|
Bush's Tax Plan: Raise Taxes for the Middle Class
|
View this Thread in Original format
| occrider |
| quote: |
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.
http://www.washingtonpost.com/ac2/w...anguage=printer
|
So let's summarize:
Tax Cuts
-Eliminating taxes on dividends and capital gains
-Savings accounts that will shelter investment gains from taxation
-Eliminate the alternative minimum tax
Tax Hikes
-Eliminating the deduction for state and local taxes (This is HUGE tax hike for EVERYONE ... my state charges an ASSLOAD)
-Eliminating the business tax deduction for employer-sponsored health insurance (Sounds great for small businesses)
So that's 3 tax cuts for the wealthy funded by two tax hikes for teh middle class. WTF???? What the ????? |
|
|
| ResonantDrag |
four more years, four more years!
:rolleyes:
elimination of tax credits for health care? elimination of state deductions?
sounds like we're getting the government we deserve.:whip:
got a band-aid, cause after this goes through, my employer's going to reel back it's health benefits. socializing health care is one thing, but ing people who provide it to their employees is a new level of sickness. but hey, the market's reacting positively:rolleyes: |
|
|
| Yoepus |
well Europeans should be happy about this.
Any tax is good tax (except when placed on condoms..)!:disbelief |
|
|
| josh4 |
| The best part is it'll take a decade to undo what Bush does in these next four. |
|
|
| MisterOpus1 |
| quote: | Originally posted by occrider
-Eliminating the business tax deduction for employer-sponsored health insurance (Sounds great for small businesses) |
Your entire post and summary is entirely valid, but this point really does jump out.
If this becomes reality, considering this is a major incentive for businesses to sponsor health insurance, what would really stop a business from dropping health insurance altogether?
And maybe, just maybe some of us nutty Progressives saw this comin' a mile away in the first place? |
|
|
| Shakka |
| quote: | Originally posted by MisterOpus1
If this becomes reality, considering this is a major incentive for businesses to sponsor health insurance, what would really stop a business from dropping health insurance altogether? |
Funny, I see more validity to that argument from John Kerry's healthcare stance.
Just because the tax-credit is eliminated doesn't mean an employer doesn't have the incentive to maintain employe sponsored healthcare as a benefit to attract better candidates to the job. I'll concede that until something is put into practice, it's hard to really tell what sort of off the wall consequences there might be, but I'd venture to guess that Kerry's plan was a lot more dangerous than this plan sounds--on this point. |
|
|
| MisterOpus1 |
| quote: | Originally posted by Shakka
Funny, I see more validity to that argument from John Kerry's healthcare stance.
Just because the tax-credit is eliminated doesn't mean an employer doesn't have the incentive to maintain employe sponsored healthcare as a benefit to attract better candidates to the job. I'll concede that until something is put into practice, it's hard to really tell what sort of off the wall consequences there might be, but I'd venture to guess that Kerry's plan was a lot more dangerous than this plan sounds--on this point. |
To your understanding of Kerry's health plan, how would it be considered a lot more dangerous to businesses?:
http://www.johnkerry.com/issues/hea...e/business.html |
|
|
| Shakka |
The way I understand it, Kerry's plan wanted to offer universal healthcare to everyone at a price below anything that a small business or any business for that matter could compete with. Given the knowledge that there is a low priced alternative, why would a small business(or any business for that matter) want to even offer healthcare if they know that the almighty government will provide it for less? Before you know it you have 350 million people on government provided healthcare--talk about a drag on the economy! If there is a cheaper alternative that the small business can't compete with, they have no incentive to provide ANY healthcare, regardless of what credits they may get to offset the expenses incurred to provide healthcare in the first place.
*disclaimer* I am basing a lot of my commentary on how Kerry explained his program in the debates. I only scanned the website explanation. Bottom line to me is that from a philosophical standpoint, people do not have any sort of God-given right to healthcare, any more than they have any sort of God-given right to have a job in the first place, just like that don't have any God-given right to car insurance, a home, etc.
From an economic standpoint, if the government is willing to offer healthcare at a cheaper price to everyone, the first problem is quality of care/socialized medicine. The longer-term problem is that soon enough EVERYONE will be forced to take the government alternative which will cost more and more. In the attempt to help out the few that need it, a system is created whereby everyone suffers. How's that for altruism/utopia?
To summarize: I am pretty much against any universally sponsored government healthcare. I just think it's wrong. I'm a dirty, right-wing capitalist! But you already knew that.;) |
|
|
| EvilDust |
| quote: | Originally posted by Shakka
Bottom line to me is that from a philosophical standpoint, people do not have any sort of God-given right to healthcare |
holy crap, you really really scare me! :nervous: |
|
|
| Shakka |
| quote: | Originally posted by EvilDust
holy crap, you really really scare me! :nervous: |
Why? If there were no government with a monopoly on the use of force, do you honestly think you'd be able to walk into a doctor's office and demand their services on your terms? And when they laugh you out of the front door, do you plan to say, "But it's my right"? Who owns you? You or your government? Who is responsible for you? You or your goverment? |
|
|
| St_Andrew |
| quote: | Originally posted by Yoepus
well Europeans should be happy about this.
Any tax is good tax (except when placed on condoms..)!:disbelief |
man, you learned something today, didnt you :p
i for one actually think this migh be a good decision, since it would stimulate investments, which will probably help the US economy in the long run. |
|
|
| BadBadNeil |
| I hope this doesn't include my self employment health care deductions. |
|
|
|
|
