‘Centerpiece’ of Bush’s Second Term: Rolling Back the First Term
By on Nov 7th, 2005 at 2:08 pm
‘Centerpiece’ of Bush’s Second Term: Rolling Back the First Term
Mike Allen’s latest piece for Time magazine includes the following about the next possible “centerpiece” of the Bush agenda:
At the White House, aides are meeting every day to work out a new agenda. A possible centerpiece is a road show next year to promote a plan for simplifying the million-plus words of the tax code, one of Bush’s most reliable applause winners on the stump in 2004.
In other words, Bush’s next Big Idea is to roll back all the additions to the tax code that he made in his first term:
During [Bush's] term in office, there have been 227 tax-code changes that added 10,000 pages to the monstrosity known as the tax code.
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Finally the left starts fighting back on tax issues. Long past due.
November 7th, 2005 at 2:19 pmAll I know is, every since Bush came into office, I’ve got less money. I’ve never seen any of those tax cuts.
November 7th, 2005 at 2:20 pmOnly the wealthly saw the tax cuts. Hopeful this will never happen. If we have a national sales tax what will happen to the State sales tax?
November 7th, 2005 at 2:28 pmThe ‘centerpiece’ of his second installation:
November 7th, 2005 at 2:32 pmHis resignation, in front of an angry crowd with a little ‘texas justice’ on their minds.
#2 – Amen. I’ve never made as much money as I do now, but I’ve never struggled harder. Go figure.
November 7th, 2005 at 2:32 pmYou go Dub!!
http://www.evostc.state.ak.us/facts/details.html
http://faculty.buffalostate.edu/smithrd/PR/Exxon.htm
(or if you prefer…
http://www.greenpeace.org/international/news/dow-fights-for-its-image-but
November 7th, 2005 at 2:36 pmI was wondering when TP was going to hit on this subject.
So, do we all know the biggest change Bush wants to make in the Tax Code? This one should flip out the republicans also:
He wants to eliminate the Home Owner tax Credit.
Fvcking outrageous!
November 7th, 2005 at 2:40 pmCan we stop with the 10,000 page nonsense?
I am sitting here with my copy of RIA’s version of “The Complete Internal Revenue Code” as of August 2005, which boasts on its cover “Includes the Tax Provisions of the Energy and Transportation Acts of 2005″ and also helpfully notes that it contains “All the Income, Estate & Gift, Employment, Excise, Procedure and Administrative Provisions” and which also includes cumulative changes to each and every code section stretching as far back as the Internal Revenue Code of 1954, and the entire thing is only 9,545 pages long.
Even if you want to throw in the regulations, in which my RIA version has 28,026 pages (not including preambles to proposed regulations), you only have 37,571 total pages. And believe me when I tell you that these have not grown by 10,000 pages since January 2001.
Now, if you want to include not only changes to the code and regulations, but all the other guidance the IRS and Treasury puts out (i.e., revenue procedures, revenue rulings, private letter rulings, general counsel memoranda, chief-counsel memoranda, notices, announcements, preambles to regulations (whether proposed, temporary or final) news releases, technical advice memoranda, field service advices, and changes to the internal revenue manual), then you probably will reach the 10,000 page number. But the vast majority of these things would have been published no matter who was President.
While it’s a nice talking point it is (a) absolutely untrue (unless when the speaker says “tax code” he actually means “tax code, regulations, revenue procedures, etc., etc., etc.”); and (b) is likely only marginally different due to the current occupant of the White House.
November 7th, 2005 at 2:43 pm#7 This is about the only thing we can deduct from our taxes. Years ago you could take off the interest from our car or truck. It seems like you cann’t get ahead anymore.
November 7th, 2005 at 2:46 pmBut, even if they only remove the 10,000 pages he added, he would never admit that he had made a mistake…
Personally, I can’t see what is wrong with having a much simpler tax code with deductions for dependents (including yourself) and one or two tax rates for all income, no matter what the source.
I think I could write something like that in under a page with no loopholes.
Say that the tax rates become
10% for under $100,000 and 35% for over $100,000… That should do. It’s nice and simple and the percentages and size of deductions can be played with until we get the right amount of income from taxes without harming people. Of course for corporations it is slightly more complicated. I think Corporate tax should be a similar percentage of profit but no deductions and forget about depreciation of assets. Once you bought it, your expenses are deducted from your income and so you are taxed on the difference. Struggling/Small companies (under $30,000 p.a. in profits, say) would be exempt. This would encourage companies to invest in infrastructure (It’s an expense) would encourage small companies, and would remove loopholes. Filling in your tax return would become simple.
