Tuesday, January 29, 2013
GUIDELINES FOR TAX REFORM
Before I “leave” for my tax filing season hiatus let me identify two guidelines that I hope the idiots in Congress will seriously consider if they actually do, as promised, start to address substantive tax reform.
(1) Recognize and acknowledge that the purpose of the federal income tax is to raise the money necessary for the administration of the government and government sponsored programs. It is not to be used to “redistribute income” or as a method for delivery of social welfare and other government benefits.
Remove from the Tax Code the Earned Income Tax Credit and the refundable Child Tax Credit and instead distribute these benefits via existing federal welfare programs for Aid to Families with Dependent Children.
Remove from the Tax Code all the various educational benefits and instead distribute these benefits via existing federal programs for providing direct student financial aid.
Remove energy and other such personal and business credits from the Tax Code and distribute these benefits via Cash-For-Clunckers-like direct discount or rebate programs.
Only use the Tax Code to encourage such things as savings and charitable giving.
(2) Keep It Simple, Stupid.
Have only one Tax Table and only one Filing Status. The Code should be “marriage neutral”. Remove the marriage penalty and the marriage benefit. Tax married couples as two single individuals. Compensate by increased exemption amounts for dependent children.
Remove all AGI-based reductions, phase-outs, exclusions and adjustments. No PEP or Pease.
Eliminate the dreaded Alternative Minimum Tax.
Tax Social Security and Railroad Retirement benefits the same as any other pension with “after-tax” employee contributions – using the Simplified Method or the method used by New Jersey for determining state taxable IRA distributions.