You're tearing me apart!!!
Nov. 18th, 2004 10:44 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
weaktwosI don't really like this...The entire text of the article is below the cut. But here's an excerpt of the plans Bush has in mind for our tax code. I really would rather tax wealth than work. I prefer a government that supports hard work, not rich people sitting on their ass collecting dividends. These changes will really hit metropolitan areas hard, as well as impact health coverage for americans, if the incentive for businesses to offer health care is curtailed.
Instead the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.
The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said.
washingtonpost.com
Bush Plans Tax Code Overhaul
Changes Would Favor Investment, Growth
By Jonathan Weisman and Jeffrey H. Birnbaum
Washington Post Staff Writers
Thursday, November 18, 2004; Page E01
The Bush administration is eyeing an overhaul of the tax code that would drastically cut, if not eliminate, taxes on savings and investment, but it is unlikely to try to replace the existing tax code with a single flat income tax rate or a national sales tax, according to several sources familiar with ongoing tax deliberations.
During his reelection campaign, President Bush piqued interest among conservatives and liberals alike when he said replacing the income tax with a national sales tax was "an interesting idea." Just after the election he signaled that tax policy would be a centerpiece of his domestic agenda, reiterating his pledge to name a bipartisan panel to draft a fundamental tax reform proposal. That sent conservatives scurrying into either the flat tax or sales tax camp to muster political momentum.
But before the tax panel is even named, administration officials have begun dialing back expectations that they will move to scrap the current graduated income tax for another system.
Instead the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.
The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said.
As the tax discussion takes shape, "we're not talking about a replacement system," said a former White House aide familiar with the emerging policy.
White House aides warn that no decisions have been made. "The president believes the tax code should be simpler, fairer, and more conducive to economic growth and he looks forward to appointing an advisory panel to review options for reforming the tax code," White House spokeswoman Clare Buchan said.
"They [the panel] will be asked to review all options, to seek input from members of Congress, to hold public hearings and then provide advice to the Treasury secretary, who will provide recommendations to the president."
She said she expects an executive order laying out the panel's mission and naming its members by the end of the year.
But already, the contours of a tax plan are taking shape: lower individual and corporate tax rates and steps to broaden the base of taxation and promote growth by cutting taxes on investment.
"From my experience, I know that he believes strongly in broadening the [income tax] base, lowering the rates and taking the tax code out of business decisions. That's where he would start; those key fundamental philosophies will lead his decisions," said Mark Weinberger, a former assistant Treasury secretary for tax policy, now a vice chairman of Ernst & Young LLP.
To shepherd through its second-term agenda, the administration is seeking new muscle for its economic team. President Bush's top economist, N. Gregory Mankiw, will likely be leaving early next year, as will his economic policy director, Stephen Friedman.
White House officials are pursuing prominent Massachusetts Institute of Technology economist James Poterba to replace Mankiw at the Council of Economic Advisers, according to several White House economic advisers. Tim Adams, the policy director of Bush's reelection campaign, is a top candidate for Friedman's job, but he has also been mentioned as a deputy White House chief of staff for policy or deputy Treasury secretary.
John F. Cogan, an economist at Stanford University's Hoover Institution and a veteran of the first Bush administration, may be called on to help push through Social Security changes. Princeton University economist Harvey S. Rosen briefed Bush last week on tax overhaul options and may be named executive director of the soon-to-be-named bipartisan panel on tax reform.
The personnel changes may be crucial if Bush hopes to realize his twin goals of overhauling both the Social Security and tax systems, advisers say.
"This will all be a function of personnel," said one economic policy adviser and former White House aide.
Pamela F. Olson, a former Bush Treasury official in close contact with administration tax planners, said the president will pursue a tax system where all income -- whether from wages, dividends, capital gains or interest -- is taxed only once. That would mean eliminating taxes on dividends and capital gains paid out of fully taxed corporate profits. Most investment gains are currently taxed at 15 percent.
The administration will also push hard for large savings accounts that could shelter thousands of dollars of deposits each year from taxation on investment gains, according to White House economic advisers who have been involved with the planning. And any tax reform, according to Treasury Department officials, would likely eliminate the alternative minimum tax, a parallel income tax designed to ensure that the rich pay income taxes but one that increasingly ensnares the middle class.
