House Ways & Means Chairman Dave Camp has been working on revamping the income tax law for three years. Yesterday, he released the plan and the Republican Leadership Wizards pronounced it “Dead on Arrival”. It is, after all, an election year.
We’re not a big fan of this proposal overall, but at least it’s a place to start. It has some things we like, reducing the complexity of the code so that 95% of filers can file on a post card is a good thing. Two tax brackets is a good thing. It’s a place to start and it shows that yes, Virginia, Republicans do have ideas.
[T]he chairman’s plan includes just enough of the proposals President Barack Obama has been pushing to neutralize a good bit of the Democratic campaign rhetoric about the GOP being the party of the rich. That leaves the Republicans to ponder whether they really want to campaign on the notion that a tax rewrite should raise hundreds of billions in new revenue to meet long-term budget goals. (The richest 1 percent of workers would face a 10 percent surtax on their salaries. Another surtax would be levied on the nation’s six biggest banks. A wrinkle that permits investment managers to avoid most income taxes would be scrapped. Tax breaks for company jets would be curbed. More than $100 billion in corporate taxes would be dedicated to overdue public works projects.)
We would prefer to simplify the tax code even more, and we’d like to see every American who earns a dollar pay taxes. We have a simple proposal for tax reform that would reduce the tax code to maybe three pages and virtually eliminate the cost of compliance which runs in the trillions of dollars.
- Three brackets for personal income.
- You pay 8% on your first $40,000 of income;
- 15% on the next $150,000;
- 22% on everything over $190,000.
- No deductions for anything, no exemptions, no rebates.
- Business tax = ZERO.
- Any money spent outside the US on anything and any foreign dividends are taxed at 15%.
Our rationale is simple. First of all, every American needs to have “skin in the game” with respect to paying for the government. That automatically eliminates the income transfer mechanism that the IRS has become.
Next, no business tax – with the exception noted above – because businesses don’t pay taxes, their customers do. Businesses spend hundreds of billions on tax compliance and they also buy stuff simply because of the tax advantages. That is inherently inefficient from the long term prospective of managing the business. Money should be spent on those things that will reap the greatest return for the business, not simply to reduce the business’ tax burden.
No deductions. Goods and services should be purchased based on their necessity and utility. They should not be purchased because the government has decided to give you an incentive to do so. For instance the mortgage tax deduction. The deductions granted to real estate related expenses artificially props up the cost of housing. Eliminate the tax breaks and that’s a solid step to having more affordable housing.
Our plan is tax neutral.
Our plan would bring an absolute explosion of new business and good, well-paying jobs to the US. We would be a magnate for European companies and even companies in the Far East. We really believe our plan could give business the incentive to create up to 50 million new high paying jobs. It would be a huge boost to the middle class and would raise wages across the board because of the demand for workers.
Our plan would also take virtually all regulatory power from the IRS. They would be reduced to an accounting function and to a lesser extent than now, a bill collector.
All ObamaCare taxes would be gone.
Our plan would also cause progressives heads to explode because we’re taxing “the poor” and stopping business taxes – “wealthy corporate interests” – all together. MSNBC would completely melt down.
Now you understand why we’ll never be President.
Sign up to get alerts from Joe!