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81 IRET Policy Bulletin 1 (2000)

handle is hein.taxfoundation/iretpbul0040 and id is 1 raw text is: August 30, 2000 No. 81 TOWARDS A BETTER TAX SYSTEM: THE BUSH PLAN In his campaign for the Presidency, Texas Governor George W. Bush has placed tax reform at the top of his economic agenda. Gov. Bush argues that federal taxes are too high and too distortionary. He and his advisors have developed a plan that would achieve major improvements in both areas. The centerpiece of Gov. Bush's plan is cutting the individual income tax's marginal rate brackets. He recommends replacing the current five brackets of 15%, 28%, 31%, 36%, and 39.6% with four brackets of 10%, 15%, 25%, and 33%. Another key element of the plan is starting to reform the tax- and-spend Social Security system by permitting workers to redirect into personal retirement accounts part of what they now pay in Social Security taxes. Many of the plan's provisions would lower marginal tax rates indirectly by changing how taxable income is measured. A few provisions would not affect marginal tax rates; Gov. Bush included them mainly for social policy reasons. All parts of the plan would lower people's federal tax bills. Texas Gover-nor- Geor-ge W. Bush ..ar-gues that feder-al taxes ar-e too high and too distortionary. He and his advisors have developed a plan that would achieve major- improvements in both ar-eas. In arguing that the government is taxing away from people too much of the money they have earned through their productive efforts, Gov. Bush observes that taxes have climbed to a peacetime record share of people's production and incomes (an estimated 20.6% in 2000).1 Gov. Bush also expresses concern that unless the extra taxes are speedily returned to the American people, they will fuel bigger government: historically, the federal government quickly spends all the revenues it receives. Gov. Bush objects not just to the level of U.S. taxes but to the economic distortions they create. The income tax sharply reduces saving and investment through multiple taxation (several layers of ' See Congressional Budget Office, The Budget And Economic Outlook: An Update, July 2000, accessed at www.cbo.gov. Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1730 K Street, N.W., Suite 910 e Washington, D.C. 20006 Taxation (202) 463-1400 * Fax (202) 463-6199 e Internet www.iret.org

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