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NEW - In 2016 the 2-4-8 Tax Blend will become 2-4-8 Tax Choice
The "choice" would allow all taxpayers to choose an income tax rate between 8% and 28% paired with a net wealth tax rate of 2% going down to zero. Wealth taxes paid would reduce Estate and Gift taxes (also set at 28%). This would encourage wealthy individuals to pay some net wealth taxes as a form of inexpensive life insurance.
  Wealth
0%
0.5%
1%
1.5%
2%

Income
28%
23%
18%
13%
8%

Business
C - Corp
4% VAT
8% Income
   


Bloomberg, May 14, 2012

How Roe v. Wade Empowered U.S. Investors

by Edward Conard

Edward Conard was a partner at Bain Capital LLC from 1993 to 2007. The article is an excerpt from his new book, “Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong,” He opined:

... Why does the U.S. have lower labor redeployment costs, more open trade borders, lower marginal tax rates and, ultimately, more tolerance for unequal distribution of income? By the random dint of history, the landmark Supreme Court case Roe v. Wade of 1973 brought pro-investment voters to power in the U.S. The faction of pro-investment voters, representing about 35 percent of the electorate, combined with enough of the now-mobilized social conservatives -- principally the members of the Christian Right, who vote Republican and represent 15 percent of the electorate -- to seize the majority and permanently shift the political economic center to the right.

... This marriage of convenience between pro-choice fiscal conservatives and pro-life social conservatives brought the larger pro-investment faction in this coalition to power. Without the unique set of circumstances surrounding Roe, the U.S. would probably be in the same place politically as Europe and Japan with respect to well-intended, but misguided, anti-business economic policies. Instead, after Roe, lawmakers cut marginal tax rates to about 30 percent, from 70 percent before the decision.

2-4-8 Response: Abortion Economics

It is very refreshing to read about abortion and Roe vs. Wade in economic terms. Edward Conard has presented some important insight into traditional union politics and the marriage of convenience between “pro-choice fiscal conservatives and pro-life social conservatives” The partisan face-off ripened during Regan’s first term as women accelerated their entry into the labor force that had begun after WWII. Birth control and abortion (often for economic reasons) let women do more than bring in some extra cash to the family and slowly led to equal pay for equal work. Changes to the tax code made sure that wages for the middle class would remain flat take-home pay would go down and income and wealth redistributed to the top. Around the same time as Roe vs. Wade the nation embarked upon a new employee retirement system which resulted in most businesses eliminating their pension plans in favor of inexpensive 401k type programs-funded largely by the employees. Soon the baby boomers (and certainly their children) became two-earner families, with no pension, lower wages, higher debt for housing and education, and chaotic child care arrangements.

When the recession hit in 2007-8 the economists did not appreciate how brittle the economy had become. The political alliance had led to tax cuts for the well-to-do, beginning in 1986, and at the expense of the middle class and strivers. When layoffs began it was quickly learned that one wage earner was no longer sufficient to pay the mortgage. Consumers lost purchasing power, housing values crashed and the economy stalled. Business temporally prospered due to stimulus, tax expenditures and large public debt. The extreme loss of resilience in the traditional economy comes, in significant part, from abortion and the corresponding loss of 50,000,000 consumers (even if most economists won’t admit it). The birth of these people would have created more jobs, more economic demand, fewer full time moms in the work force, and more money for dads. A family that is supported by one earner or even one earner and a part time worker is economically stronger than a two earner family stretched to the brink or just a paycheck from bankruptcy. Roe vs. Wade has had consequences that even the pro-choice fiscal conservatives could not have foreseen. The chickens have come home to roost.

Eugene Patrick Devany, JD, MPA

www.TaxNetWealth.com

 
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