Tax Reform and Other Tragedies [link]
I went over to the American Spectator website today...lots of good stuff there.
The link above is to a column by Peter Hannaford about the President's Advisory Panel on Federal Tax Reform and its coming recommendations. The short version: no major changes. Trim away some more middle class deductions; limit the home mortgage deduction; do away with the Alternative Minimum Tax. Small stuff...nothing major. And we NEED something major.
You know what I want to see? A top federal tax rate of no more than 33% and permanent repeal of the Estate and Gift (AKA Death) Tax. When I was doing my graduate law studies, my professors stated a rule of thumb that tax revenues go DOWN if the top rate is above 33%. My profs loved it when the 1986 tax reform act lowered the top rate to 28%. With a 28% fed rate, and if states could limit themselves to 5%, tax rates would be low enough that it would not make sense for the wealthy to engage in aggressive tax avoidance planning.
I had a cousin who was earning 6 figures of income in Atlanta back in 1986 when President Reagan's major tax reform was proposed. My cousin asked me what he should do. I told him to pull all his money out of deferred comp plans (paying the 10% penalty) and take as much income as he could in the years when the rate was 28%. I told him he would never see rates that low again. Better to have the money free and clear of any restrictions than stuck under heavy restrictions imposed by a tax avoidance plan.
The estate and gift tax is a trap for the unwary. The mega wealthy have a variety of ways of avoiding the tax (just look at the Kennedys and Teresa Heinz)(or better yet, DON'T look at them...disgusting creatures). Congress generally designs tax laws so that the tax avoidance techniques currently used by members of congress and their friends continue to be permitted. Did you ever wonder why the Bill and Melinda Gates Foundation opposes repeal of the Death Tax? Well, it is probably because the Gates have spent a small fortune creating a tax avoidance plan to keep their millions (I think that these Gates are the parents of Microsoft's Bill Gates) from getting hit by that tax...money that will have been wasted if the Death Tax is repealed.
The sock-the-rich nonsense espoused by liberals is just that...nonsense. What you really have is a tax system that does its best to keep NEW people from becoming rich...the old money is exempt.
The purpose of the tax code should be to raise revenue. Nothing more; nothing less. Let's drop all the social planning and economic incentive goals. The law of unintended consequences always comes into play and Congress never gets what it wants with these special incentives and programs. So, drop them all.
Let's use our 80+ years' experience with national income taxation to develop a tax system that is streamlined, easy to comply with (which will also make it easy to ENFORCE...what good is a tax system if it is so complex that your revenue agents can't figure out how to collect the tax?), and fair.
Ah shucks...I am a tax lawyer. I guess that means I would have to find another line of work. Well, I am willing to make that sacrifice if it is for the good of the country!
But then, my friends already know that I have a serious martyr complex. Good thing I am a NON-violent martyr!
The link above is to a column by Peter Hannaford about the President's Advisory Panel on Federal Tax Reform and its coming recommendations. The short version: no major changes. Trim away some more middle class deductions; limit the home mortgage deduction; do away with the Alternative Minimum Tax. Small stuff...nothing major. And we NEED something major.
You know what I want to see? A top federal tax rate of no more than 33% and permanent repeal of the Estate and Gift (AKA Death) Tax. When I was doing my graduate law studies, my professors stated a rule of thumb that tax revenues go DOWN if the top rate is above 33%. My profs loved it when the 1986 tax reform act lowered the top rate to 28%. With a 28% fed rate, and if states could limit themselves to 5%, tax rates would be low enough that it would not make sense for the wealthy to engage in aggressive tax avoidance planning.
I had a cousin who was earning 6 figures of income in Atlanta back in 1986 when President Reagan's major tax reform was proposed. My cousin asked me what he should do. I told him to pull all his money out of deferred comp plans (paying the 10% penalty) and take as much income as he could in the years when the rate was 28%. I told him he would never see rates that low again. Better to have the money free and clear of any restrictions than stuck under heavy restrictions imposed by a tax avoidance plan.
The estate and gift tax is a trap for the unwary. The mega wealthy have a variety of ways of avoiding the tax (just look at the Kennedys and Teresa Heinz)(or better yet, DON'T look at them...disgusting creatures). Congress generally designs tax laws so that the tax avoidance techniques currently used by members of congress and their friends continue to be permitted. Did you ever wonder why the Bill and Melinda Gates Foundation opposes repeal of the Death Tax? Well, it is probably because the Gates have spent a small fortune creating a tax avoidance plan to keep their millions (I think that these Gates are the parents of Microsoft's Bill Gates) from getting hit by that tax...money that will have been wasted if the Death Tax is repealed.
The sock-the-rich nonsense espoused by liberals is just that...nonsense. What you really have is a tax system that does its best to keep NEW people from becoming rich...the old money is exempt.
The purpose of the tax code should be to raise revenue. Nothing more; nothing less. Let's drop all the social planning and economic incentive goals. The law of unintended consequences always comes into play and Congress never gets what it wants with these special incentives and programs. So, drop them all.
Let's use our 80+ years' experience with national income taxation to develop a tax system that is streamlined, easy to comply with (which will also make it easy to ENFORCE...what good is a tax system if it is so complex that your revenue agents can't figure out how to collect the tax?), and fair.
Ah shucks...I am a tax lawyer. I guess that means I would have to find another line of work. Well, I am willing to make that sacrifice if it is for the good of the country!
But then, my friends already know that I have a serious martyr complex. Good thing I am a NON-violent martyr!
posted by Lucius Cornelius at 11:45 AM
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