Tax Reform in America

cawacko

Well-known member
I was not aware Baucus and Camp had been working together on bi-partisan reform. Lord knows our tax code needs it. Would be great to see something workable come out of this.


Simpler, fairer, possible

An imperfect proposal could still improve America’s awful tax code: back it, Mr President



NO ONE denies that America’s tax code is a mess. It is unintelligible, which is why 90% of taxpayers use an accountant or commercial software to file their returns. It is a labyrinth of loopholes, which is lovely for tax lawyers but bad for America. Public outrage tends to focus on specific abuses. How is it, people ask, that multinationals such as Apple can legally avoid billions of dollars of tax? Why is it, conservatives fume, that the Internal Revenue Service just so happened to select anti-tax groups for intrusive scrutiny? But the real problem is much broader. A tangled code is unfair and inefficient. Loopholes for some mean higher tax rates for everyone else. The 6.1 billion hours Americans waste each year complying with tax rules could have been spent inventing new products. Exemptions promote unproductive activities, such as buying big houses, while high rates penalise work and drive companies abroad.

America sorely needs tax reform. Two legislators are trying to deliver it. Max Baucus, the Democrat who heads the Senate’s tax-writing committee, and Dave Camp, his Republican counterpart in the House of Representatives, have been taking testimony and floating ideas for almost three years. They have yet to release a full plan, but their principles look sound: lower tax rates for both corporations and individuals, paid for by limiting or scrapping tax breaks.

Ideally, no tax break should be spared, even the popular ones for charity, housing, health insurance and research and development. (All these things are desirable, but their privileged treatment imposes a cost, in the form of higher taxes, on other desirable things.) The political reality is that some of these tax breaks will survive, just as there is no hope for a carbon tax, one of the more sensible ways to raise money. Yet Mr Camp and Mr Baucus have found enough common ground to build a more efficient tax system. Where they differ is on the crucial question of whether tax reform should raise more revenue. Mr Camp, being a Republican, says no. Mr Baucus, like the rest of his party, including Barack Obama, says yes. On this, the Democrats should concede, for two reasons.

First, tax reform is so important that lawmakers should not let the perfect be the enemy of the good. A revenue-neutral tax simplification would raise the same sums to pay for Leviathan, while imposing a lighter burden on taxpayers. A simpler code would create fewer distortions and spur faster growth. Getting rid of all loopholes would allow individual income-tax rates to fall a whopping 44% and still raise the same revenues.

One thing at a time

Second, although the Democrats are right that higher taxes will eventually be needed to stabilise America’s debts, this is a separate issue. By using tax reform as a bargaining chip for higher revenues, Democrats probably doom it to fail.

Better to pass it into law quickly. That would still allow Mr Obama to pursue a separate grand bargain, with the Republicans tolerating higher taxes in return for the president accepting curbs on the growth of entitlement programmes such as Social Security and Medicare (pensions and health care for the elderly), as suggested in his own budget. For the moment, the chances of the Republicans swallowing that are slim. That is a shame for a party that used to believe in balancing the books. But it is not a reason to let the Baucus-Camp reform die. A simpler tax system with lower rates and fewer loopholes is good for America. Push it, Mr Obama.


http://www.economist.com/news/leade...s-awful-tax-code-back-it-mr-president-simpler
 
I was not aware Baucus and Camp had been working together on bi-partisan reform. Lord knows our tax code needs it. Would be great to see something workable come out of this.


Simpler, fairer, possible

An imperfect proposal could still improve America’s awful tax code: back it, Mr President



NO ONE denies that America’s tax code is a mess. It is unintelligible, which is why 90% of taxpayers use an accountant or commercial software to file their returns. It is a labyrinth of loopholes, which is lovely for tax lawyers but bad for America. Public outrage tends to focus on specific abuses. How is it, people ask, that multinationals such as Apple can legally avoid billions of dollars of tax? Why is it, conservatives fume, that the Internal Revenue Service just so happened to select anti-tax groups for intrusive scrutiny? But the real problem is much broader. A tangled code is unfair and inefficient. Loopholes for some mean higher tax rates for everyone else. The 6.1 billion hours Americans waste each year complying with tax rules could have been spent inventing new products. Exemptions promote unproductive activities, such as buying big houses, while high rates penalise work and drive companies abroad.

America sorely needs tax reform. Two legislators are trying to deliver it. Max Baucus, the Democrat who heads the Senate’s tax-writing committee, and Dave Camp, his Republican counterpart in the House of Representatives, have been taking testimony and floating ideas for almost three years. They have yet to release a full plan, but their principles look sound: lower tax rates for both corporations and individuals, paid for by limiting or scrapping tax breaks.