Example one… A is married with three kids, so that is five deductions @ $4,000 each. A made $80,000 last year, so A pays 10% tax on $60,000. A’s tax bill would be $6,000 p.a.
Example two… B is single, and has an income of $1,000,000 from his investments. B pays 10% on $100,000 and 35% on $896,000 for a grand total of $323,600.
Obviously the percentages, levels and deductions can be tweaked so that the tax paid under the new system is similar to the old one to start.
Of course the Bush changes are more likely to be…
Income from anything other than tips or a paying job is not taxed. Deductions are limited to contributions to his retirement party.
In which case A will pay $20,000 in taxes while B pays nothing…
Z.
November 7th, 2005 at 2:47 pm#9
Yes, screw the little guy.
They went to the rich folks and asked them if they had enough tax shelters to not have the home owner tax credit and they said “Sure we do, fvck the little guy.”
November 7th, 2005 at 2:49 pmSpudge and my other progressive friends, remember the two key questions to put to our wingnut brothers and sisters…
1. Why do we need deficit reduction?
2. Aren’t tax cuts supposed pay for themselves?
To Q1 – remember Cheney said deficits didn’t matter.
To Q2 – remember 2 words: Laffer curve.
In short, stick it to the wingers with their own talking points.
November 7th, 2005 at 2:56 pmZwack –
You have assumed away the problem of defining what income is.
For example, if I bought stock for $100 in January and at December 31 the stock is worth $500, do I have income of $400 or not under your system?
Another example, my father gives me $100 for my birthday, income?
Yet another example, I prepare a tax return for you and in exchange you paint my house, income to none, one or both of us? If so how much? If not why not?
Another example, my employer pays for my health insurance, income to me?
November 7th, 2005 at 3:03 pm“All I know is, every since Bush came into office, I’ve got less money. I’ve never seen any of those tax cuts.”
Because the tax custs were not for the middle class or lower class, the tax cuts were for the top 10%,the ones that needed the cuts less.
November 7th, 2005 at 3:08 pmIt will be fun to sit back and see, what FOOL republican will run in 2008. Line up people…hmmm..what if no one ran?
November 7th, 2005 at 3:20 pmI also wondered when tis might startto make some impact and notice out there. In my case for a moiderate home in Reno, NV, not exactly the most expensive real estate in the world, I am looking at the possibility of $250.00 a MONTH in extra taxes. That kind of over shadows the $400.00 a year I got out of the earlier Bush tax cuts.
This one is set to really hurt middle class homwowners a population of very high voting percentages. It is starting to trickle out there, but this is probably the best political weapon the Democrats have been given in a long time.
Oh and by the way, the proposal does include a tax cut for the highest level of income as well.
http://www.taxreformpanel.gov/final-report/
Greg
November 7th, 2005 at 3:26 pm#16 You are saying that the rich would get a tax cut. That is totally not fair. What do you expect from Old Bushie and his Admin.
November 7th, 2005 at 3:40 pmMaybe this time they’ll use someone other than Billy Tauzin and Dick Armey as their Mr. Haney from Green Acres. I’m sorry can someone tell me where did Bill & Dicks’ excellent adventure get us last time? How about giving illegal immigrants instant SS #S just for tax revenue the second they buy something at Wall-Mart or at the gas stations and add it on as a welcome to taxpayer hell surcharge.
November 7th, 2005 at 4:07 pmJust at quick question – where are the trolls espousing the Shrub wisdom on this topic? Just wondering…
November 7th, 2005 at 4:35 pmHmmmm… could it be that they don’t have to worry about taxes? Is that why they have all the time in the world to praise the wisdom according to Duhbya on all the other topics?
November 7th, 2005 at 4:37 pm“You have assumed away the problem of defining what income is.
For example, if I bought stock for $100 in January and at December 31 the stock is worth $500, do I have income of $400 or not under your system?”
No, That is an asset. The asset is worth more, but as you haven’t sold it you don’t have the extra as income. However, if you sell the stock for $500 then that $500 is income, and should be taxed. The cost of purchasing the stock is not taxed, but it would have already been taxed as income… Yup, it’s double taxation, but it has no loophole.
