US News, Feb. 29, 2012
Obama, Romney, Santorum, and Gingrich Fall
Short on Tax 'Reform'
by Anthony Davies
Antony Davies is an affiliated senior scholar at the Mercatus Center at
George Mason University and an associate professor of economics at Duquesne
University.
... The candidates'
economic policies are a hodgepodge of window dressing, shell games, and
irrelevant tweaks. And this includes the president, who has found another
bad idea on which to double-down: the alternative minimum tax, or AMT. ...
Obama claims that he
wants to cut corporate tax rates and end tax credits and subsidies. Buried
in the fine print is that he wants to do these things selectively for
politically-favored industries. Some industries, like manufacturing, will
see tax cuts, and some industries, like oil and gas, will see reduced
credits and subsidies. This isn't a plan to end corporate welfare. It's a
plan to redirect corporate welfare.
...
Most of the political
debate involves tinkering with the tax code. ... It is mathematically
impossible for the federal government to continue the way it has been going.
Forget about cutting a program here or closing a military base there. If we
were to shut down the entire federal government save for Social Security,
Medicare, and interest payments on the debt, we still wouldn't be able to
balance the budget. ... We can't afford any of the programs. That is,
unless we're willing to reform Social Security and Medicare ...
2-4-8 Response: Don't Cut Social Security
You are right about the, “hodgepodge of window
dressing, shell games, and irrelevant tweaks†but I disagree with your
conclusion that we, “can't afford
any of the programs. That is, unless we're willing to reform Social
Security and Medicareâ€. I believe we simply have to raise taxes in a way
that is Efficient, Simple and Fair.
Consider a wealth tax (Warren Buffett will), a sales
tax (Bill O’Reilly will) and eliminate tax expenditures (Simpson and Bowles
will). Put the three tax ideas together and you have the 2-4-8 Tax Blend
which taxes individual and foreign-owned net wealth at 2% (above a $15,000
exemption), retail sales (or VAT) at 4% and income at 8%. The low rates
yield $2.6 trillion – ($400 billion more than FY 2010 federal revenue).
• Rich and poor would pay the same “2-4-8†rates - making it the fairest tax
system on the planet.
• Social Security and Medicare payroll taxes are
eliminated - guaranteeing future unrestricted benefits paid out of the
general fund for all.
• Earners keep about 20% to 30% more income each
year - creating economic mobility and consumer power.
• Taxes on capital
gains, estate transfers and gifts would not be necessary - restoring
economic freedom to the investment class.
• Reduce the corporate income
tax to 8% for all types of business - jump-starting the economy.
The United States is the only developed country that
does not have a national consumption (VAT) tax. We must stop blaming Social
Security and Medicare for spending problems caused by a grossly unfair tax
code. Our $15 trillion debt has grown along with the $60 trillion in private
wealth resulting in a concentration of income and wealth in the hands of an
unproductive few. Only a tax blend that includes wealth, sales and income
can achieve extremely low rates and economic mobility. Let’s stop the,
“hodgepodge of window dressing, shell games, and irrelevant tweaksâ€.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
February 29, 2012
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