Wednesday, September 9, 2015

GOP tax con game starts again


The proposed tax tables are approximate correlations with the existing federal income tax tables. Trump and Bush are proposing tax brackets that don't exist in the tax code.

Jeb Bush is probably the worst of the bunch with his three tax brackets courtesy of the Committee to Unleash Prosperity that includes Larry Kudlow, Stephan Moore, Steve Forbes and Republican economist Arthur Laffer, an economic fossil from the Reagan era.

Rand Paul also has a similar flat tax plan His 14.5%, plan is similar to Ben Carson's which is based upon tithing. However, Paul doesn't mention tithing

The flat income tax is a bad idea because the majority of American taxes, such as sales tax and municipal property tax, are already flat.

Let's look at a worse case scenario: Huckabee's fair tax. Florida has a sales tax of six or cent and Pinellas county has a one per cent sales tax. So if you purchase the average car which costs $32,000, your sales would boost you cost by another 30 per cent or $9600. You car would now cost $41600 under Huckabee's fair tax.

Now consider what the fair tax would be on a home sale.

Think that is fair?

President George W. Bush reported that that a national sales tax of at least 34 percent would be required to replace federal income tax. The Institute on Taxation and Economic Policy estimated the sales tax would need to be at least 45 percent to be revenue neutral.
Donald Trump on a national flat sales tax”

I would try to avoid paying it whenever possible.

Trump makes a great point. You can avoid sales tax with bartering, something that is common in the underground economy.

Theodore Roosevelt, a progressive Republican, created the graduated income tax and Republicans have been whining about ever since,

Theodore Roosevelt said this:

At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth……
No man should receive a dollar unless that dollar has been fairly earned.
Every dollar received should represent a dollar's worth of service rendered. . .”

Some other features of the GOP candidates' tax plans:

Trump wants to eliminate the inheritance tax with a would impose a one-time, 14.25% tax on individuals and trusts with a net worth over $10 million. Trump's proposal indicates that that would a one time tax. What people who establish new trusts. In the future, would they be subject to this tax? Trump uses of the term “one time'” suggests that people who establish trusts in the future would get free rides.

The Estate Tax only affect 0.1 to 0.2per cent of the US population and it was reformed when Bill Clinton was president. Not clear why any changes are needed to the Estate Tax.

Jeb Bush's tax plan is even more reactionary that Trump's with three tax brackets. It is similar to his brother's plan that contributed to the record deficit spending Bush does end carried interest for hedge fund mangers that allows their income to be treated as capital gains.

Ted Cruz is the only one who has said much about corporate taxes:

Right now, U.S. corporations face the highest tax rate in the developed world, and they face double taxation if they invest their profits in America.
Ted is correct but there are so many corporate tax exemption, the effective tax rate is one of the lowest in the industrial world. None of the candidates said anything about ending corporate tax exemptions and having a minimum tax on corporations.


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