November 25, 2013

TAX WHAT YOUN DON'T WANT, NOT WHAT YOU DO:

Tax Professor Pushes Plan to Tax Consumption (DAVID WESSEL, 11/25/13, WSJ)

A professor of tax law at Columbia University who did a stint in the George H. W. Bush Treasury, Mr. Graetz believes that someday Congress and a future president will realize that piece-by-piece changes to the individual and corporate income tax system won't work. At that point, he predicts, the U.S. will follow every other developed economy and adopt a tax on consumption [...]

He would impose a new national value-added tax and use the money, in part, to eliminate the income tax - and the filing of income tax returns - for families with incomes under $100,000. For others, there would be three marginal tax brackets (14%, 27% and, for income above $600,000,  31%.)  He'd also lower the corporate tax rate to 15%, cut the payroll tax and give cash to low-income families with children.  For more, see the full tax plan.

"It does not tear up the tax code and start over," Mr. Graetz says. "It simply returns the nation to its pre-World War II tax system, where most revenue came from taxing consumption -- then in an archaic way, through tariffs -- and the income tax was limited to its proper function of providing tax justice through progressivity for folks at the very top. My proposal is designed to promote more economic growth without shifting the tax burden away from the top to families with less income."

Number crunchers at the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution think tanks, say the current version of the Graetz plan would raise as much money as today's tax code without shifting the tax burden among income groups.

Posted by at November 25, 2013 4:31 PM
  

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