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89 IRET Policy Bulletin 1 (2004)

handle is hein.taxfoundation/iretpbul0048 and id is 1 raw text is: _October 8, 2004 ____ ____ __ _ No. 89 A PRINCIPLED ANALYSIS OF JOHN KERRY'S TAX PROPOSALS Introduction and Summary Senator John Kerry (D-MA) calls for major tax and spending changes if he is elected President. The aim of this paper is to measure Senator Kerry's tax proposals against sound and consistent tax principles, and to determine whether his proposals would help or harm the economy and meet or fail to meet his goals of paying for expanded spending. Senator Kerry's tax plan combines more aggressive income redistribution with greater use of the tax system to assist various government-favored activities. He would hike taxes sharply on a relatively small number of firms and individuals to finance lower taxes and substantial tax rebates for a much larger number of firms and individuals. In an effort not to increase the deficit, he seeks to enact tax increases sufficient to pay for his spending proposals. For example, he expects that the revenue raisers directed against upper-income taxpayers will collect an extra $860 billion over 10 years to finance his health care and education initiatives. Senator Kerry proposes to increase taxation of upper-income individuals and to expand tax credits for lower- and middle-income individuals. He would repeal for people in the top two tax brackets the provisions of the 2001 and 2003 Tax Acts that gave tax rate relief and that provided capital gains and dividend tax relief. He would also repeal the provisions that eliminated the phase- outs of itemized deductions and personal exemptions. He supports continuing the middle-class elements of the tax cuts. He would continue to impose the estate tax on large estates. Senator Kerry charges that the foreign operations of U.S. companies hurt employment in this country and that loopholes in the tax code encourage those foreign operations. He recommends higher corporate taxes on U.S. companies with foreign operations and reduced corporate taxes for U.S. companies that stay at home. Although the Senator has promised not to raise most people's Social Security taxes or cut their benefits, he has left the door open to cutting the benefits of seniors who have significant non-Social Security income. 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 1710 Rhode Island Avenue, N.W., 11th Floor e Washington, D.C. 20036 Taxation (202) 463-1400 * Fax (202) 463-6199 * Internet www.iret.org

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