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It's time for tax reform

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This article first appeared in the Washington Post's Sunday business section.

Congress is ready for a nap. The financial crisis was a year-long emergency. Health-care reform has been a seemingly endless grind. No one quite knows what to do about jobs. Cap-and-trade seems doomed in the Senate, which means all the work the House did to pass its bill was for nothing. The election looms. There's not a lot of enthusiasm for taking on another big, complicated issue that will be distorted by interest groups and screamed about on cable networks and ripped apart on op-ed pages.

But there is some. A lot of it is coming out of Sen. Ron Wyden's office. Wyden (D-Ore.) -- last seen pushing a bipartisan, comprehensive health-care reform bill that would have passed in a landslide if pundits and experts had votes in the Senate -- is Congress's Energizer Bunny when it comes to proposing ambitious policy overhauls. His next target is tax reform.

As well it should be. There aren't many free lunches left in Washington. But from a policy, if not a political, standpoint, tax reform is one of them. Economists of all stripes agree that the tax code has become so complex and inefficient that we're raising less money than we could with a simpler tax code that offered lower rates. Think about that: We could cut taxes for most Americans while keeping revenue steady.

The problem, of course, is that not everyone agrees those breaks and loopholes and deductions and exemptions and deferrals and exclusions are bad. Save for a couple of big-ticket tax items -- the mortgage interest deduction, for example -- the politics for most of the sections you'd want to clean from the tax code pit a tiny group of beneficiaries who are committed to preserving their sweetheart deals against the vast majority of Americans who have no idea that the tax code contains that deal in the first place. "Every interest group around will be lined up saying if you take our tax break, Western civilization will end," Wyden predicts.

Luckily, he isn't alone on this one. Sen. Judd Gregg, the ranking Republican on the Budget Committee, has joined him. The bill they have crafted shows the ways that tax policy is, and isn't, an ideologically polarized issue. Republicans and Democrats get into a lot of fights about how high taxes should be and what they should fund. But Wyden and Gregg have largely sidestepped those fights by holding revenue more or less steady and are simply attempting to clean up the code. "We think there's very fertile ground for a bipartisan initiative, which takes the tax laws and makes them dramatically simpler and maintains their progressive nature," Gregg says.

The Wyden-Gregg plan takes the six income brackets currently on the books and compresses them into three (15 percent, 25 percent and 35 percent). It gets rid of the alternative minimum tax. It triples the standard deduction available to all taxpayers, which means that people don't need to spend as much time trying to itemize deductions and figuring out ways to game the system. It kills off the existing six corporate rates and eight corporate brackets, and replaces them with a flat corporate tax of 24 percent. And it reduces the task to a one-page form.

Read the rest here.

Photo credit: By Alex Brandon — Associated Press

By Ezra Klein  |  March 14, 2010; 12:45 PM ET
 
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Comments

I don't really see the advantage in reducing the number of income brackets - it's just a table look-up - but the glaring problem with this proposal is the top rate of %35. Given the country's vast inequality problem, that's obviously insufficient. I'd start the negotiation at 95%.

There's no problem with a top 35% rate, or a top 15% rate, or zero for that matter, once everyone has adequate health care, education is free for all and no-one goes hungry or unsheltered for lack of money. But not before then.

Posted by: eb53 | March 14, 2010 1:09 PM | Report abuse

I'd like a political futures market to start from the moment of some "bipartisan" proposal in Congress through to its failure to get passed before a Congressional session ends, or when its Republican co-sponsor bails on his own legislation.

Here we have Judd Gregg on tax reform apparently taking up the role of Robert Bennett on health care reform, as pretending to be willing to vote for and co-sponsor one of Ron Wyden's common sense solutions to a nagging problem. I'm willing to make an all-in, even leveraged, bet that if this actually gets taken up Judd Gregg is nowhere to be found when the lights come on.

Betting against the somewhat naive idealism of liberals and conservatives, my sense is I'd be able to retire within four years!

Posted by: zeppelin003 | March 14, 2010 1:30 PM | Report abuse

It's ok if we start by compressing income brackets, but then we need five more:

$1.0M/yr
$1.5M/yr
$2.5M/yr
$4.0M/yr
$10.0M/yr

Not doing this is draining more money from the treasury than loopholes and inefficiencies.

Posted by: neversaylie | March 14, 2010 2:24 PM | Report abuse

Come on, Ezra. You know that as soon as Obama embraces anything like this, Gregg's support will go, Republicans will tar this as the end of freedom in America, centrist Democrats will force all kinds of concessions, and then DC pundits will slam Obama for "irresponsibly" not pushing the original deal.

