Maximum Growth Tax Reform is Fair
Reader comment on: Toomey on Taxes and Entitlements
Submitted by Eugene Patrick Devany (United States), Jul 25, 2012 20:29
Tax Reform, The Recession and The Wealth Gap
According to a July 2012 report from the Congressional Research Service, in 1995 the top 10% of the country had 67.8% of the country's wealth while the bottom 50% shared only 3.6% ($1,912 billion [in 2010 dollars]). The bottom share eroded to 2.5% before the Great Recession of 2007 and by 2010 it had tumbled to 1.1% ($584 billion) – (a 70% loss of $1,333 billion over 15 years). The share of the top 10% increased to 74.5% - a gain of $3,558 billion. This 15 year gain is six times the entire net wealth of half the country.
A wealth distribution ("wealth gap") of this extreme has not been seen in the U.S. since the Great Depression of 1929 (when unemployment was also as bad). Top income tax rates were increased from 24% to: 63%, 79%, 81%, 88% and finally to 94% in 1944 in order to correct the economic imbalance. The tax code today makes the economy less resilient because we have the regressive payroll taxes which destroy jobs and apply only to wages under $110,100.
Replacing payroll taxes with a 2% net wealth tax (excluding $15,000 cash and retirement funds) is the tough medicine needed to create millions of jobs (without government subsidy).
Income tax loopholes would be unnecessary if the tax rate was lowered to 8% (and capital gains, estate and gift taxes were eliminated). These changes encourage maximum investment.
Completing the perfect tax reform plan would be a 4% value added tax (VAT) on business and an 8% corporate income tax rate for the most competitive business rates in the world. Foreign profits would also return to the U.S. without switching to a territorial tax system.
Let us know at www.TaxNetWealth.com if you can identify a logical, legal or economic reason why this 2-4-8 Tax Blend would not produce a sustainable economic recovery as promised.
Eugene Patrick Devany, JD, MPA
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