Tax policy and reform ideas
Some thoughts on our current tax code and a suggestion for reform:
A dollar earned is still a dollar, no matter its origin - interest, dividends, cap gains or "ordinary income". It should be taxed the same way on the same progressive scale. Allowing cap gains, interest, dividends and carried interest to be taxed at 15% coupled with ridiculous tax credits, allows for such disproportionate distortions of income profiles that people who make billions pay a lower % than someone making $150K. Historically income equality has been one of the primary causes of revolutions and societal upheaval. There is simply no justification for a wealthy individual who can take advantage of such income taxonomical classifications to pay a lower rate on very high amounts than someone who actually works for a living - hence Buffets angst re: his secretary and cleaning staff.
Proponents point to the issue of "double taxation".. the company already pays taxes. Two points: 1. this is not new - double taxation for companies has always existed. 2. most companies pay no where near the statutory rate - they have tremendous a amount of loopholes to take advantage of, espcially if they have international operations. Most big companies play in the low single digits. Corporate tax collections are at near 60 year lows as percent of GDP.
One proposal would be to: 1. tax all income regardless of origin on the same progressive rate 2. eliminate corporate taxes altogether. 3. tax anyone who invests in US equities at the same rate (currently cap gains for non-citizens and residents are tax free).
This would a) encourage investment stateside b) eliminate a massive industrial-lobby complex built upon creating tax loopholes - the attorneys, tax firms, lobbyists, accountants etc. - probably in the 100's of billions saved.
Yes, let's just eliminate hundred of thousands of jobs. It's not like we have a shortage of jobs. Everyone is an arm chair tax expert these days. I am a proponent of a simplified tax system however it's nor the time or the place to go out and just slash an entire industry out of the economy. Low cap gains tax is a current whipping boy, however you kids seem to forget it was responsible for the 7 year long boom we had in the 2000s I didn't see anyone complaining then, did you? Until you have spent a reasonable amount of time studying the current system of taxation and how it effects all parts of the economy.
The biggest problem with the current system of taxation is not cap gains rate, nor is it that the ultra rich pay lower aggergrate tax rates then salaried workers. The reason for this is to promote success and innovation. The problem is the system creates a system that promotes a group of people who do just enough to qualify for a tax credit to limit their need to work. This country has created a large percentage of the populace that is totally dependent on the government to provide for them. Yet this same group complains when the providers want to restrict the uses of the money. This is the problem that is more pressing to the country than a few precentage points on the upper classes income.
On a different note, business are essentially triple taxed if you count that businesses have to pay their share of their employees taxes that require a company match. Yes they can write this off however that is still dollars they can not put back into the economy.
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