Mr. Bartlett held senior policy roles in the Reagan and George H.W.
Bush administrations and served on the staffs of Representatives Jack Kemp
and Ron Paul. He is the author of â€œThe Benefit and the Burden: Tax Reform â€“
Why We Need It and What It Will Take.â€ He opines:
... income from capital
is lightly taxed. Unrealized capital gains are untaxed, realized gains are
taxed at a maximum rate of just 15 percent, and gains held until death are
never taxed. ... The point is that a tax system that lightly taxes capital
and heavily taxes labor is necessarily going to benefit the wealthy.
... the tax system in the United States violates the fundamental
principles of income taxation. Those are â€œvertical equity,â€ which says that
those with upper incomes should pay a higher effective tax rate than those
with modest incomes â€” as far back as Adam Smith, ability to pay has always
been a core principle of taxation â€” and â€œhorizontal equity,â€ which says that
those with roughly the same income ought to pay roughly the same taxes.
2-4-8 Response: Political Tradeoff for Tax
More tax expenditures (a/k/a loopholes) are not the
solution. They are good for the business of lobbyists, tax attorneys and
accountants; and are very good to encourage political donations from
The political dysfunction on all sides makes it hard to
formulate a political scenario whereby even basic tax reform (i.e.
eliminating the preferential tax expenditures) might be achieved. Try to
imagine a tax reform that realigns traditional political alliances and also
fixes the issues of unemployment and economic mobility.
The 2-4-8 Tax Blend broadens the tax base by including
and taxing individual net wealth at 2% (over $15,000), retail sales at 4%
and income (individual and corporate) at 8%. The broad base enables the
lowest possible tax rates and the blend is inherently progressive even
though rich and poor pay the same rate. It would yield $2.6 trillion â€“ ($400
billion more than FY 2010 federal revenue).
Because the 8% income tax rate is lower than the
various tax expenditures, it becomes a feasible political tradeoff for the
elimination of tax expenditures. The concurrent elimination of payroll,
estate, gift and capital gain taxes would enable most to keep about 22% more
income each year.
How would an 8% corporate income tax affect jobs and
the economy? Those answers may be better left to your talent and
Eugene Patrick Devany, JD, MPA