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View Diary: Cato: taxes must be increased to stop Bush's Big Government (121 comments)

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  •  CATO starting their campaign for a GST (4+ / 0-)
    Recommended by:
    oldpro, MamasGun, boofdah, greenearth

    Goods and services tax.  Another regressive, middle class eroding tax. These conservatards always have an alterior motive.

    •  good point! (1+ / 0-)
      Recommended by:
      MamasGun

      Chris Edwards is the tax policy guru at Cato. As of February of 2005 this is what he was saying about taxes:

      However, the tax system remains terribly complex and inefficient. The number of pages of federal tax rules has increased 48 percent in the past decade. The complex alternative minimum tax will hit about 35 million households by the end of the decade if not repealed. The high-rate U.S. corporate income tax is under growing pressure as global investment capital has become more mobile.

      This study looks at possible changes to address those problems. It identifies three goals for tax reform: simplification, efficiency, and limited government. The latter goal focuses on tax code features such as visibility and equal treatment that cultivate an understanding of the high cost of government.

      This study examines reform options including a flat tax, a national retail sales tax, and a savings-exempt tax in reference to those goals. It also proposes a new option: a "dual-rate income tax." This revenue-neutral option would convert the individual income tax to a two-rate system that eliminates most deductions and credits and allows nearly all families to pay tax at a low 15 percent rate. A 27 percent rate would kick in for earnings above $90,000 (single) and $180,000 (married).

      To promote growth, the maximum individual rate on dividends, interest, and capital gains would be 15 percent. The corporate tax rate would be dropped to 15 percent and interest made non-deductible. These changes would equalize and cut the combined top income and payroll tax rates on wages, dividends, interest, and small business income to just under 30 percent, compared with between 35 and 45 percent under current law.

      The dual-rate tax plan would retain the standard deduction, an expanded personal exemption, and the earned income tax credit. The plan would create a simpler and more efficient taxcode within the structure of today's system and may be just the type of tax plan that the president's advisory panel is looking for.

      Link

      The study in its conclusions seems to favor the dual-rate tax plan and highlights that it's a step in the direction of the flat tax. However, notice this paragraph:

      The president’s call for tax reform creates
      both risks and opportunities for taxpayers
      and the economy. The risk stems from commentators
      who view major tax changes as an
      opportunity to increase revenues in order to
      fund entitlement programs and reduce the
      budget deficit. Recently, there have been calls
      to raise income and payroll taxes, and calls to
      create an add-on sales tax or VAT. Those calls
      should be rejected—under no circumstances
      should a tax reform bill be considered if it
      raises taxes. There is no need for higher taxes
      when there are hundreds of inefficient federal
      programs that could be eliminated to save
      money.

      Anyone know if Chris Edwards has changed his mind about not increasing revenues at this time?

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