Posted by: Isa8686 | March 14, 2010 2:25 PM | Report abuse

"The irony is that writing policy this way actually results in more spending because the funding grows automatically. A program needs Congress to vote to give it more funding. A tax deduction simply requires more people who qualify to take advantage of it, or more accountants who figure out how to make it look like their clients qualify for it."

So, by extension, indexing taxes to inflation turns out to have both cut taxes /and/ raised spending. That's Reaganism for you.

Posted by: adamiani | March 14, 2010 3:31 PM | Report abuse

Just for the record, a lot of Republicans were insincere on Wyden-Bennett. But Bennett wasn't one of them. He would've voted for that bill, and would do so if it came up today.

Posted by: Ezra Klein | March 14, 2010 5:09 PM | Report abuse

You write "Republicans and Democrats get into a lot of fights about how high taxes should be ... clean up the code."

This would be a reasonable description of the state of play except for one huge gigantic immense issue which you want your readers to ignore -- progressivity. Given revenues Democrats want the tax code to be more progressive and Republicans want it to be regressive. This is a huge issue. You segue to presenting income tax brackets.

You are pushing the Republican line that income tax brackets are about the level of taxes, that all go up or all go down but it is impossible to increase the tax rate on high incomes and lower the tax rate on lower incomes. You don't even pretend you have an argument. You just jump from a scaler choice (high or low) to three numbers -- a vector.

You are participating in an absurd blatant obvious trick that has been the core and basis of Republican political strategy since 1980. If you were a Republican, I would, at least, give you points for audacity, but you are a Democrat and, in this post, writing as a fool (usually you are brilliant).

Wyden is an major reform energiser bunny and a total maniac about bipartisanship. Even Obama has noticed that it is a bad idea to try to deal with Republicans. How many of the Wyden plan's Republican cosponsors voted for the much more moderate Senate health care reform bill? How many motivated their no votes by saying the bill wasn't radical enough ?

I think it is safe to guess that Gregg would vote against any bill based on his joint work with Wyden. That's what Republicans do.

In exchange for Gregg's time, Wyden is willing to surrender on a vitally important policy issue on which the public overwhelmingly agrees with Democrats and opposed Republicans.

Posted by: rjw88 | March 14, 2010 6:23 PM | Report abuse

I support simplifying the tax code but I think this analysis is forgetting the $10 trillion debt we have as a country - this needs to get paid back at some point (or paid down at the very least). So this reform doesn't go far enough if it only collects the same amount of revenue as our current tax code.

Why not make the top bracket 45% instead of 35%. That additional 10% is used solely for debt reduction. If and when the debt is lowered to reasonable levels through budget surpluses, that rate can be dropped automatically (and conversely reinstated when the gov't runs a deficit). This gives politicians an incentive to balance the budget because a deficit will result in a de facto tax increase (Repubs will never pass deficit-funded bills like they did during the last decade since it will hit the wealthiest Americans - their core constituency).

The wealthiest Americans have seen their share of taxes drop continuously since 1980. This has done very little for job or wage growth but has exploded our deficits. At least this paradigm would have a means to pay those deficits down.

Posted by: kmani1 | March 14, 2010 6:41 PM | Report abuse

Luckily, he isn't alone on this one. Sen. Judd Gregg, the ranking Republican on the Budget Committee, has joined him.

I think it's safe to predict this will end as soon as Gregg comes to believe some Democrat anywhere in the country might benefit from the adoption of the proposal.

Posted by: zimbar | March 14, 2010 8:44 PM | Report abuse

EK

Does the Wyden proposal give preferences to dividends and capital gains like current Federal income tax law does? This is a big one for the Grand Old Rich Man's Party. We certainly don't want to start any "class warfare" by taxing those who receive income from capital at the same rate as those who are paid for their labor.

Posted by: stsimons | March 14, 2010 8:44 PM | Report abuse

How does Wyden's proposal treat dividends and capital gains? The Grand Old Rich Man's Party is very sensitive to "class warfare" (otherwise know as "tax equity").

Posted by: stsimons | March 14, 2010 8:58 PM | Report abuse

Wyden's office has a web-page for his measure (http://wyden.senate.gov/issues/Legislation/wyden-gregg/). It does keep the preferential dividends & long-term capital gains. (It even cuts the "long-term" cutoff to 6 months for the first $500k of CG income).

