Skip to comments.Democrats Inadvertently Demonstrate Need For Tax Code Reform
Posted on 07/13/2011 3:01:12 PM PDT by Kaslin
The looming political showdown over raising the federal debt ceiling has generated a seemingly endless stream of punditry over winners and losers, key players versus back-benchers, and on-again, off-again "grand compromises." But beneath those ever-shifting currents lie bedrock fiscal issues: how to slow the pace of federal expenditures, reestablish long-term budgetary discipline, and reform our uncompetitive tax system without heaping heavier burdens on businesses or individuals. In their quest for a staggering $2.4 trillion debt increase, President Obama and his allies on Capitol Hill have weighed in with many responses to those issues - some good, more than a few bad, and some downright ugly.
Sitting firmly in the "ugly" category is a scheme that would do nothing to cut spending, fly in the face of responsible fiscal policy, and worsen an already mucked-up Tax Code all at once. As a precondition to a debt-ceiling deal, the Administration and some Democratic lawmakers seek to eliminate so-called "subsidies" for the five largest oil and gas companies in America. Left out of their rhetoric is an inconvenient fact: the key elements of the plan involve taking away the very same tax provisions available to other industries. One, the Section 199 deduction, is extended to a wide variety of firms for domestic production activity, while another, the dual capacity credit, shields firms with operations abroad from being double-taxed.
Why create special legislation that punishes only the five largest oil companies? Because it's politically convenient. The firms have recently been posting large profits, and all too many officials in Washington abide by the mantra, "the more you make, the faster we'll take it." This kind of policymaking-by-mood-swings on the part of Congress prompts the question: if Senators and Representatives can pass a law attacking a handful of energy companies, how long before lawmakers target a few companies they deem "excessively profitable" in technology, food, manufacturing, or some other industry? And, how long before these firms, fearing the whims of tax-writers, take their investments and jobs somewhere else?
This is not idle speculation. Section 199 and dual capacity exist to take some of the worst pain out of a tax system that severely hobbles our businesses at home and abroad. In fact, a recent study by the Oxford University Centre for Business Taxation ranked the U.S.'s "Effective Average Tax Rate" for corporations as the second-worst among G20 countries, just behind Japan (which has been cutting its taxes). Getting rid of Section 199 and dual capacity for U.S. firms in the global race for energy development - without addressing the underlying problems they were designed to partially relieve - would be tantamount to handing a gift to our competitors abroad.
Simplifying the Tax Code through broadening the base while streamlining deductions and credits can add up to a serious tax reform plan - if tax rates are lowered across the board in the process. Selectively stripping provisions for certain companies while leaving high rates in place is the very antithesis of the overhaul our tax system needs.
It would also be the last thing our struggling economy needs. For example, in addition to raising the price of fuel for all American consumers, a tax hike on oil and gas production would jeopardize the more than 9 million jobs supported by this energy sector at a time when national unemployment has once again exceeded 9 percent. Our national energy industry is one of the few bright spots in a recovery that remains cloudy. Boosting its tax burden would eventually land on the shoulders of real, live people - workers, retiree-investors, and, of course, consumers at the pump.
The debt-ceiling debate should serve as an opportunity to enact prudent rather than punitive fiscal policies. Spending restraint and tax reform, not tax increases, are the way forward to prosperity.
Democrats/Socialists/Statists/Totalitarians Legitimize The Need For...
Legislatures (state and federal) can be part-time jobs with 1/10th pay, NO retirement, NO perks, NO insurance. Get a job. Pay for your own crap, you POS politicians.
...That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness...
It’s the socialism, stupid. DEFUND socialist collectives, foreign and domestic.
15 Steps we need to take now to even have a chance at a Recovery Plan:
1) Take back the Senate and put a fiscal conservative into the WH
2) Flat tax of 15% for all citizens and income earners in the US, no deductions and lock in for 10 years
3) Flat tax of 18% for all businesses and lock in for 10 years.
4) Do away with the rest of the tax code including capital gains, AMT, etc
5) Reduce spending to 2004 levels
6) 2% reduction in SS entitlements and make SS non-taxable income.
7) 10% reduction in Defense spending (halt Libya, reduce Iraq to training/advisory roles)
8) Repeal Obamacare
9) Change Medicare/Medicaid to a voucher program of $200 per person to the state so that they can go shop for insurance. Lock the $200 amount in for 10 years
10) Reduce regulations and restrictions on Oil and gas production
11) Limit crop reduction program to 300 acres per farmer
12) Roll all EPA reguations back to the year 2000
13) Reduce Pell Grants and Student Loan guarntees by 50%
14) Allow a corporate tax deduction of 105% for salary, benefits and related overhead for all full time employees
#15 ...?? what do you want to see as a spending reduction ??
200 per person for what? Insurance costs more than that per month.
But its a good idea. I’m onboard for the start
As far as a flat tax on citizens, all well & good, but 90%+ of all businesses in the us are those citizens as well - do they pay another 18%?
“#15 ...?? what do you want to see as a spending reduction ??”
Every bank, every business, every government that took TARP gives it back. Indict everyone from Freddy and Fannie and conviscate their assets.
Here’s a much simpler tax plan that would raise more revenue than the current Federal Income Tax, and be more pro-growth:
1) Individuals: Change the AMT so that it applies to everyone instead of only the high income people, thus: if your Federal Income Tax owed is less than 10% of your AGI, you pay 10%; if the amount owed is more than 15%, then you pay only 15%. All compensation, including the value of employer provided benefits is counted as income. Somebody that earns $40K and buys their own benefits should not be taxed more than somebody who earns $25K but receives $15K worth of health insurance and pension/401K matching. Or you can choose the fastpath and not bother figuring your taxes: 10% on the first $100K, and 15% on all income above $100K. (Rev: $1.4T)
2) No Corporate Income Tax at all, but employer FICA payroll tax is replaced with a 10% tax on all labor costs including the cost of benefits, and also applies to any dividends paid out to shareholders. This is applied as a lump sum and eliminates the fake attribution to each employee as it funds SS/M benefits. (Rev: $1.1T)
3) No individual SS/M FICA tax. SS will pay what it has promised as if you stopped working today and had zero contributions for the rest of your career. If this amount is less than poverty level — currently $900/mo — then you’ll receive the poverty-level. To retire with more than poverty-level income, you’ll have to save for your own retirement.
15) For spending reductions, eliminate departments: Education, Energy, Agriculture, HUD, EPA, FEMA, Flood Insurance. Sunset ALL Federal regulations that are not championed by the industry they affect, and are not objected to as barriers by new entrants.
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