Ideally, no tax break should be spared, even the popular ones for charity, housing, health insurance and research and development. (All these things are desirable, but their privileged treatment imposes a cost, in the form of higher taxes, on other desirable things.) The political reality is that some of these tax breaks will survive, just as there is no hope for a carbon tax, one of the more sensible ways to raise money. Yet Mr Camp and Mr Baucus have found enough common ground to build a more efficient tax system. Where they differ is on the crucial question of whether tax reform should raise more revenue. Mr Camp, being a Republican, says no. Mr Baucus, like the rest of his party, including Barack Obama, says yes. On this, the Democrats should concede, for two reasons.

First, tax reform is so important that lawmakers should not let the perfect be the enemy of the good. A revenue-neutral tax simplification would raise the same sums to pay for Leviathan, while imposing a lighter burden on taxpayers. A simpler code would create fewer distortions and spur faster growth. Getting rid of all loopholes would allow individual income-tax rates to fall a whopping 44% and still raise the same revenues.

One thing at a time

Second, although the Democrats are right that higher taxes will eventually be needed to stabilise America’s debts, this is a separate issue. By using tax reform as a bargaining chip for higher revenues, Democrats probably doom it to fail.

Better to pass it into law quickly. That would still allow Mr Obama to pursue a separate grand bargain, with the Republicans tolerating higher taxes in return for the president accepting curbs on the growth of entitlement programmes such as Social Security and Medicare (pensions and health care for the elderly), as suggested in his own budget. For the moment, the chances of the Republicans swallowing that are slim. That is a shame for a party that used to believe in balancing the books. But it is not a reason to let the Baucus-Camp reform die. A simpler tax system with lower rates and fewer loopholes is good for America. Push it, Mr Obama.


http://www.economist.com/news/leade...s-awful-tax-code-back-it-mr-president-simpler
As long as the reform is progressive in nature, doesn't put the burdon of taxation on the working and middle classes or create a system of corporate welfare.....I'll be happy with a simpler system.

I have a feeling that what we'll get is a probusiness anti-working people legislation that let those with the most pay the least.
 
As long as the reform is progressive in nature, doesn't put the burdon of taxation on the working and middle classes or create a system of corporate welfare.....I'll be happy with a simpler system.

I have a feeling that what we'll get is a probusiness anti-working people legislation that let those with the most pay the least.

Do you think our current system is fair to working and middle class people?
 
Do you think our current system is fair to working and middle class people?
I think the Federal income tax is very fair to poor and working class people. It lopsidedly favors corporations and the top 1%. It's the middle, upper middle and lower upper classes who get hosed by our current system.
 
I don't expect anything coming out of this Congress to be any fairer.

kind of like the formula for the voting rights act - yeah, it was out of date, but how could we get a new, better formula with this congress?

similar with the tax code - no, it's not completely fair, but any change will probably be for the worse. Still, I'm happy to see what Baucus and Camp come up with.
 
prove that it can

You made the claim.

But sure. A flat tax rate without subsidies means U.S. based corporations cannot use loopholes to pay a lower tax rate. If the rate is 23% (and it should be), then a billion dollar company pays $230,000,000. How does your plan (which you haven't articulated or even suggested that you have) provide more revenue across the board?
 
so you have no confidence in your own plan and have never even considered the proof of why it would work?


You see when you have a truly workable solution you jump at the chance to outline its credentials
 
You can remove corporate loopholes without going to a flat tax across the board.

Flat tax is very regressive for people at the low end of the income scale. That's the problem with it.
 
so you have no confidence in your own plan and have never even considered the proof of why it would work?


You see when you have a truly workable solution you jump at the chance to outline its credentials

Have you ever heard of Julian the Apostate? I'll assume you have. His civil administration reform is perfect proof of my claim.
 
You can remove corporate loopholes without going to a flat tax across the board.

Flat tax is very regressive for people at the low end of the income scale. That's the problem with it.

And a 'progressive' tax rate is unfair to those at the higher ends.
 
And a 'progressive' tax rate is unfair to those at the higher ends.

Yep. In our country, we are comfortable with that. Because we realize if someone earns a million dollars, paying more taxes won't take food out of their children's mouths or cause them to be on the streets, homeless.
 
""The 6.1 billion hours Americans waste each year complying with tax rules"" (from the article)

I don't see how this is in any way productive for our country unless you are one of the tax attorney or accountants who personally benefits from all the confusion. I played golf yesterday with my buddy who is a tax attorney and i'm listening to what he's working on and i'm just shaking my head at how complicated the system is. My friend went to Harvard Law (actually had Elizabeth Warren as a professor) and he didn't fully understand everything in his two deals he was telling me about. It guys like him don't get it how are regular folks like us to suppose to understand it?
 
The highest brackets also make their higher incomes due to the infrastructure of this country
 
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