E-Mail Message to Senators Grassley and Baucus on the 2003 Tax Bill
As you begin to debate the economic stimulus plan, please allow me to add the thoughts of the Center.
This bill is a unique opportunity to lay the ground work for long term structural reform of the tax code. We address such long term reform on our web page. For more information, go to (updated link to later comments).
In summary, the long term reform we seek is the movement to an employer based tax system, much like a value added tax, with the inclusion of tax credits for employees for the support of dependents, health care, education and home mortgage interest. We believe that such a system will both free most individuals from the burdens of taxation while providing a sure way to support families.
Supporting families is important. The only way to reverse the demographic conditions which threaten Social Security is to remove the economic burden of having additional children. This is also the BEST WAY TO PREVENT ABORTION. We will soon be working with the major Right to Life organizations to advance this solution to the tragedy of abortion. As you are a valued member of the pro-life community, we expect your support in this matter and applaud the provisions in the bill which accelerate the Earned Income Tax Credit. We believe that this credit must be applied to all families, regardless of income, and be increased to cover the full cost of child rearing. THIS IS THE ONLY TRUE PRO-LIFE POSITION. Shifting to an employer based tax is the most politically feasible way to increase the Earned Income Credit to the level it needs to be, as to be effective in supporting the families the credit must be integrated into the payment of wages.
Some would argue that the provisions we seek would put an undue burden on employers. We disagree, as in reality employers are already the chief payers and collectors of the personal income tax, through the practice of payroll withholding. Removing the deductability of wages for employers and the obligation that all but the highest income earners be allowed to opt out of personal income taxation is the most feasible way to reform income taxaton at the most basic level. This method is also the best way to integrate certain FICA taxes (health insurance and disability insurance) into the general budget so as to more easily create personal retirement accounts (which we have written to you about under separate cover.
To repeat, the legislative before you is a perfect vehicle to begin the process of long term tax reform. We suggest that the target tax rate for the long term Business Income Tax we suggest for the long term is equivalent to those personal income taxes collected at the 25% rate and below, as well as the first 25% of income collected under the higher tax rates. This rate should also be the rate for Capital Gains Taxes and the Alternative Minimum Tax Rate. Setting these rates lower, as has been suggested, will actually inhibit the adoption of basic structural reform to the tax code, as would ending the Marriage Penalty.
Ending the double taxation on dividends is a touchy subject. We believe that the method the administration proposes is too cumbersome. It would be better to incorporate this change into basic structural reform of the tax code, where income from both dividends and inheritance would be excluded, as well as all other personal income, below the $100,000 per individual tax payer level. Only individuals, not families or estates, would pay these taxes under our basic structural reform proposal. We propose that personal income taxes at the higher levels not be considered double taxation, but as a surtax to the Business Income Tax we propose, with rates varying from 5% to 15%. Such a surtax is best levied on the individual level, allowing higher income earners the ability to avoid full financial disclosure to the employers.
In the interim, some form of progressivity is essential to the system. Levying higher rates on higher earners provides positive benefits to the economy, counteracting the flow of net interest payments to these same individuals. Were the national debt, both public and private, to disappear such taxes would no longer be necessary. In today's fiscal world, they are essential. For these reasons, we advise you to forgo any acceleration of the rate cuts to higher income individuals. In the best of all possible worlds, these would be reversed just enough to bring the budget into balance and to resume retiring the national debt, which is a tax on our children and our yet unborn grandchildren - although we do not expect so much from the current administration.
For more information on our views of the current legislation, please see these additional comments on our site.
The site also includes our proposals on Social Security and Health Care Reform, which I believe you will find useful.
Thank you for this opportunity to express our views.
Michael Bindner
Executive Director
This bill is a unique opportunity to lay the ground work for long term structural reform of the tax code. We address such long term reform on our web page. For more information, go to (updated link to later comments).
In summary, the long term reform we seek is the movement to an employer based tax system, much like a value added tax, with the inclusion of tax credits for employees for the support of dependents, health care, education and home mortgage interest. We believe that such a system will both free most individuals from the burdens of taxation while providing a sure way to support families.
Supporting families is important. The only way to reverse the demographic conditions which threaten Social Security is to remove the economic burden of having additional children. This is also the BEST WAY TO PREVENT ABORTION. We will soon be working with the major Right to Life organizations to advance this solution to the tragedy of abortion. As you are a valued member of the pro-life community, we expect your support in this matter and applaud the provisions in the bill which accelerate the Earned Income Tax Credit. We believe that this credit must be applied to all families, regardless of income, and be increased to cover the full cost of child rearing. THIS IS THE ONLY TRUE PRO-LIFE POSITION. Shifting to an employer based tax is the most politically feasible way to increase the Earned Income Credit to the level it needs to be, as to be effective in supporting the families the credit must be integrated into the payment of wages.
Some would argue that the provisions we seek would put an undue burden on employers. We disagree, as in reality employers are already the chief payers and collectors of the personal income tax, through the practice of payroll withholding. Removing the deductability of wages for employers and the obligation that all but the highest income earners be allowed to opt out of personal income taxation is the most feasible way to reform income taxaton at the most basic level. This method is also the best way to integrate certain FICA taxes (health insurance and disability insurance) into the general budget so as to more easily create personal retirement accounts (which we have written to you about under separate cover.
To repeat, the legislative before you is a perfect vehicle to begin the process of long term tax reform. We suggest that the target tax rate for the long term Business Income Tax we suggest for the long term is equivalent to those personal income taxes collected at the 25% rate and below, as well as the first 25% of income collected under the higher tax rates. This rate should also be the rate for Capital Gains Taxes and the Alternative Minimum Tax Rate. Setting these rates lower, as has been suggested, will actually inhibit the adoption of basic structural reform to the tax code, as would ending the Marriage Penalty.
Ending the double taxation on dividends is a touchy subject. We believe that the method the administration proposes is too cumbersome. It would be better to incorporate this change into basic structural reform of the tax code, where income from both dividends and inheritance would be excluded, as well as all other personal income, below the $100,000 per individual tax payer level. Only individuals, not families or estates, would pay these taxes under our basic structural reform proposal. We propose that personal income taxes at the higher levels not be considered double taxation, but as a surtax to the Business Income Tax we propose, with rates varying from 5% to 15%. Such a surtax is best levied on the individual level, allowing higher income earners the ability to avoid full financial disclosure to the employers.
In the interim, some form of progressivity is essential to the system. Levying higher rates on higher earners provides positive benefits to the economy, counteracting the flow of net interest payments to these same individuals. Were the national debt, both public and private, to disappear such taxes would no longer be necessary. In today's fiscal world, they are essential. For these reasons, we advise you to forgo any acceleration of the rate cuts to higher income individuals. In the best of all possible worlds, these would be reversed just enough to bring the budget into balance and to resume retiring the national debt, which is a tax on our children and our yet unborn grandchildren - although we do not expect so much from the current administration.
For more information on our views of the current legislation, please see these additional comments on our site.
The site also includes our proposals on Social Security and Health Care Reform, which I believe you will find useful.
Thank you for this opportunity to express our views.
Michael Bindner
Executive Director
posted by Michael Bindner at 4:21 PM
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