Posted by
Gary Gross on Monday, September 04, 2006 10:49:11 AM
In Congress, I will make the needs of middle-class families a
priority so that they can achieve this dream. When it comes to making
changes to our tax system, I will always follow three basic principles:
- We need to make the tax system fair so that no one is overly burdened;
- We need to make the tax code simple so that families are able to file basic household taxes on their own;
- We need to be responsible to future generations and stop burdening our children and grandchildren with a growing national debt.
The plan that I support follows the principles mentioned above and
will help middle-class folks in buying a home, raising children, paying
for college and saving for retirement. With this plan, we can lift the
burden off of the middle class, provide them access to greater
opportunities and give them hope for the future.
The Plan
- The Simplified Family Credit
A credit for
working families with children that provides more benefits to families
while cutting 200 pages of the tax code into a 12 question form. It
will replace three existing credits: the Earned Income Tax Credit, the
Child Tax Credit and the Dependent Care Credit. - Universal Mortgage Deduction
A home mortgage deduction for all
homeowners, not just those who itemize their taxes. This approach is
less complicated, makes the benefit more accessible and will encourage
more home ownership. - The College Credit (Refundable Credit for Higher Education Expenses)
A college tax credit of $3,000 for all
college students. This credit will help increase access to higher
education and economic success. It combines several current tax
incentives: the Lifelong Learning Credit, the HOPE Scholarship, the
Deduction for Higher Education Expenses and the exclusions of
employer-provided education benefits and qualified tuition reductions. - Universal Pension
A single, portable retirement account to replace the “alphabet soup” of 16 existing IRA-type accounts.
The Cost
Cost of plan over 10 years
- The Simplified Family Credit - $250 billion over 10 years
- Universal Mortgage Deduction - $56 billion over 10 years
- The College Credit (Refundable Credit for Higher Education Expenses) - $83 billion over 10 years (over what the current credits cost – which is $92 billion)
- Universal Pension – negligible. Savings are gained from consolidation
Total: $389 billion over 10 years
Sounds good so far, right? We're just getting to where this stops being a tax cut.
The Possible Offsets
As part of this plan, I propose several possible offsets so that we
can provide relief for middle-class families without adding to the
deficit.
Economists estimate that over $300 billion is lost each year to
non-compliance (tax avoidance or underpayment). We can improve
compliance in part by simplifying the tax code. My plan makes
simplification an integral part of reform.
I will also propose closing these unfair loopholes in our tax law:
- Special rules for the oil and gas industries cost us $19 billion
- There is a corporate deduction for attorney’s fees that if closed could generate $327 million/10 years
- Imposing penalties for abuse of tax shelters gets us $20 billion/10 years
- Corporate jet executive loophole - $6 billion/10 years
- Bermuda offshore incorporation loophole - $5 billion
By Ms. Wetterling's calculations, the cuts equal $389 billion. Using Ms. Wetterling's numbers, my calculations tell me that the offsets equal $287.27 billion.Then there's the matter of credibility here. How likely is it that the trial attorney lobby, which Democrats are beholden to, would let Congress close the corporate deduction for attorney's fees? Less than slim? Little more than none? Or less than none? I'll choose C, less than none.What's the likelihood that they'd get the corporate jet executive 'loophole' closed? I'd suspect that it's less than zero after the first lobbyist heard about this proposal.Here's the Bachmann campaign's response: Today, Patty Wetterling flip-flopped on her stance on tax cuts. From her own words, we know that Patty has "strongly agreed" that a portion of the federal tax cuts enacted since 2001 should be repealed (Star Tribune 10/28/04) and it was reported in the Star Tribune that she "opposes making the Bush tax cuts permanent" (Star Tribune 2/19/06). The tax cuts Wetterling has said she would like to repeal include the elimination of the marriage penalty and the elimination of the death tax.
It sounds to me like Ms. Wetterling isn't proposing tax cuts; she's proposing cuts in her credibility. That isn't smart strategy. I'd doubt that it'll help her come November.