Politico, Feb. 15, 2012
Obama, in Wisconsin, talks tax reform
by Donovan Slack
Mr. Slack opines:
... he started his trip here, at a Master Lock
factory that he praised in his State of the Union address for bringing 100
jobs back from China. He used the factory as an example of his efforts to
eliminate deductions and loopholes ...
... “Right now, companies get tax breaks for
moving jobs and profits overseas. They’re taking deductions for the expenses
of moving out of the [country],†he said. “Meanwhile, companies that choose
to stay here, they get hit with one of the highest tax rates in the world.
That doesn’t make sense. Everybody knows it doesn’t make sense. … So my
message to Congress is, ‘Don’t wait.’â€
Republicans have already lambasted the proposal and the continued
deficit spending it includes, calling Obama’s plan for encouraging domestic
manufacturing growth misbegotten.
2-4-8 Response: Tax Reform and Manufacturing
"He used the factory as an example of his efforts to eliminate
deductions and loopholes for companies ..." even though the tax code already
has a manufacturing deduction and loophole that costs the taxpayers about
$171 billion per year. It even applies to the manufactures of software and
movies. We need real tax reform and we need to have the same rules apply to
all.
If we expand the tax base we can we can lower the income tax rate,
maintain progressivity and have the same brackets for the rich and poor. The
solution is the 2-4-8 Tax Blend which broadens the tax base by taxing net
wealth at 2% (above a $15,000 exemption), retail sales at 4% and income at
8%. It would yield $2.6 trillion – ($400 billion more than FY 2011 federal
revenue). The tax blend is progressive even though rich and poor would pay
the same rates. The concurrent elimination of payroll, capital gains, estate
and gift taxes; and a significant reduction of the corporate income tax rate
to 8%, should guarantee near universal support from social liberals and
business conservatives alike.
Please think outside the box before you react. Try to contrast a
30% income tax (the Buffet Rule rate or the rate paid by the middle class
when the payroll tax is included) with an 8% income tax joined with a 2%
wealth tax for each of the next 11 years. The latter combined income-wealth
tax would permit an individual to keep 22% more salary each year. If one
saved just the 22% extra take home for 11 years it would amount to several
years’ salary in the bank - a very nice retirement fund, (conservatively
assuming the 2% wealth tax was offset by 4% investment interest). Now that’s
real economic mobility!
How would an 8% corporate income tax affect jobs and the economy?
Those answers may be better left to your talent and imagination - and not to
Mr. Obama
Eugene Patrick Devany, JD. MPA
www.TaxNetWealth.com
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