The Quipper

Monday, November 08, 2004

Tax Golems

Today's New York Times has an article Big Tax Plans, Big Tax Risks by Richard W. Stevenson which discusses Bush's desire to reform the national tax code. As usual, the article is structured as a he-said, she-said argument with no real independent analysis.

According to the article, Bush has stated that he wants to the tax code reform to be revenue neutral. Given this goal, the most important question that needs to be asked is how the tax burden will be restructured -- who will end up paying more in taxes and who will pay less? Considering the current Administration has favored tax cuts on wealth over work, shifted the tax burden to the middle class, repeatedly cut taxes for corporations, eliminated the estate tax (which only hits the wealthiest families), and its obsession with the "flat tax" (which typically is a red herring for tax simplification through the elimination of deductions, many of which favor the poor), the Administration doesn't seem to have the working class's interests truly at heart.

I predict that, once again, the poor and middle class are going to have their pockets picked by the rich. Consider this quote from the article: "Advocates of both options say [that some tax reform proposals] would give the economy a substantial boost by effectively eliminating taxes on savings and investment". Eliminating taxes on saving and investment is another way of saying "tax work, not wealth".

Amazingly, the national sales tax is an even worse idea. Why does it not surprise me that Cheney appears to be a fan?

However, my biggest pet peeve with articles on tax policy is they never seem to consider total federal tax burden, let alone total federal, state, and local tax burden. My personal payroll tax burden (both employee and employer share) is larger than my 2003 federal income tax burden, and I'm probably in the second quintile of federal income!