Monday, August 4, 2014
QUESTIONS ABOUT TAX REFORM
In her recent BARBARA’S BLOG post “Just Another Reason That It’s Time To Re-do the Tax Code” Barbara Weltman concludes –
“It’s time to have a national discussion about what we want the Tax Code to be.”
And she lists some questions she would like to pose in the discussion about a new Tax Code.
Below are Barbara’s questions and my answers (in bold) -
» Should it be a sure revenue raiser so the federal government has the funds to pay its bills as well as start to pay down the national debt?
Yes. The only purpose of the income tax is to raise the money necessary to run the government. And paying down the debt is important.
» Should it encourage certain activities by individuals and businesses (e.g., going “green;” hiring certain types of workers; purchasing capital equipment)?
The use of the Tax Code to encourage behavior should be limited to encouraging saving and investing in general – but this encouragement should not benefit specific industries over others. As for going “green” – tax credits for energy efficient purchases should be replaced by “Cash for Clunkers–like” point of purchase rebates. And education incentives should be taken out of the Tax Code and offered via the existing student financial aid programs.
» Should it be an anti-poverty tool? (That’s what Nina Olsen, the National Taxpayer Advocate, called the earned income tax credit.)
No! No! Definitely not! Read my lips – NO! Welfare does not belong in the Tax Code; it should be distributed via existing traditional welfare programs. Tax preparers should not be forced to become social workers. The Tax Code should not be used to distribute government benefits or to “redistribute” wealth.
» Should it make U.S. corporations competitive with those in other developed countries?
» Should it eliminate the marriage penalty entirely (so that it makes no difference taxwise whether a couple is married or not)?
Yes! Yes! Definitely yes! The Tax Code should neither encourage or discourage marriage. It should be "marriage-neutral".
How would you answer these questions?