My peeve is the removal of the foreign earned income exclusion (which was capped at $87k anyway). He wants to tax both US citizens that are residing in other countries, as well as foreign citizens residing in the US. VERY few countries do anything like this, even the "super-high tax land" known as Europe.

Posted by: nomadwolf | March 14, 2010 9:15 PM | Report abuse

@eb53,

A 95% income tax rate doesn't raise any money. Avoiding/evading taxes on that income generates a 1800% return. If the tax cannot be avoided, the income won't be earned if it requires any effort whatsoever, and our nation will be poorer as a result.

@kmani1,

Actually, the share of taxes paid by the wealthiest Americans has soared from 1980 to the present.

The share of federal income taxes paid by the top 1% has soared from 19.05% to 40.42%. This does exclude FICA, but the wealthy typically also pay some FICA, and in any case most of FICA pays for a progressively structured social pension scheme that those who pay into it will enjoy in the future.

http://www.taxfoundation.org/news/show/250.html

@stsimons

The taxation of capital is heavier than it seems. Taxes on dividends and capital gains appear low, but those are levied after corporate tax and inflation tax has been paid.

Someone who bought a stock for $80 in 1996 and sold for $100 in 2005 paid $3.00 in taxes on the $20 gain, but that $20 gain was basically just inflation. The investor is left with less purchasing power in 2005 than he had in 1996. Likewise with dividends - the $500 dividend check received by a wealthy investor was paid from corporate earnings which probably had an average tax of ~25%.

Posted by: justin84 | March 14, 2010 10:25 PM | Report abuse

Yeah right.

Just when the top bracket is set to go back up to 39.6% in 2011, we suddenly decide to simplify the tax code.

This is nothing more than a ploy by rich elites trying to find a way to keep the Bush tax cuts from expiring.

If I read this correctly, this plan will also raise the lowest rates from 10% (I believe) to 15%. A tax increase for the lowest earners.

These people must really think Americans are stupid, and if Americans accept this change, they would be right.

BTW, this plan would also cause 1 million accountants to become unemployed, and it would cause I don't know how many university accountant programs to crash and burn. Sounds like a wise thing to do when we are trying to create jobs, not kill them.

Posted by: Lomillialor | March 14, 2010 10:38 PM | Report abuse

You should be embarrassed writing such a hack column.

What a bunch of malarkey.

No, the problem isn't the number of brackets. Computers can calculate brackets quite nicely, thank you very much. No, it isn't the complexity of the tax code. The problem is that the top brackets are WAY too low to encourage economic growth. Remember, the country did quite well in the 50s and 60s with a 90% marginal tax rate on high incomes. That was money pumped back into the economy. Now that money is just sitting idle or waiting for the next big scam.

If you haven't noticed, the problem is not a lack of investment money. Have you noticed the low rates on CDs or the low return on your 401K? There's so much money just flopping around looking for a return that California sold $2.5B out of a $2B bond issue. That's California! California is effectively bankrupt. There's no point in investing because incomes haven't been rising since tax reform took effect in the 80s. That's all there is to it.

I used to read your blog, but if this is typical of your Washington Post output then it's sad. You used to be better than this.

Posted by: earther | March 14, 2010 10:41 PM | Report abuse

Ezra is making the mistake a lot of good-hearted people tend to make, which is to take a person at his word. Sooner or later, Democrats will learn that dealing with the Republicans is just like dealing with the Soviets during the Cold War. Stop listening at that garbage they're rattling off and watch their actions.

There is nothing, nothing at all that gives any indication that Bennett, Gregg, or any other right-wing conservative in the Senate oughta be trusted to support legislation when they say they will.

You cant even get them to support common sense regulations on banks in the Dodd bill, and I'm supposed to believe the Republicans plan to get serious about tax reform with a Democrat in the White House. No way. Its a damn lie.

Be more cynical. These people are liars.

Posted by: zeppelin003 | March 14, 2010 10:53 PM | Report abuse

Whenever someone heralds "fewer brackets" as a "simplification," I know I'm being conned. Looking up the taxes you owe is as simple as looking it up in a table for most of us. What makes taxes complicated is calculating your "taxable income", because that's what you have to produce receipts for and calculate.

However, raising the standard deduction to the point where itemizing is a rare thing is the first step to automatic filing, and _that_ is a step in the right direction.

Lomillialor, are you serious about your obsession with keeping accountants employed? I originally thought your mention of that was sarcasm, but now I'm not so sure.

