This weekend, the By The Fault Weekend Reader looks at candidates’ proposals on taxes.
A Report from the Tax Policy Center of the Urban Institute and Brookings Institution
Tax and fiscal policy will loom large in the next president’s domestic policy agenda. Nearly all of the tax cuts enacted since 2001 expire at the end of 2010 and the individual alternative minimum tax (AMT) threatens to ensnare tens of millions of Americans. While a permanent fix palatable to both political parties has proven elusive, both candidates have proposed major tax changes. This report describes how we performed our modeling and analysis, outlines the major tax proposals, and discusses the implications of their policies for the revenue raised, taxpayer economic activity, and the distribution of the tax burden. The Tax Policy Center has a pdf and html version of the full report for printing.
A quicker one page overview of winners and losers is this article by Howard Gleckman of the Tax Policy Center.
Unfortunately the Tax Policy Center doesn’t look at the other candidates’ proposals. So here’s a quick look:
The Libertarian Party
Government spending at all levels is out of control. Most Americans understand the problem of “earmarks,” commonly used by pork-minded congressmen to buy votes. But while earmarks are an outrageous abuse of the taxpayer’s money, they account for a very small percentage of federal spending. Over the past decade, total government spending (state, local and federal) has increased from $2.9 trillion to an astonishing $5.1 trillion in 2008. The $3.1 trillion federal budget submitted by President Bush for next year was greater than the combined 1998 spending of the federal government, all 50 states and over 87,000 local governments.
The federal government must take the lead in making significant cuts in spending. Focusing on earmarks risks distracting attention from the broader problem of a government wildly wasting the money of hard-working Americans. Tens of billions of dollars in corporate welfare — essentially aid to dependent corporations — should be eliminated. Largesse for middle- and upper-income Americans, particularly so-called “entitlement” programs, must be cut. Billions in so-called defense spending, which protects America’s populous, prosperous allies rather than Americans, must be eliminated.
Cutting spending would allow America to implement real tax reform. Our goal should be to reduce both the tax burden on Americans and the intrusion in their lives resulting from IRS enforcement of the income tax. One of the best approaches would be to adopt some form of a consumption tax, like a national sales tax, replacing the Internal Revenue Service and all federal income taxes as well as payroll taxes.
It is not enough to eliminate the income tax. We also must repeal the 16th amendment, which authorizes Congress to levy an income tax. Without doing so, there would be an ever-present danger that a future Congress would attempt to bring back the income tax on top of the Fair Tax or any other alternative to the income tax.
For more on the Libertarian ticket, please visit Barr 2008.
Ralph Nader & Matt Gonzalez
Fair Tax Where the Wealthiest and Corporations Pay their Share; Tax Wealth More than Work; Tax Activities We Dislike More than Necessities
The complexity and distortions of the federal tax code produces distributions of tax incidence and payroll tax burdens that are skewed in favor of the wealthy and the corporations further garnished by tax shelters, insufficient enforcement, and other avoidances.
Corporate tax contributions as a percent of the overall federal revenue stream have been declining for fifty years and now stand at 7.4% despite massive record profits. A fundamental reappraisal of our tax laws should start with a principle that taxes should apply first to behavior and conditions we favor least and pinch basic necessities least, such as the clearly addictive industries (alcohol and tobacco), pollution, speculation, gambling, extreme luxuries, instead of taxing work or instead of the 5% to 7% sales tax food, furniture, clothing or books.
Tiny taxes (a fraction of the conventional retail sales percentage) on stock, bond, and derivative transactions can produce tens of billions of dollars a year and displace some of the taxes on work and consumer essentials. Sol Price, founder of the Price Clubs (now merged into Costco) is one of several wealthy people in the last century who have urged a tax on wealth. Again, it can be at a very low rate but raise significant revenues. Wealth above a quite comfortable minimum is described as tangible and intangible assets. The present adjustment of Henry George’s celebrated land tax could also be considered.
Over a thousand wealthy Americans have declared, in a remarkable conflict against interest, that the estate tax, which now applies to less than 2 percent of the richest estates, should be retained. The signers of this declaration included William Gates, Sr., Warren Buffett and George Soros. Ralph Nader does not believe that “unearned income” (dividends, interest, capital gains) should be taxed lower than earned income, or work, inasmuch as one involves passive income, including inheritances and windfalls, while the latter involves active effort with a higher proportion of middle and lower income workers relying on and working each day, some under unsafe conditions, for these earnings.
For more on Nader & Gonzalez, please visit Nader 2008.
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