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97 IRET Congressional Advisory 1 (2000)

handle is hein.taxfoundation/iretcgadv0094 and id is 1 raw text is: February 2, 2000 No. 97 BILL BRADLEY SHOOTS FOR HIGHER TAXES Former Senator Bill Bradley stated in December that, if elected President, he would use none of the projected federal budget surplus for tax relief unless there is a recession. He said, I don't think that that would be the most prudent use of [Raising tax public revenues. Instead, he plans to spend much of the t Oaxayther surplus on higher government outlays. (Interview with The Mr. Bradley e Washington Post on hikes are use December 2, 1999, accessed at which Mr. Br www.washingtonpost.com/wp- out... All the dyn/articles/A 123 13- Senator's proj 1999Dec3.html.) On January fall on busine 4, Senator Bradley proposed a or consumers, package of primarily business save. tax increases to finance part of his spending program. He said the tax package would save American taxpayers roughly $125 billion over ten years. (Fact sheet on plan accessed at www.bill- bradley.com.) The first thing to note is that raising taxes on one group of taxpayers does not save money for other taxpayers, as Mr. Bradley claims, unless the tax hikes are used to fund tax cuts, which Mr. Bradley expressly rules out. Businesses do not pay taxes, only people do. All the tax increases in the Senator's proposal will ultimately fall on business owners, workers or consumers, who will pay, not save. The tax hikes mean more money for Washington to spend on programs that the population may or may not favor as highly as the private-sector output that will be crowded out in the process. Second, the Bradley plan is badly flawed in terms of the specific tax changes that he recommends. Most of the tax provisions Senator Bradley brands as loopholes are actually proper tax treatment designed to offset what would otherwise be damaging multiple layers of tax on the affected activities, or are normal tax planning techniques. Many of the tax proposals would not raise the expected revenue because the activities they hit are not widespread and would shrink as a result of the tax s on one group of not save money taxpayers, a s !aims, unless the tax d to fund tax cutts, dley expressly riles tax increases in the ,osal wvill ultimately 'ss owners, workers who will pay, not IRS crack dow proposes stepped stiffer tax penalt change. All the proposals would raise taxes on investment - income and would retard capital formation. Specific proposals Tougher enforcement and penalties. Most of the Bradley tax increase, $100 billion over 10 years, is supposed to come from tougher IRS treatment of large corporations. According to Senator Bradley, this big jump in corporate taxes, about 5% m compared to current law, can be collected by means of an n on abusive tax shelters. He up IRS audits of large companies, ies, a requirement that companies explain any differences between financial-statement income and taxable income, and a ban on contingency fees for tax advice. Assuming more taxes from large companies through tougher tax enforcement and higher penalties rests on the mistaken notions that major corporations routinely commit large, blatant tax 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 inorming the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www. ret.org

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