This trio wanted to wait until Rangel unveiled his massive reform, but the Democratic tax leader is so far behind schedule that Ryan moved this week. Under the plan, taxpayers could either continue under the current tax code or accept the simpler system. In place of deductions and credits, every taxpayer would get a generous standard exemption ($39,000 for a family of four). Presumably, nearly everybody would take this opportunity to escape the scrutiny and invasiveness of the Internal Revenue Service. A taxpayer could switch back to the old system only once in a lifetime (with an exception for such life-changing events as death, marriage or divorce).
This system may avoid the fate of past years' flat-tax proposals, which encountered the wrath of the 'tax expenditure lobby' seeking to retain such deductions as home mortgages, charitable contributions and state income tax payments. Those exclusions make a 25 percent tax rate impossible, but the Taxpayer Choice Act puts the decision of whether to retain them in the hands of the individual. The plan also would make permanent President Bush's capital gains and dividends tax cuts. Nevertheless, Paulson and the Treasury cannot live with it because they are unwilling to give up that $840 billion in revenue. Neither can Rep. Jim McCrery, the ranking Republican on Ways and Means.
Let me say this first: no one likes paying taxes. Even more unlikeable is the idea that the goal should be no taxes. George W. Bush ought to be poster child for what is wrong with mindlessly cutting taxes. We have been borrowing money to pay for everything including our misadventures in Iraq. Come on folks, if I cut my revenue are my creditors going to be happy with me? So what is the difference with government?
Cutting spending is a good thing. This no longer the Fifties and Sixties, our economy must compete with the world now. That means we can no longer spend and tax without limit (there were probably limits in those halycon days but they were not quite so close to home). It does not mean that there can be no government spending. Instead, we need to find a balance. For at some point, this tax cutting manner becomes anti-social if not sociopathic.
All that said - and maybe making my point - if you want to end American imperialism get rid of the income tax. Then it becomes more difficult to buy all that military hardware.
I would have been more interested if Novak had been more interested in tax simplification and fairness.
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