To pay for those large tax cuts, the administration is looking at eliminating both the deduction for state and local taxes, and the business tax deduction for employer-sponsored health insurance. That would raise nearly $926 billion over five years, according to White House and congressional documents.
Eliminating the state and local tax deduction, for example, would allow the administration to scuttle the alternative minimum tax and raise an extra $400 billion over 10 years, said Leonard E. Burman, a tax policy expert at the Urban Institute. That would be twice what the White House needs to fund the planned tax-free savings accounts, expanded retirement savings accounts and tax-free health savings accounts.
The tax panel will be given roughly six months to make recommendations, according to administration officials. Treasury Secretary John W. Snow would then come up with his own plan before the end of next year. That would give Bush all of 2006 to press Congress to enact the reforms, making the whole effort a two-year process.
In the meantime, lobbyists are running into skepticism on the part of corporations that might be touched by the changes. The corporate world is taking a wait-and-see position for the most part before organizing either for or against the effort.
Even allies have their doubts about how far Bush can go.
"The White House is dreaming if they think they can do all this," said Bruce Bartlett, a conservative economist with the National Center for Policy Analysis.
Instead the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.
The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said.
washingtonpost.com
Bush Plans Tax Code Overhaul
Changes Would Favor Investment, Growth
By Jonathan Weisman and Jeffrey H. Birnbaum
Washington Post Staff Writers
Thursday, November 18, 2004; Page E01
The Bush administration is eyeing an overhaul of the tax code that would drastically cut, if not eliminate, taxes on savings and investment, but it is unlikely to try to replace the existing tax code with a single flat income tax rate or a national sales tax, according to several sources familiar with ongoing tax deliberations.
During his reelection campaign, President Bush piqued interest among conservatives and liberals alike when he said replacing the income tax with a national sales tax was "an interesting idea." Just after the election he signaled that tax policy would be a centerpiece of his domestic agenda, reiterating his pledge to name a bipartisan panel to draft a fundamental tax reform proposal. That sent conservatives scurrying into either the flat tax or sales tax camp to muster political momentum.
But before the tax panel is even named, administration officials have begun dialing back expectations that they will move to scrap the current graduated income tax for another system.
Instead the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.
The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said.
As the tax discussion takes shape, "we're not talking about a replacement system," said a former White House aide familiar with the emerging policy.
White House aides warn that no decisions have been made. "The president believes the tax code should be simpler, fairer, and more conducive to economic growth and he looks forward to appointing an advisory panel to review options for reforming the tax code," White House spokeswoman Clare Buchan said.
"They [the panel] will be asked to review all options, to seek input from members of Congress, to hold public hearings and then provide advice to the Treasury secretary, who will provide recommendations to the president."
She said she expects an executive order laying out the panel's mission and naming its members by the end of the year.
But already, the contours of a tax plan are taking shape: lower individual and corporate tax rates and steps to broaden the base of taxation and promote growth by cutting taxes on investment.
"From my experience, I know that he believes strongly in broadening the [income tax] base, lowering the rates and taking the tax code out of business decisions. That's where he would start; those key fundamental philosophies will lead his decisions," said Mark Weinberger, a former assistant Treasury secretary for tax policy, now a vice chairman of Ernst & Young LLP.
To shepherd through its second-term agenda, the administration is seeking new muscle for its economic team. President Bush's top economist, N. Gregory Mankiw, will likely be leaving early next year, as will his economic policy director, Stephen Friedman.
White House officials are pursuing prominent Massachusetts Institute of Technology economist James Poterba to replace Mankiw at the Council of Economic Advisers, according to several White House economic advisers. Tim Adams, the policy director of Bush's reelection campaign, is a top candidate for Friedman's job, but he has also been mentioned as a deputy White House chief of staff for policy or deputy Treasury secretary.
John F. Cogan, an economist at Stanford University's Hoover Institution and a veteran of the first Bush administration, may be called on to help push through Social Security changes. Princeton University economist Harvey S. Rosen briefed Bush last week on tax overhaul options and may be named executive director of the soon-to-be-named bipartisan panel on tax reform.
