Monday, November 22, 2004
USNews.com: Jodie T. Allen: Tax reform tossup (11/29/04)
USNews.com: Jodie T. Allen: Tax reform tossup (11/29/04): "So where would the needed revenues come from? Surely not from average wage earners, whose take-home pay has been nearly flat over the past decade. As for the wealthy, further tax benefits, like permanent repeal of the estate tax, are tops on Bush's list. Still, two sources are ripe for plucking, notes Yale Law School Prof. Michael Graetz: 'importers and cheats.' To tap them, Graetz proposes a 'progressive value-added tax' that would also vastly simplify life for most taxpayers. Under the plan, a 14 percent value-added tax would replace the income tax entirely for families with income below $100,000. A 25 percent flat tax would be levied on income in excess of that amount. To 'avoid some of the big shocks,' Graetz would keep deductions for home mortgages and charitable gifts. To avoid double taxation, state and local taxes would also be deductible--a feature the administration is considering dumping (after all, such levies tend to be highest in 'blue states')."