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By Leslie M. Alperstein and Joe Lieber -- Reports that the Bush Administration may delay tax "reform" until 2006 and that the reform will not result in an overhaul of the system-i.e. no national sales tax, value added tax or flat tax-confirm what we've been saying for some time. Instead, the Administration plans to focus on other items in 2005, like Social Security reform, tort reform and the deficit.
Highlights of the President's tax reform proposal, derived from a 2002 Treasury Department study (which many expect will be the blueprint for reform) include:
My comments follow each point in bolded italics. For Washington Analysis' comments, you'll have to subscribe to the newsletter. See phone number above.
- Creating lifetime savings and retirement accounts where individuals could contribute up to $5,000 a year in each account; Not bad but most of the country doesn't have $5,000 a year to spare and don't 401Ks and IRAs do that for savings and retirement?
- Repealing the personal Alternative Minimum Tax (AMT); Great idea for those earning under $200,000, with a phaseout for those earning from $200,000 to $400,000. For income over $400,000 it should remain fully in effect.
- Dramatically increasing the standard deduction; The drama is good but how will the balance be made up? If it is made up by adding a few extra high brackets, starting at $400,000 it's a great idea. Why not make the top marginal bracket 55% and add brackets at 50%, 45%, 40%. Our ancestors paid 91% and we ended up getting a pretty good country out of the deal. A 15% tax on dividends is a disgrace!
- Eliminating two tax brackets-28 percent and 33 percent-leaving only four brackets-10 percent, 15 percent, 25 percent and 35 percent; Again, if it is made up by adding a few extra high brackets, starting at $400,000 it's a great idea.
- Allowing corporations to expense more of their capital expenditures; No, bring back the investment tax credit, where companies can get a 10% credit for new equipment purchased from US Manufacturers and only a small portion for used equipment. The lesser amt for used equipment prevents a huge credit going to the buyer of all of a business' assets, where no new business was created. Bush wants to give gifts to his friends for just breathing wealthy air. I'd rather give incentives to grow and hire people.
- Taxing individuals for the value of their employer-provided health care to help pay for reform; What a Goddamed stupid idea. Many employees are already paying 50% of their medical costs...from $3,000 to $8,000 a year, now they want to tax the rest...I don't think so!!!!!!!
- Taxing most Social Security income; and 85% of SS income is already taxed once one reaches a certain level of income (modified adjusted gross income). It would be better to tax 100% of the salaries.
- Eliminating itemized deductions for state and local taxes. Another stupid idea but I'd love to see it happen just to put the screws to all the people from the more affluent areas (the Blue States) who voted for Bush. It will never pass but that could be the thing that wakes up the sleeping dead of America.
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