[Rhodes22-list] Taxes - Timely Article

[Bill Effros]

PS -- The 13th Amendment abolished slavery.

Bill Effros

3drecon at comcast.net wrote:
> I have deliberately stayed out of all the political discussions lately, but I am compelled to comment.  If this has been addressed, then I apologize (I refuse to read all the previous tax e-mails).  The Flat Tax, Fair Tax, National Sales Tax, or any other tax that will replace the current system can work and can work well under a number of circumstances however; the one event that must occur is the repeal of the 13th Amendment authorizing the Income Tax.  No matter what Congress passes, a future Congress could otherwise reinstate the income tax on top of any other tax solution (and they will).
>
> Philip
>
>
> -------------- Original message -------------- 
> From: "Brad Haslett" <flybrad at gmail.com> 
>
>   
>> Here's an article from today's WaPo that dovetails neatly with our recent 
>> discussion. Care to make a bet about the home interest deduction? No one 
>> in the Congress has the guts to take on that sacred cow! 
>>
>> Brad 
>>
>> ----------- 
>>
>> *The $800 Billion Tax Loophole 
>> * 
>>
>> By Maya MacGuineas 
>> Special to washingtonpost.com's Think Tank Town 
>> Thursday, January 18, 2007; 12:00 AM 
>>
>> Democrats are in a bind when it comes to their domestic economic agenda. 
>> They have promised a number of new and costly initiatives such as fixing the 
>> Alternative Minimum Tax, providing middle-class tax relief, and increasing 
>> spending on homeland security and education. But they have also made a 
>> commitment to fiscal responsibility. So how can they deliver on their 
>> promises without opening themselves up to the old "tax and spend" label? 
>> Reforming tax entitlements -- a large, mostly under-the-radar part of the 
>> federal budget -- might just give them a way out of their predicament. 
>>
>> As a result of the 1986 bipartisan tax reforms, the tax base was broadened 
>> and the tax code was greatly simplified. But these reforms have been 
>> gradually undone as Congress has created scores of new tax breaks and 
>> loopholes. Want to preserve historic buildings, encourage alternative energy 
>> sources, help working families, or give certain industries a boost without 
>> appearing to increase spending? Voil? -- a new targeted tax break is born. 
>>
>> Most tax expenditures are really spending programs designed to look like tax 
>> cuts. Picture them as vouchers for healthcare, mortgage payments, daycare, 
>> transportation -- name the tax break. Dressing these programs up as tax cuts 
>> makes them a much easier sell for politicians who fear the "big spender" 
>> label. But call them what you will, they drain the money from the Treasury 
>> and extend the scope of government. All told, this portion of the budget 
>> represents $800 billion in lost government revenues annually. 
>>
>> Not only do these tax breaks mask the true size of the government, they are 
>> a terrible way to make policy. They regularly pay people and businesses to 
>> do what they would do anyway, making them both poorly targeted and 
>> unnecessarily expensive. They are also extremely regressive. A particular 
>> tax exemption might be worth 35 cents on the dollar to a wealthy individual 
>> and only 10 cents to someone on the other end of the income scale who faces 
>> a lower tax rate. It would be hard to justify a housing policy that does 
>> more to subsidize the rich than the poor, yet that is exactly what the $80 
>> billion a year home mortgage interest deduction does. 
>>
>> Moreover, tax expenditures do not get nearly the level of scrutiny they 
>> should. (If they did, would we really have a government program that 
>> subsidizes millionaires who buy vacation homes?) New government programs 
>> should only be created following vigorous debate over whether a proposed 
>> policy is important enough to warrant government intervention, and if it is, 
>> whether it will be effective. Discussions about new tax programs however, 
>> tend to focus almost exclusively on the cost. Billions of dollars of 
>> targeted tax cuts have been passed in the past few years with little or no 
>> discussion about the worthiness of their goals. And unlike spending 
>> programs, which are subject to congressional review, tax expenditure 
>> programs are pretty much on automatic pilot. 
>>
>> Reforming this area of the budget would not only be a critical step in 
>> improving the tax code (and probably the closest thing we will see to 
>> fundamental tax reform in the next two years) it could also generate tens -- 
>> if not hundreds -- of billions of dollars in savings. 
>>
>> The first step should be capping a number of existing tax breaks. Capping 
>> two of the largest breaks -- the home mortgage interest deduction and the 
>> exclusion for employer-provided healthcare, would easily provide over $50 
>> billion a year in savings. Both of these changes would reduce the large 
>> subsidies that go to the highest earners while freeing up resources. Getting 
>> rid of a host of other tax breaks that subsidize certain businesses or 
>> industries could easily generate another $25 billion. A thorough review of 
>> the over 150 existing tax expenditures to determine which ones have outlived 
>> their usefulness would yield still more in savings. As Democrats search for 
>> ways to offset the costs of their new agenda, reducing the $800 billion tax 
>> loophole would be an excellent place to start. 
>>
>> *Maya MacGuineas is the Director of the Fiscal Policy Program at the New 
>> America Foundation.* 
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