Tax Blend Karma: Mr. Romney Knows All About Paul Ryan's VAT and Donald Trump's Net Wealth Tax
Reader comment on: Romney-Ryan
Submitted by Eugene Patrick Devany (United States), Aug 11, 2012 19:00
Mr. Obama's Simpson-Bowles Commission was not permitted to consider a value added tax (VAT) or net wealth tax as potential tax reform tools. Blindfolded and with one hand tied behind their back they focused on tax expenditures (any deduction, credit, exemption, low rate, deferral or other "loophole" that reduces tax revenue). The commission members could not agree and congress is grateful for their efforts. The Japanese would have won World War II (or perhaps we would still be fighting it) if this group had been in charge of the 1939 Manhattan Project.
The proper understanding of economic incentives enables the design of a simple and fair tax reform that will maximize job creation and business investment. It corrects the four major problems in today's economy generally overlooked by other tax reforms:
• Payroll taxes of 15% discourage new job creation by increasing the cost of labor (employer share) and reducing broad based consumer spending (employee share).
• Social Security and Medicare consume too much (about half) of the income tax base and overload the middle class portion (earnings under $110,000).
• The wealth gap is the result of the tax code which left half the country with only 3.6% of the net wealth in 1995. The bottom share eroded to 2.5% a couple of years before the Great Recession of 2007 and by 2010 it was only 1.1% ($584 billion) – (a loss of $1,333 billion over 15 years). The top 10% gained 6.7% ($3,558 billion). A wealth imbalance this large last existed just before the Great Depression of 1929.
• Tax expenditures are secret transfers (computed only on private tax returns) which each year redistribute $1.3 trillion - twice the wealth owned by half the country. These 250 "loopholes" can be eliminated with the right bargaining chip – like a low 8% income tax rate which makes existing tax loopholes unnecessary.
We can begin by eliminating business tax expenditures in exchange for an 8% corporate income tax rate and 4% VAT. The U.S. remains the only developed country without a VAT and that is the only reason why we have the highest corporate tax rate and several trillion in foreign profits not returned and reinvested in the U.S.
Individual tax expenditures can also be replaced with an 8% individual income tax rate if we also replace the job killing payroll taxes with a 2% net wealth tax (excluding $15,000 cash and retirement funds).
Keep in mind that Mr. Romney's most important primary endorsement came from net wealth tax supporter, Donald Trump and his most important decision has been the Vice Presidential selection of VAT supporter, Paul Ryan. Mr. Romney may be destined to put good people and good ideas together - imagine:
• Millions of new jobs with no government spending
• Adequate funding for Social Security and Medicare
• Rich and poor paying the same low fair tax rates
• At least $500 billion more revenue each year (or optionally revenue neutral by proportionately reducing the already low 2%, 4% & 8% tax rates)
Let us know at 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. Otherwise, please forward a copy of this comment to your representatives in Washington from both parties to respectfully let them know that you expect them to fairly reform the tax system or die trying.
Eugene Patrick Devany, JD, MPA
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Other reader comments on this item
|Great choice [39 words]||richard40||Aug 12, 2012 18:45|
|⇒ Tax Blend Karma: Mr. Romney Knows All About Paul Ryan's VAT and Donald Trump's Net Wealth Tax [574 words]||Eugene Patrick Devany||Aug 11, 2012 19:00|
|Obama cut medicare by $600 BILLION [12 words]||lester||Aug 11, 2012 09:55|
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