August 12, 2004
THE REVOLUTION WILL NOT BE COMPREHENDED:
Bush Remark Touches Off New Debate on Income Tax (EDMUND L. ANDREWS. 8/12/04, NY Times)
Mr. Bush's comments were followed Wednesday by a conference call with reporters, arranged by the Bush-Cheney campaign, in which the chairman of the tax-writing House Ways and Means Committee, Representative Bill Thomas, Republican of California, said that he favored looking at "well-thought-out alternate tax structures" and that the committee planned to do so."We have one of the more regressive tax structures in the world today that basically is a 19th-century concept," Mr. Thomas said, adding, "We should get that revenue from people in the least destructive way possible."
Senator John Kerry, the Democratic presidential nominee, responded to the president's remarks by immediately accusing him of contemplating a step that would add to tax burdens on the middle class.
"The last thing we need is a national sales tax that would impose a whole new tax on this country," Mr. Kerry said. "Were the Bush proposal to be adopted, many Americans would be paying more than 20 percent in national sales taxes on top of state and local sales taxes."
Nor was Mr. Kerry the only opponent. At least one Bush adviser said there was a schism over the idea within the president's camp.
A concept that has surfaced from time to time, a national sales tax, or value-added tax similar to those in most European countries, would be a radical departure in the tax code. Its opponents argue that it would punish the poor and the middle class, who typically spend a larger share of their income than the wealthy on consumption. Proponents argue that it would be simpler and fairer than the traditional income tax, because it would not provide the opportunities for loopholes and sophisticated tax-reduction schemes that tend to favor wealthy taxpayers.
At his appearance on Tuesday, Mr. Bush stopped well short of proposing anything specific. But White House officials were careful not to rule out the idea, noting that he had long been in favor of fundamental tax changes.
"The president has always believed in lower taxes and a simpler, fairer tax code," the White House press secretary, Scott McClellan, said Wednesday. But Mr. McClellan added, "There's nothing more to announce at this time."
At another point on Wednesday, when a second White House spokesman, Trent Duffy, was asked whether Mr. Bush was contemplating a dramatic new tax proposal at the convention, he replied, "Stay tuned."
R. Glenn Hubbard, a former chairman of Mr. Bush's Council of Economic Advisers and now an adviser to the Bush-Cheney campaign, has long been a vocal supporter of fundamental change that would tax consumption rather than income from savings and investment.
"I don't think he meant a national sales tax per se," Mr. Hubbard said Wednesday. "I think what he means is a tax reform that might disadvantage savings and investment less."
We're three and a half years into his presidency and folks still don't get how radical the President's plans are. Posted by Orrin Judd at August 12, 2004 12:32 PM
Let's hope Bush gets the next 4 years to continue the revolution.
Posted by: AWW at August 12, 2004 1:21 PMThe stock market is tanking, job growth has slowed to a crawl, oil prices are sucking all of the benefits of lower taxes right out of the economy, and we're talking about this!?! Talk about taking your eye off the ball...
4.5% GDP growth. the goal is to keep it that high by boosting savings.
Posted by: oj at August 12, 2004 1:56 PMFor the vast majority of people in this country, savings and investment are already tax-free. IRA's, 401K's, low capital gains tax rates, and the dividend tax cut have already virtually eliminated taxes in this area up to the limits of investment that all but the wealthiest 1-2% can afford.
Changing the tax code will thus not yield the boost that you seem to think it will, as all the incentives are already in place. Even worse, they are being overwhelmed by higher oil prices, which are not just raising prices at the pump but are also working their way through the wholesale and retail manufacturing and distribution systems. They've already crushed CEO confidence, leading to the hiatus in hiring, and soon they will begin to compress corporate profit margins, which will depress the market still further.
If something isn't done, quarterly 401K statements coming out at the end of September are going to be ugly (again).
The only point at which to break this downward cycle is in the oil market. If he wants to be re-elected, this is where Bush needs to intervene decisively, both rhetorically and practically, to create a different economic dynamic in the runup to the election.
Unfortunately, I don't see the Administration being flexible enough in its thinking to do this.
Posted by: HT at August 12, 2004 2:41 PMYes, the problem is that your social security taxes (15% ? of everyone's income) aren't invested in an account that you own and that your income is taxed rather than your consumption.
Oil prices go up and go down--big deal.
Posted by: oj at August 12, 2004 2:49 PMIt speaks volumes about President Bush that he is willing to bring up ideas like this, to be associated with ideas like this - all the while knowing that Kerry will lash back.
Of course, Kerry will do nothing more than wave his medals and try to scare his base. Any fresh idea is rejected by his brain just like a bacterium. And I think he left his courage in Cambodia.
Posted by: jim hamlen at August 12, 2004 3:53 PMjim:
While the media prattles on about the absence of big ideas...
Posted by: oj at August 12, 2004 3:58 PMThere are many reasons abolish ihe Federal Income Tax: it is a vicious system, deeply rooted in the vice of envy and operating in the vice of deception. It's a gigantic occasion of sin, almost forcing its victims to lie and cheat.
That said, given the state of fallen man, it isn't going anywhere soon, and we should not impale ourselves on the illusion that it may. There is a popular, almost mythic, belief in the progressivity of the system. Which is almost is impervious to reality as the belief in the Social Security trust fund.
I would like to see it go away, replaced with a system that reached all hidden wealth, not just wealth which could not be concealed. I would have the tax burden fall on under-the-table operators, including pimps, drug dealers and congressmen, as well as wage-earners, but this is not happening anytime soon. We have to do a lot of education on this issue before its presentation will do anything else but cement the canard that conservatism is no more that the voice of the rich.
Posted by: Lou Gots at August 12, 2004 8:17 PM