Eliminate all deductions and credits from the income tax, and move to a broad based, three rate structure. Eliminate the payroll tax on all wages below the top income Obamacare declares is eligible for subsidized insurance, and extend the payroll tax throughout the entire income range. Eliminate all capital gains taxes, estate taxes and corporate income taxes immediately. Reduce state income taxes across the board. Raise additional revenues from a carbon tax and other extraction taxes as well as congestion pricing of roads.
We can draw all kinds of indifference curves and budget constraints to prove that most of that makes sense. And empirical evidence is there to support doing it. Oh, I forgot one more – let’s allow the President and Congress to institute a surtax on anyone they don’t like. That has a better chance of passing than anything above.
Whoa — eliminate all deductions? Suppose one derives one’s income from a business, as opposed to collecting a paycheck from someone else who owns a business. Does that mean one cannot deduct payroll costs, utilities, the cost of depreciation, raw materials, etc., etc., and be taxed on net income? I do not think Wintercow means that.
Lowering income tax rates is a great pro-growth idea.
One effect is that it diminishes the value of every deduction, regardless of its legitimacy. If you are a sole proprietor with a big travel budget, the less the after-tax value of a room, whether it be the Ritz or the Motel 6.
And the subsidy to municipal borrowing goes down, too. The political advantage to this is that Harry Reid gets to screw the rich who hold long-term municipal bonds. But it also discourages municipalities from building unnecessary pyramids. Is that win-win, or what?
Since when is Wintercow against taxing the rich? Let’s raise marginal rates to 70 percent AND close all loopholes. That will restore prosperity to what it was in 1979, when you could earn twelve percent on a CD at Hill Financial Savings and Loan Association.
And let’s bring back Bills of Attainder, which would allow Cass Sunstein to develop a list of enemies of the state.
Actually, I liked the three-rate system of the early Reagan administration, when the top rate was 28 percent and where accelerated depreciation and the investment tax credit was still alive. Back then, dairy cattle could be either depreciated in three years or expensed, and big earners like John Lennon bought genetically excellent cows to keep at his estate near Pawling, NY. Not only were the Hindu gods pleased, but there was a vigorous market for well-bred holsteins. Now there’s a win-win.
Arthur Laffer lives!