“Another example, my father gives me $100 for my birthday, income?”
Yes… You receive cash from anywhere and it counts as income. Of course there is the question of whether you would declare it…
“Yet another example, I prepare a tax return for you and in exchange you paint my house, income to none, one or both of us? If so how much? If not why not?”
Payment in kind. Yes it is income. Technically you should report it. If you check with the IRS then they will tell you the same thing. If you receive payment in kind at the moment you should report it, and it is taxable.
“Another example, my employer pays for my health insurance, income to me?”
No. The employer is providing a benefit for you and money is going to a third party. The third party (the insurance company) will pay corporate taxes on their profits. The employer will pay less corporate taxes as this reduces their profits, and you receive an intangible benefit. I don’t currently pay taxes on my employers contribution towards my health insurance. Technically, it could be considered payment in kind, but it isn’t…
o.k. so my suggestion isn’t perfect, but it is simpler, and not too bad for five minutes of typing… No thought required. :-)
By the time it had gone through congress it would be 4,000 pages of legalese with the net effect of taxing the poor and not the rich.
Z.
November 7th, 2005 at 4:46 pm#9, MP,
November 7th, 2005 at 5:02 pmThat is the point. Bush’s plan is to slowly but certainly remove all tax breaks that affect the average working person, and keep in tact all the tax breaks for the millionaires and their heirs.
Watch for him to couch it into terms like “simplify” and “equalize” — it will mean you and I are screwed.
#10, Z
November 7th, 2005 at 5:06 pmWith a little tweaking, your plan is do-able.
Zwack -
On the stock, under the current code, you’re correct for individuals and most corporate taxpayers. However some corporate taxpayers are subject to mark to market rules that would subject them to tax on the unrealized appreciation. Ideally, if you were to tax all income, such unrealized appreciation would be taxed. It isn’t because (a) it can be hard to measure (instead of stock, suppose it’s a house you’ve owned for 20 years); (b) it’s adminstratively burdensome (in part because of (a)); and (c) in a lot of cases you’d have to sell the asset to pay the tax.
I agree that gifts should be income, but they are generally exempt to the recipient under the current (if it’s truly a gift) and the law only taxes the giver, subject to an exemption of $11,000 per person per year ($12,000 for 2006). This was originally intended as a way for people to give things like birthday and christmas gifts without having to worry about the income tax consequences; it has instead morphed into a system where people give that much in cash to recipients each year, and yet buy them birthday and christmas gifts too without paying the gift tax.
You’re also right that the “trade” of services is income to each party, and is required to be reported. There were a whole bunch of barter cases in the late 1970s (I think) where people were setting up barter pools and not reporting the income therefrom. I’m sure it still happens all the time, but likely on a much smaller scale.
As for employer provided health insurance, but for a specific exemption in the code that would definitely be income to you. It shouldn’t matter if the employer first pays you in cash and then you pay the insurance company (resulting in a deduction for your employer, and income both to you and the insurance company), vs. the employer paying the insurance company directly. For example, if the employer bought you a car and paid the dealer directly, that would be income to you despite the fact that the employer will get a deduction.
Anyway, I appreciate the response, and I’ll stop filling up the comments on taxes.
November 7th, 2005 at 5:32 pmLet’s just have a flat tax and get rid of all personal and business deductions. (I would tax the poor at 5% and the middle, rich and businesses at 15%). I’d eliminate ALL non-profits from tax-exempt status – just watch the money roll in!!!!
November 7th, 2005 at 5:34 pmThe new tax plan that bushie wants does away with all exemptions that help the working class. No interest of any kind, no mortgage interest, etc.
In addition, if your employer furnishes you medical insurance you will have to claim that as income.
November 7th, 2005 at 5:37 pmFlat tax is a stupid idea, no surprise you would post it mighty dingbat. It puts undue burdens on the poor. But then again as an irresponsible and selfish bitch, no wonder you would want it.
November 7th, 2005 at 5:37 pmThe problem is that the tax burden has shifted away from corporations, onto individuals. The IRS permits public companies to have 2 sets of books! One is used for wall street, and the other is used for the IRS. The wallstreet books show a profit, the IRS books show a loss, and the american taxpayer is the big loser!
