Thursday, June 30, 2011

What if we really did cut out the tax "loopholes"?

Republicans in the default or no-default negotiations are now making noises that they're willing to contemplate getting rid of "loopholes" in the tax code to achieve what they will accept as deficit reduction. Of course, my loophole is your sacred cow and there ain't no such thing as deficit reduction. But let's dream ... and consider a modest proposal.

I'll call it the Simple Tax Act, because that's what it is: a tax code that is nothing more than a schedule of tax rates and a few simple definitions. Ten pages, max.

No mortgage deductions, no housing tax credit, but no oil depletion allowance and no fancy depreciation. Just levy X taxes on Y income (or Z profit).

Keep progressivity: lower brackets should pay smaller proportions than higher brackets. Keep the grand givaway of taxing corporate profits rather than income (define allowable "expenses" only as cash and carry items, no fancy deeming of anything that is not an actual exchange of goods, services and money ... bye-bye, Ken Lay). Even keep low (but not zero) inheritance and capital gains taxes.

Because that's the little secret: if everyone pays a fair share, each one of us can get to pay little less to balance the budget and get our goodies, like the occasional chest-thumping war or three, Medicaid and Medicare, federal student loans, etc.

What's more: eliminate all the deductions, credits and allowances and you don't have to file a tax declaration at the end of the year. What gets deducted is what you owe! Period. Bye-bye April 15 deadline. Let's have a tax parade and cookout, instead ... I'll bring the hot dogs.
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