Los Angeles Times, Feb. 27, 2012
Former Obama aide Lawrence Summers says tax reform is inevitable
by Jim Puzzanghera
... Lawrence Summers, a former Treasury secretary
who left the White House in late 2010 ... argued that the corporate
tax code is in desperate need of its first overhaul since 1986 and that
Washington politicians will find the changes are inevitable given the
problems the nation is facing. Eliminating corporate tax breaks is a much
better way to raise money that increasing marginal corporate or individual
rates, he said. ...
Americaâ€™s rich have
become richer with the share of income going to the top 1 per cent
increasing from about 10% to about 20% over the last generation while middle
class incomes have stagnated ... Summers warned that the more tax
issues are discussed, the more likely candidates will be to make promises to
voters that would hinder hopes for a bipartisan deal after the election.
2-4-8 Response: Tax Reform Inevitable?
Lawrence Summers wrongly believes discussion of tax
issues will â€œhinder hopes for a bipartisan deal after the election.â€ For
example, this weekend Warren Buffett not only spoke of increasing income
taxes on the wealthy, he also told a CNBC interviewer that he would be open
to a tax on net wealth.
Bill Oâ€™Reilly (a/k/a the Factor) supports a national sales tax (of 3%) as a
necessary component of tax reform. There are a lot of good ideas that
get shot down in the pre-discussion stage by donâ€™t-rock-the-boat guys like
Mr. Summers. Indeed, that is why you havenâ€™t even heard about the 2-4-8 Tax
The 2-4-8 Tax Blend broadens the tax base by taxing individual and
foreign-owned net wealth at 2% (above a $15,000 exemption), retail sales at
4% and income at 8%. It would yield $2.6 trillion â€“ ($400 billion more than
FY 2010 federal revenue). The tax blend is progressive even though rich and
poor would pay the same tax rate. Event-based taxes from capital gains,
estate and gift taxes would not be necessary because net assets are taxed
over time. The concurrent elimination of the Medicare and social security
payroll tax (to be funded from general funds) and a significant reduction of
the corporate income tax rate to 8% should merit near universal support from
social liberals and business conservatives alike.
Eugene Patrick Devany, JD, MPA