November 7th, 2005 at 5:39 pmSo many exemptions so little time. Watch closely the states that don’t have state income taxes and their responses to any changes. One current idea floating around which would just happen to affect Blue states, IE: NY& California is to repeal the exemption of one’s state income taxes from one’s fed. return. This is a huge subsidy by the federal govt and would be a political winner for the GOP. My return from Texas last year gave us all of our sales tax, yes all of our state sales tax back . This is a Red state pay back as far as I can tell. Anyway because Wall-Mart is the hero for most local and state govt. as far as revenue is concerned the emphasis will be on the value added tax. Also there really needs to be a good argument on investment income. What about the AMT? Archaic? But oh what a money maker for uncle Sam. I’m annoyed why consumer spending isn’t rewarded the way Corporate spending is. Lots to learn. Thanks Zwack for your explanations. Any good links would help.
November 7th, 2005 at 5:46 pmAccording to the IRS, in 1971, corporations paid 23 percent of income taxes collected by the federal government. By the year 2000, the corporate share of taxes had fallen to 17 percent. This reduction may seem relatively minor unless we appreciate that individual taxpayers were required to fill the gap left by the effective decrease in corporate tax rates. If corporations had paid 23 percent of the income taxes collected in 2000, as they did in 1971, the federal government could have distributed an average rebate of $628 per tax filer at no net loss of revenue.
November 7th, 2005 at 5:48 pmThe Fly-man –
The current proposal is to repeal the deduction for state and local income/property taxes, which would take the deduction for sales taxes with it (which, in any event, was a recently enacted and temporary deduction). I don’t think it will pass, a lot of the red states have income taxes too.
Ryan Neat -
The reason corporations (at least publicly traded corporations) keep two sets of books is because the federal government requires them to. They keep GAAP books for SEC purposes, and tax books for IRS purposes. This only makes sense as GAAP is aimed at overstatements of income and tax is aimed at understatements of income. A big reason why tax income is routinely lower than GAAP income (although that’s not always the case) is specific large benefits written into the code by Congress, including accelerated depreciation, carrybacks and carryforwards of net operating losses, deferral of certain offshore earnings, etc. These are also a big reason why corporate taxes as a share of the whole have dropped.
November 7th, 2005 at 6:07 pmUgh, Thanks for your time. I’m sorry if I thought that there might be a whiff of political hat tipping in this beast. It’s my habit of trying finding a political reason behind everything the govt. does. My accountant is $300.00/hr and I usually don’t bother him for these kind of questions. Thanks again.
November 7th, 2005 at 6:21 pmBushie is too incompetent to tackle anything let alone the tax code.
Impeach him and lets get someone qualified to handle the job.
November 7th, 2005 at 6:30 pmThe Fly-man –
No problem. Also, if you click on Greg’s link at #16, there’s a handy 2 page chart near the beginning of Chapter 5 of the report that gives a concise (though less then detailed) summary of the report’s recommendations (though not current law).
November 7th, 2005 at 6:31 pmUgh,
I would treat unrealised assets as untaxable because they are unrealised. However for individuals they would be taxed when they realise the asset. So if you are holding onto the stocks you aren’t penalised. Corporations wouldn’t be penalised either, but any person or company making a profit onselling an asset will be taxed on that asset.
But, I’m not going to claim that this is perfect… I just think something this simple would be harder to find loopholes in and therefore a fairer/better system for everyone.
A flat tax is inherently unfair on the poor, but a two or (maximum) three tier system still encourages people to work hard (I would LOVE to pay taxes at the higher rate because that means I make more money) but still charges those who can afford it more.
Z.
November 7th, 2005 at 6:32 pmsorry, Georgie Boy… there are no do-overs for the Prez…
November 7th, 2005 at 7:09 pmThanks to everyone here for a great discussion. Truly appreciated.
November 8th, 2005 at 11:48 amThank you Shlomo,
I’ve enjoyed my side discussion with Ugh, and seriously appreciate not having a bunch of trolls doing their usual. That gets so old, and some days I’m not in the mood for “witty repartee”.
Z.
November 8th, 2005 at 2:26 pmAccounting Financial Financial Success
I can not agree with you in 100% regarding some thoughts, but you got good point of view
April 6th, 2008 at 4:07 pmMortgage Interest Deductions
It is a quite interesting post but quite difficult to understand for me -
April 11th, 2008 at 12:21 pmKiera
Great things are not done by impulse, but by a series of small things brought together.
April 14th, 2008 at 4:24 am