Wall Street Journal, April 16, 2012
Trickle-Down Taxation
by Grover G. Norquist
Mr. Norquist is president of Americans for Tax Reform and co-author (with
economist John Lott) of the new book "Debacle: Obama's War on Jobs and
Growth and What We Can Do Now to Regain Our Future" (John Wiley & Sons,
2012). He opines:
...
In his 1984 acceptance speech at the Democratic National Convention, Walter
Mondale announced that if elected president he would raise taxes. He lost
the electoral college 525 to 13 ... In the 2012 election year,
President Obama again promises to only target individuals earning more than
$250,000—but his public statements on raising taxes focus on those earning
more than $1 million a year. In theory this could be a compelling argument.
...
... The history of trickle-down taxation over the last
100 years and the last two Democratic administrations suggests an answer.
...
The Alternative Minimum Tax was imposed in 1969 because 115 households
investing in municipal bonds reportedly paid little or no federal income
tax. This tax on the rich who were paying what the president and others call
a "fair share" now affects four million households. On Jan. 1, 2013, it is
set to hit 27 million more
... It appears that American taxpayers have noticed
this pattern of trickle-down taxation. Such tactics have a shelf life. There
is a reason the Greeks did not conquer the rest of Asia Minor with the
Trojan Horse trick that worked so well the first time.
2-4-8 Response
Better Taxes and Better Spending
The "Trojan Horse" is the big tax code we thought was
fair but has caused $15 trillion in national debt while the well-to-do
funnel increasing amounts of income and other assets for their personal and
luxurious use. How stupid were we not to realize that the "job creators" we
supported with billions of tax expenditures were the very same business
persons who have sent millions to the unemployment lines. Destroy the Trojan
Horse Mr. Norquist and then we can discuss better spending.
I invite you to consider comprehensive individual and
business tax reform that redefines tax fairness and which can be described
in one sentence. Tax individual and corporate income at a flat 8% rate (with
no deductions, credits or loopholes), tax individual net wealth at 2%
(excluding $15,000 cash and retirement funds) and impose a 4% Value Added
Sales Tax (VAT) on business.
The low 2-4-8 tax rates on individuals and business
will produce about $500 billion more than current federal revenue and there
will be no need for payroll, estate, and capital gains taxes or deferral of
foreign income.
If adopted, congress would be free to focus on better
spending and a balanced budget.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
home of the 2-4-8 Tax Blend
Reply to 2-4-8
Further 2-4-8 Response
Your concerns about my mental health and the continued
2% net wealth tax are both valid; but you have only considered the 2% wealth
tax rather than the 92% of income that is kept. Think about a 30% income tax
year after year verses an 8% income tax. The extra 28% of income each year
for 10 years amounts to 3 years of salary - not a bad bonus. The 2% wealth
tax will likely be less than inflation and leave you with whatever you did
not consume.
Let me also assure you that my really insane (and
frugal) ideas are on the spending side.
Further Reply to 2-4-8
My reference to insanity was in relation to your unfounded belief that
politicians would only take 2% of assets. You must remember that the first
income tax was 7% on income over $500,000 (equivalent to $11,000,000 today).
Giving politicians a virtually inexhaustible supply of money will only
increase spending. That has been proven over the last 100 years. That's why
we have $16 trillion of debt and spending of over $3.5 trillion annually.
The debt is caused by the politicians reluctance (They have to get
reelected!) to raise taxes fast enough.
I recommend that you push
your "insane (and frugal) ideas ... on the spending side."
Further 2-4-8 Response
Thank you for the opportunity...:
Better spending requires faith
that all Americans are willing to work and pay fair taxes; and that all
entitlement programs, business incentives and projects should be measured by
need and effectiveness at the appropriate level of government. A few simple
changes would revolutionize both entitlements and most discretionary
spending.
Education – Provide copyright free digital books,
educational videos and tests to all; and leave the management of public
education teachers and school buildings to the state and local government.
Have faith that Americans with basic skills can teach themselves new
vocational and collage level skills. Have faith that private schools and
colleges will find ways to reduce costs by using free quality digital
materials.
Employment - Replace food stamps and other federal “safety
net†programs with government part time jobs at salaries a little below
minimum wage for those in need. Have faith that local governments and
not-for-profit entities will put the labor of the poor to good use and that
good work will be rewarded by the private sector businesses willing to pay a
little more for reliable workers. Have faith that the working poor can be
trusted to buy food without food stamps instead of treating the poor as
simpletons and addicts. Discourage layoffs by requiring companies to pay
extended severance (in lieu of unemployment benefits) and health care.
Retirement - The government should not encourage late retirement with
higher social security payouts and excessive retirement savings tax
exemptions. Have faith that the economy will do just fine with more younger
workers getting jobs and modest 401ks and IRAs.
Infrastructure – The
federal government should not take tax dollars from one community and give
them to another (including highways, mass transit, empowerment zones,
education, farming, fisheries, police, big oil and most other congressional
earmarks). Have faith in the ability of each state and local government to
tax as needed and manage its own affairs.
Tax Expenditures – The tax
code may be necessary to define the limits of tax exempt retirement plans
but there are no other necessary tax expenditures. Have faith that every US
industry is capable of conducting business without unfair tax loopholes and
handouts. [Please also note that in the 2-4-8 Tax Blend the deduction of
home mortgage interest is replaced by using the mortgage principal to
compute net wealth.]
Health Care – The Supreme Court review of health
care legislation is noted. Hospitals provide emergency health care to all
and full federal funding for emergency hospital services may be appropriate.
Vouchers, rather than tax credits, may play an important role in maintaining
innovation and competition in future health care insurance marketplaces.
Tort reform and open enrollment may also be needed to level the insurance
markets. Innovation and provider competition might require health insurers
to receive and maintain digital health records of all patients, identify and
help create best practices (i.e. interactive online patient questioners,
nurse and physician assistant triage, video examinations, and doctor
referral scheduled as needed), and steer patients to cost effective
providers (through lower co-payments and other incentives). Have faith that
managed competition can improve quality and reduce the cost of health care.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
home of the 2-4-8 Tax Blend
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