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发帖数: 5094 | 1 Reforming taxes
Here’s a plan
Lower rates, broaden the tax base. And pray
Mar 1st 2014 | WASHINGTON, DC | From the print edition
BUSINESSMEN REACTED swiftly when a leading Republican lawmaker unveiled a
proposed tax overhaul on February 26th. Advertisers moaned that it would “
stifle economic activity”. Oil companies saw “serious flaws”. Estate
agents were “extremely disappointed”.
This merely served to confirm that Dave Camp, chairman of the tax-writing
committee in the House of Representatives, had done what he set out to do:
lower tax rates and broaden the tax base by attacking the countless
preferences that leak $1 trillion in revenue a year and make compliance a
nightmare.
The plan, three years in the making, would slash the top corporate tax rate
—at 35%, the highest in the OECD—to 25%, and pay for it by shrinking tax
breaks. The biggest savings come from slowing the rate at which business can
depreciate capital equipment, and from eliminating the special break for
domestic manufacturing.
Mr Camp would shift America to a “territorial” system, meaning
multinationals would no longer owe American taxes on the bulk of their
foreign-owned profits. The practical impact would be small, since
corporations can now avoid such taxes by leaving those profits abroad. The
hope is that the lower tax rate would encourage business to keep operations
and offices in America. He would also penalise too-big-to-fail banks with a
0.035% tax on assets in excess of $500 billion.
There are now seven tax rates for individuals, which range from 10% to 39.6%
. Mr Camp would reduce them to just two: 10% and 25%. This is deceptive,
however: he would also impose a 10% “surtax” on families earning more than
$450,000, so their top rate drops only to 35%. He also scraps the hare-
brained alternative minimum tax, a parallel tax that ensnares a large and
growing chunk of the upper middle class. But state and local taxes could no
longer be deducted from federal tax, and nor could interest on mortgages
over $500,000 (the present cut-off is $1m). Both these breaks most benefit
the rich.
Mr Camp would convert the Earned Income Tax Credit (EITC), which adds a
dollop of cash to the pay-cheques of the working poor, to a payroll-tax
rebate. This would significantly reduce the generosity of the credit, which
Mr Camp justifies by asserting that the EITC is inefficient and riddled with
fraud, a common conservative complaint. It is, nonetheless, a strange
target; Republicans generally like the EITC, since it encourages people to
work.
The nonpartisan joint committee on taxation reckons Mr Camp’s plan favours
neither rich nor poor relative to the current system. It also thinks the
plan, by boosting work incentives and take-home pay (and thus consumption),
would leave the economy between 0.1% and 1.6% larger, permanently. More’s
the pity, then, that the bill’s political prospects are grim. Democrats
have insisted that tax reform must raise money to reduce the deficit or fund
their priorities; Republicans are equally insistent that tax reform must
not raise new revenue. With little chance of the bill becoming law,
Republicans see no point in antagonising so many vocal constituencies by
putting it to a vote in an election year. |
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