That said, do Wyden and Gregg not realize how much ending the foreign income exclusion screws people over?

Posted by: tyromania | March 14, 2010 11:35 PM | Report abuse

I'm suspicious of any economic theory that suggest high tax rates encourage economic activity, and that high tax rates are necessary to pump money into the economy. The rich don't bury their money in the ground. They may not use it the way you would prefer, but then the government often doesn't either (e.g. Vietnam). In any case, hardly any one was really affected by the top rates in those days - the % of GDP collected by the individual income tax didn't change much from the 1950s/1960s to the 1990s/2000s.

By the way, the Soviet Economy saw decent growth in the 1950s and 1960s as well, but that hardly suggests we should follow that model. Growth in the 1950s and 1960s in both the U.S. and U.S.S.R. was good because the inputs - labor, capital, human capital, knowledge/tech - all saw decent growth - the U.S. economy grew in spite of high tax rates, not because of them.

By the way, we shouldn't support a complex tax system as make work for accountants. I'd rather have the million accountants use their knowledge of business/finance to do other useful work, start businesses, etc.

Posted by: justin84 | March 15, 2010 12:10 AM | Report abuse

Other comments seem to think that relying exclusively on the wealthy is a sure thing, but it can back-fire (from NY comptroller's office):

"The reduction in Wall Street bonuses will cost nearly $1 billion in personal income tax revenues for New York State and another $275 million for New York City. Before the start of the financial crisis, business and personal income tax collections from Wall Street activities accounted for up to 20 percent of State tax revenues and 12 percent of City tax revenues."

Posted by: chrisgaun | March 15, 2010 12:35 AM | Report abuse

I doubt there will be bipartisan agreement when all is said and done. There's going to be a lot of proclamations and naming of post offices between now and November and not much else.

Posted by: bmull | March 15, 2010 4:14 AM | Report abuse

Give Congress until November to pass the FairTax, which is the most popular and the easiest to administer. If they say 'No' then it's time for a federal tax revolt. Everybody pay your federal income taxes to your state, county or city government. Keep you local economy up and running while the idiots in Washington figure out what they did to tick us off. No rush, Congress, take your time!

It would also help to demand that they bring the troops home from Iraq and Afghanistan. There are no weapons of mass destruction in Iraq and Bush let Osama bin Laden get away a long time ago. Hang it up and bring 'em home. They should also close all US military bases overseas. They're Cold War relics that cost three times as much as our bases here at home. Close 'em!
And since we're still in a recession, why not impose a ten-year moratorium on immigration to the US? Our population went from 250 million in 1990 to 300 million in 2005, an increase of 50 million in just 15 years. The US has been the promised land of choice for too many for too long.

It's time for the rest of the world to pick itself up. They send their kids over here for college, so they have all the brains they need to solve their own problems. I live near a large university with a few thousand foreign exchange students, whom I know personally. They are amazed at how millions of Americans just sit back and let their own government and the corporate swine steal their federal tax dollars and squander it on bogus wars, bailouts for the rich and there's hardly any money left over for health care, repair of our country's infrastructure and putting people back to work. Many of them agree that the US has done more than enough for a thankless world, especially after they see the problems we have here. I don't know about you, but I'd take that as a strong hint that it's time for a second revolution. Shall we?

Posted by: dudefromthebronx | March 15, 2010 5:08 AM | Report abuse

You mean someone is proposing that profitable corporations and wealthy individuals should pay taxes just like the average citizen does? Wait till Glenn Beck hears about this. He'll say that the wealthy already pay the lions' share of taxes, without saying in the same breath that the wealthy have the lions' share of income. With people like him distorting the truth, and people like his listeners dumb enough to believe him, what's left of democracy at the Federal level doesn't stand much of a chance. But I commend people like Wyden and Gregg for still trying. Heaven help us when there's no one like them left in the Congress. That's probably when we'll have a President Palin, too.

Posted by: stillaliberal | March 15, 2010 5:39 AM | Report abuse

"Obamatax" is just a socialist plot. Anybody who says different is a big liar, liar, pants on fire. Any report from a nonpartisan rating agency that seems to suggest that tax reform would be a good thing for the economy is prima facie unbelievable.

Oh, and neener neener neener.

Whew. Glad I got that off my chest. Next suggestion?

