About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

47 IRET Congressional Advisory 1 (1995)

handle is hein.taxfoundation/iretcgadv0045 and id is 1 raw text is: July 7, 1995 No. 47 GEPHARDT TAX PLAN: COMPLEX AND BIASED AGAINST SAVING AND GROWTH House Minority Leader Richard Gephardt (D- MO) has entered the tax restructuring sweepstakes with a misguided proposal that would damage the economy and do nothing to simplify the The Gephar tax system. completely n PointOf tax r, The Gephardt proposal has th ofbias o tar completely missed the thaist o.l... economic point of tax restructuring -- ending the bias of the current tax system against saving and investment so that productivity, wages, employment, and GDP can grow faster. Instead, the Gephardt plan would accentuate the anti-saving bias to pay for modest rate cuts for low income taxpayers. The result would be a temporary windfall for low income taxpayers but at a terrible price. The Gephardt plan would reduce saving and capital formation, would cut the growth of productivity, wages, and employment relative to current law, and would hurt the very people it claims to help. Claims that the proposal would simplify the tax system are largely spurious, and there may be substantial additional costs of enforcement and compliance associated with the plan. At odds with real tax restructuring proposals The Gephardt proposal runs counter to the thrust of every other major tax reform proposal currently on the table - the savings exempt income tax of Senators Domenici and Nunn, the Armey flat tax and its variations, the national sales tax recommended by Representative Archer and Senator Lugar- all of which seek to end the current tax system's destructive bias against saving and investment. The income tax is imposed once on income used for consumption. It is imposed two or three times on income that is saved in bank accounts, bonds, or corporate stock, and a fourth layer of tax is levied on gifts and estates. The other proposals seek to end the multiple taxation of income -dt proposal has issed the economic tructuring - ending current tax system and investment. inventory, plant, that is saved so that savings, investment, productivity, wages, and employment can grow more rapidly. In the process, they would truly simplify the tax code by ending the provisions that generate the majority of regulations and confusion: calculation of capital gains; complex depreciation rules for equipment, and structures; confusing tax rules regarding foreign source income; and limitations on pension and other saving plans. The Gephardt proposal does none of these things. Increased bias against saving and growth Most of the so-called loopholes that the Gephardt plan seeks to eliminate are not loopholes at all, but merely partial relief from the multiple taxation of saving and investment that would otherwise occur. While other reforms seek to tax all income once and only once, the Gephardt plan seeks to expand and perfect the multiple taxation of capital. Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N.W., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www. ret.org

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most