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 There
Should Be Taxes on the GOP Platform
Nancy Salvato
August 27, 2004 |
History has proven that decreasing taxes
works to improve the economy. In the 1920s, early 1960s, late l970s, and
early l980s Congress enacted tax-rate reductions which spurred, on average,
economic growth of 3 ˝ to 5 percent a year.
Reforming the tax code would also stimulate the economy. Filling out a
standard 1040 form takes over 13 hours and itemizing adds 5 ˝ more. Time is
money. Paying the accountants is money, too. The current tax code is a
product of politics, not reasoning. The tax code is more than 17,000 pages
with 700 forms.
One suggestion for reform is the flat tax which would tax all income at one
flat rate of 17 percent. There would include an exemption to protect
low-income workers. This would provide a significant restraint on government
growth. Also, compliance costs could drop 94 percent.
Another suggestion is a national sales tax that would use the money
collected to replace all of the revenue from:
• individual and corporate income tax
• transfer taxes (A tax on the transfer of assets by gift or by death),
• excise taxes (A tax on the manufacture, purchase, or sale of a good or
service)
A 15 percent flat-rate tax would be assessed on retail sales of goods and
services. There could be a rebate awarded to all households on their
purchases up to the poverty level. Low income households would then be
exempted from the tax and all taxpayers could purchase life necessities
tax-free.
Extra relief could be provided to lower income working families by
abolishing the payroll tax for Social Security and Medicare, in addition to
income tax, and raising the NST rate accordingly. Eliminating the payroll
tax would shift the tax burden onto more affluent taxpayers. The Social
Security payroll tax is regressive. It is imposed on the first dollar earned
and is capped--at $62,700 of income (in 1996). The Medicare portion of the
tax is imposed on all wages and is not subject to a cap. If the payroll tax
were also replaced with the NST, the new tax-inclusive rate would rise to 21
percent (in 1995) and the tax-exclusive, if the rebate is issued, rate to 27
percent (in 1995).
Several congressional caucuses are working on tax reforms which would help
pave the way for the eventual implementation of a flat tax or national sales
tax. The Universal IRA Caucus seeks to eliminate taxes on all savings. The
Zero Capital Gains Tax Caucus wants to eliminate taxes on investments. The
End the Death Tax Caucus wants to eliminate taxes that survivors pay on the
deceased. The Full Business Expensing Caucus wants businesses to deduct the
entire cost of depreciation at once. This would lessen their tax liability
and encourage investment projects and discourage capital formation which
results in lower labor productivity and higher prices for goods produced.
The AMT Abolition Caucus wants to abolish the Alternative Minimum Tax, which
penalizes individuals and corporations that have deductions deemed "too
high" compared to their income.
President Bush has made headway on tax reform with temporary tax cuts on
investments and on the Death Tax. He recently said that abolishing the U.S.
income tax system and replacing it with a national sales tax was an idea
worth considering. While pondering this idea, remember that a national sales
tax could force the underground economy, such as drug dealers, to pay their
"fair” share.
Implementing a flat tax or national sales tax should be an idea explored,
not just considered, by delegates at the Republican National Convention.
Overhauling the tax code needs to become part of President Bush’s second
term agenda.
Let’s not see the RNC make the mistake of focusing on Kerry and all of his
negative campaigning. Instead, the focus should be on the positive
accomplishments of President Bush and how to continue the progress he’s made
first term. Serious tax reform should be a major part of the platform.
Bush: Sales tax in, income tax out?
http://money.cnn.com/2004/08/11/news/economy/election_bush_tax.reut/
Does Paying Taxes Have to be So Complicated?
http://www.freedomworks.org/informed/issues_template.php?issue_id=938
Emancipating America from the Income Tax: How a National Sales Tax Would
Work
http://www.cato.org/pubs/pas/pa-272.html
Making the Flat Tax a Reality
http://www.gopusa.com/commentary/guest/2004/rdm_0217.shtml
Time to Act on the Lessons of History
http://www.freedomworks.org/informed/issues_template.php?issue_id=1922
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