Posted by: TomServo | March 15, 2010 8:44 AM | Report abuse

I'm sorry, but let's back up a moment. Why must I pay income tax at all? The money goes to build infrastructure I neither want, nor need. It also goes to subsidize industry to make stuff I neither want, nor need. A very small chunk goes toward funding clean-up of catastrophic environmental damage that industry does while raking in huge profits. A very large chunk goes to promote and support wars to obtain wealth that goes right into corporate pockets. If the government did the one and only thing a government worth spit should do, see to the health and welfare of ALL its people, by providing shelter, clean air and water, and healthy food, then maybe one could argue that an income tax is beneficial. This government does not provide those things in equal measure to all its people. Income taxes are used to subsidize the rich. The wealthy are getting wealthier at the expense of all the less-greedy. Capitalism is a tool by which the greedy get wealthier by ripping off anyone they can. Socialism is a word that our government has been propagandizing as an evil thing. Take a close look at what capitalism has done to this place that we live in, and you tell me where evil lies.

Posted by: halifar59 | March 15, 2010 9:20 AM | Report abuse

Ezra, you're not delusional enough to think a REAL tax reform bill will be passed. There are a TON of loopholes, credits, expemptions, etc...and each one has its own champion in Congress. Taken from the 1000 ft view, it certainly looks passable, but get into the details, and this thing will blow up worse than health care.

Posted by: truth5 | March 15, 2010 11:39 AM | Report abuse

@halifar59: You have to pay income tax because you'll get in trouble if you don't. Why does anybody pay income tax?

I'd be entirely cool if I could just pick what I wanted to pay taxes for. I'd be all national parks and the space program and the Interstate System. Although, all that would happen if we could "pick and choose" what our income tax paid for, the things nobody liked would keep getting shoehorned into the popular programs, somehow. Thus, NASA would be paying for the development of newer and more devastating daisy-cutters. The Interstate fund would be paying for tribute statues to senators who bring home the pork, and so on.

As far as where "evil" lies, I expect it lies in systems administrated, created, or participated in by humans. Thus, capitalism manifests one set of evils that are inherent in human nature while utopian socialism manifests other evils. Because they both involve humans, and if men were inherently good and just in all things, all the time, the libertarian vision of the free market would be ideal in all ways, because everybody would always do the best thing for the best interest of everybody. Unfortunately, people don't work like that, which is why socialist systems are rife with corruption and abuse of power. Just like capitalist systems.

Posted by: Kevin_Willis | March 15, 2010 11:47 AM | Report abuse

Add 3 tax brackets:
50% on income over $1M
75% on income over $10
90% on income over $100M

Posted by: chucky-el | March 15, 2010 2:17 PM | Report abuse

Capitalism is one thing. Equality is another. Out of the Age of Enlightenment and the Industrial Revolution came some great principles. However, America has become king of the "rich get richer and the poor get poorer." Now that corporations are individuals and can now poor unlimited amounts of money into the campaigns of politicians, the poor, hardworking American has no chance to see any tendency toward an equitable society.

Obama identified in very clear terms what the salary of a rich person looked like during the campaign. Obviously, this salary should be adjusted annually due to inflation.

Individuals making under $100K should pay at the 15% rate.

Individuals making between $100K and $250K should pay at the 25% rate.

Individuals making between $250K and $1M should pay at the 35% rate.

All individuals making over $1M should pay at the 70% rate.

Without exception, those who break into higher brackets should pay a penalty for doing so as one can see by the rate structure above.

Also, no one should be able to stop paying the payroll tax, regardless of income level. As of this year, the Fed will pay out more in Social Security than it will take in. Yes, it has arrived. The baby is on the doorstep.

A personal stanardized deduction should be allowed which is the amount required for a person to be just above the poverty level. This should be adjusted annually to reflect inflation. It should be age-based. No more personal allowances. No more itemization.

My form is very easy. The income amount is from any source (salary, interest on taxable investments and so forth)

I mention the above because I have not seen a flat-tax proposal that will benefit me.

Posted by: EarlC | March 15, 2010 3:41 PM | Report abuse

Let's see - today's headline almost everywhere else is that the IRS sent two agents to a car wash to collect a 4 cent tax debt. Oh, and the car wash owner had never been told of the debt, either. So, a government agency can burn through god only knows how many man hours of time and money harass a small business for a "secret" debt? Tax reform would consist of wiping the IRS, firing ll of it's employees, imposing a simple flat tax on everyone, and doing away with write-offs, loopholes, and a Byzantine tax code.