The personnel changes may be crucial if Bush hopes to realize his twin goals of overhauling both the Social Security and tax systems, advisers say.
"This will all be a function of personnel," said one economic policy adviser and former White House aide.
Pamela F. Olson, a former Bush Treasury official in close contact with administration tax planners, said the president will pursue a tax system where all income -- whether from wages, dividends, capital gains or interest -- is taxed only once. That would mean eliminating taxes on dividends and capital gains paid out of fully taxed corporate profits. Most investment gains are currently taxed at 15 percent.
The administration will also push hard for large savings accounts that could shelter thousands of dollars of deposits each year from taxation on investment gains, according to White House economic advisers who have been involved with the planning. And any tax reform, according to Treasury Department officials, would likely eliminate the alternative minimum tax, a parallel income tax designed to ensure that the rich pay income taxes but one that increasingly ensnares the middle class.
To pay for those large tax cuts, the administration is looking at eliminating both the deduction for state and local taxes, and the business tax deduction for employer-sponsored health insurance. That would raise nearly $926 billion over five years, according to White House and congressional documents.
Eliminating the state and local tax deduction, for example, would allow the administration to scuttle the alternative minimum tax and raise an extra $400 billion over 10 years, said Leonard E. Burman, a tax policy expert at the Urban Institute. That would be twice what the White House needs to fund the planned tax-free savings accounts, expanded retirement savings accounts and tax-free health savings accounts.
The tax panel will be given roughly six months to make recommendations, according to administration officials. Treasury Secretary John W. Snow would then come up with his own plan before the end of next year. That would give Bush all of 2006 to press Congress to enact the reforms, making the whole effort a two-year process.
In the meantime, lobbyists are running into skepticism on the part of corporations that might be touched by the changes. The corporate world is taking a wait-and-see position for the most part before organizing either for or against the effort.
Even allies have their doubts about how far Bush can go.
"The White House is dreaming if they think they can do all this," said Bruce Bartlett, a conservative economist with the National Center for Policy Analysis.
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no subject
Date: 2004-11-19 01:18 am (UTC)You get interest in return for depositing your money in the bank. Money that the bank then uses to make loans that business, small and large, use to create jobs, grow their businesses, invest in new technology, etc. Same with dividends, same with capital gains. I would much rather see someone getting a tax break on their bank interest because they were conservative and saved some of their income rather than racking up consumer debt beyond belief. Companies have already made taxes on income before it is used to pay a dividend. Why should it then be taxed again?
The social security system in almost every Western country is fast running out of funds. Not because of mismanagement or profligate spending but because of pure demographics. When the generation after this one retires, the cupboard will be bare. The only way to correct that problem is to tax people more or to give them the freedom to plan for their own retirement. But to encourage them to do the latter, you cannot tax them to the hilt.
The tax plans are intended to be tax neutral - in other words, the cuts will have no overall effect on government revenues. Why? Because with the elimination of tax on interest and dividends and capital gains, people and businesses will invest more, thereby creating more jobs, thereby creating more income, etc., etc. etc.
Kudos for doing this. Now, where's my copy of the WSJ....
no subject
Date: 2004-11-19 01:42 am (UTC)Besides, most people are investing in tax-deferred investment plans. Once again, you're really only helping the very wealthy, who have probably thrown all they are going to throw at the labor force.
I'm sure both sides of the fence could argue and bring out studies to support their claims.
no subject
Date: 2004-11-19 04:34 am (UTC)This is not a question of pure supply side economics. It's a question of giving people a benefit from investing in economic growth. What's the alternative then?
no subject
Date: 2004-11-19 04:45 am (UTC)I certainly don't find the alternative of allowing people who do not work, but merely sustain themselves on interest and dividends to not pay taxes very attractive in the least, especially since the economy is not guaranteed to grow, and, in the past, has not grown as a result of tax "relief". Only the deficit in our nation has grown.
no subject
Date: 2004-11-19 05:10 am (UTC)Interest, dividends, capital gains - they are all taxed when people earn the income that they invest.
no subject
Date: 2004-11-19 06:12 am (UTC)no subject
Date: 2004-11-22 06:12 am (UTC)