Annie
Diamond Member
- Nov 22, 2003
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Left, Right Can Love Tax Plan: Laurence Kotlikoff, Andrew Weiss - Bloomberg
...We propose a tax reform -- and Lord knows we need one -- that recognizes this equivalence. Our plan taxes all retail sales at a 17.5 percent rate. But if you dont want to pay the retail sales tax, you can pay, up front, a 15 percent tax on your wages and wealth. Every dollar of tax you pay up front gives you an electronic sales-tax credit, for use when shopping, which exempts $1 of consumption from the 17.5 percent retail sales tax. Unused credits grow with interest, so you arent penalized by waiting to spend. ...
Taxing consumption, either directly or indirectly, at a fixed rate is neither progressive nor regressive. Its proportional. If you double someones economic resources, you double their future spending, and you double their consumption tax payments. This holds even if the resources are spent over time or bequeathed for others to spend.
Since consumption taxation is proportional, weve added a monthly payment by Uncle Sam to each household, which depends only on the number and ages of household members. This payment is large enough to ensure that households living at or below the poverty line pay no net tax.
Staying Progressive ...
Our overhaul has additional elements. We make the payroll tax that funds Social Security and Medicare much more progressive by removing the ceiling on taxable earnings, now at $106,800. The plan also would exempt employee contributions on the first $40,000 of earnings, index that $40,000 to real wage growth, and require payroll contributions on wages paid in the form of business ownership rights. We tax, at a 15 percent rate, the cumulative value, above $1 million, of all gifts and inheritances received, directly or via trusts.
Going Broke
The plan also would impose transition rules that tax pensions and retirement-account assets on which future taxes are due as well as unrealized capital gains on existing asset holdings.
Our country is saving nothing, investing nothing, growing more unequal, going broke and pulling apart. The current tax system makes these problems much worse. Our plan, called the Purple Tax Plan (The Purple Tax Plan | The Purple Tax Plan), provides a simple and transparent tax system with much better incentives to work and save, much greater revenue-generating capacity, and much greater equity. Best of all, both parties can call the plan their own. ...