Posted by: mibrooks27 | March 15, 2010 4:05 PM | Report abuse

What is up with all of these 70%+ marginal tax rates? If you tax $100 at 35%, you'll probably get $35. If you tax $100 at 70% - keeping in mind other entities want to place further taxes on this same income - you tend to get $0. People work less, people invest less, and people shift work effort into tax avoidance/evasion.

I'm not going to repeat the Republican talking point that a top rate of 39% is economically disastrous. Since the deadweight loss of a tax is proportional to the square of the rate, I prefer lower marginal rates but given the deficit territory we're in, I'd accept a modest increase in the top rate.

Posted by: justin84 | March 15, 2010 4:07 PM | Report abuse

Reduce taxes to a one-page form? Are you kidding? Think about all those companies in the tax prep business that would be out of work. More special interests that Congress has to cater to. Never happen.

Posted by: silencedogoodreturns | March 15, 2010 4:36 PM | Report abuse

We certainly don't want to start any "class warfare" by taxing those who receive income from capital at the same rate as those who are paid for their labor.

Posted by: stsimons | March 14, 2010 8:44 PM
-----
Oh, please. Grow up. Where do you think the money came from that was invested to produce captital gains? How in the world are capital gains "unearned" income? If I take the dollarss paid me by my labor and invest it in America, how is a return on that "unearned?" I am risking my earned income. THis whole socialist/redistributionist argument is sickening...and vERY ignorant.

Posted by: silencedogoodreturns | March 15, 2010 4:41 PM | Report abuse

A huge increase in the standard deduction could increase the progressivity with the fewer tax brackets; however, it is hard to see offhand how a 35% top rate will generate enough revenue. The numbers could be interesting. It is correct though that the cost of administering the current tax code for the Fed and the public is very high.
I have a favorable view of the "fair tax" if the annual "rebate" check is enough for sustenance (including basic health care); what I don't like though is the sleigh-of-hand in how he calculates the sales tax. He states a 20 cents on the dollar tax is NOT a 20% tax, since 20 cents is only 17% of $1.20. This is not how most people calculate tax, so why does the author do this except to mislead.

Posted by: arpy58 | March 15, 2010 4:56 PM | Report abuse

Give Congress until November to pass the FairTax, which is the most popular and the easiest to administer. If they say 'No' then it's time for a federal tax revolt. Everybody pay your federal income taxes to your state, county or city government. Keep you local economy up and running while the idiots in Washington figure out what they did to tick us off. No rush, Congress, take your time!

Posted by: dudefromthebronx
------
Here's the problem with your FairTax theory, it is based on the sales tax rate combining the Federal to local tax rates to one rate which could be in the range of 30-35 or 50% depending on localities.
For example in LA the sales tax is
State: 6%
Parish:4%
Local: 3%
Federal: 20-24%(variation of rates I've heard)
Total tax rate is 33%.

In this case, if you decide to buy a house for 100,000 you would have to finance it for 133,000 just cover the 33,000 tax.

Many tax experts have stated that the sales tax rate high enough would invite massive tax cheating or avoidance or clamoring for exemptions just to avoid paying for it. Furthermore the author misleads on certain point to promote one thing: abolishing the IRS with this theory. The problem is that the IRS will still be around to enforce the tax codes contradiction of the stated claim. I even had one dispute me only to disappear when I put evidence to contradicting his argument.

Posted by: beeker25 | March 15, 2010 5:38 PM | Report abuse

What we need is simple.

Shareowners of public firms need to be able to vote on executive compensation packages in a binding vote, like other capitalist nations can do right now. Including the CEO.

All corporate exemptions in the tax code need to be sunset and voted on by the American public every four years (or after they have been in force for one year) by a line item vote in the Presidential Election - if they fail to get a majority of Yes votes, they are removed from the tax code.

And, even though it affects a number of my relatives (who are good people), the treatment of private hedge fund profits and payments to executives must be as INCOME and not as CAPITAL GAINS.

Posted by: WillSeattle | March 15, 2010 7:42 PM | Report abuse

In any talk of tax reform, mention must be made of the 'fair tax'. The idea has been around a long time. Perhaps we're getting to the point of considering this approach, although I doubt it. Maybe it will take a gradual transitioning to the fair tax initiative. One of the best articles that discusses both the pro/con side of this can be found here: http://www.karlonia.com/2007/04/16/fair-tax-pros-and-cons/ This was written in 2007, but has some updated material. Here's hoping...

Posted by: ireland51 | March 15, 2010 11:44 PM | Report abuse

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