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

100 IRET Policy Bulletin 1 (2011)

handle is hein.taxfoundation/iretpbul0059 and id is 1 raw text is: _ _ _ _ _ _October 28, 2011 No. 100 ECONOMIC CONSEQUENCES OF THE WYDEN-COATS TAX PLAN Introduction In February 2010, Senators Ron Wyden (D-OR) and Judd Gregg (R-NH) introduced the Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018). The proposed legislation was reintroduced in April 2011, with small revisions, by Senators Wyden and Daniel Coats (R-IN) as the Bipartisan Tax Fairness and Simplification Act of 201 1 (S. 727). (Senator Gregg did not run for reelection in 2010.) Wyden-Gregg, now Wyden-Coats, would revamp the individual and corporate income taxes. The authors' goals are to make the income tax system simpler, fairer, and less distortionary, and more transparent than it currently is, while causing less damage to economic growth than would complete repeal of the Bush tax cuts. To collect as much revenue as does the current system, the proposal includes a number of changes that the authors characterize as loophole closers. Unfortunately, the plan accepts the notion that a broad based income tax is the ideal tax system, and seeks to make the income tax system more all-inclusive. The income tax is highly biased against saving and investment relative to consumption, with many instances of double taxation and overstatement of income. Many provisions of the current tax system are designed to reduce those biases, and create a more neutral, accurate, and unbiased tax base. These include pension and retirement plans, accelerated depreciation and expensing, and lower tax rates on capital gains and dividends. Such provisions are regarded by income tax advocates as loopholes or tax expenditures, but they are the norm under a uniform, neutral cash flow or consumed income tax. Mistakenly assuming that a broader tax income tax base must be a better tax base, Wyden-Coats would worsen the tax treatment of saving and investment in a manner very much at odds with good economic policy. It moves in the opposite direction of what would constitute real tax reform, which would be some form of saving-consumption neutral tax. (These issues are discussed more fully following the economic modeling results.) 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 economic growth and efficient operation of the market economy. on the Economics of 1710 Rhode Island Avenue, N.W., 11th Floor • Washington, D.C. 20036 Taxation (202) 463-1400 - Fax (202) 463-6199 - Internet www.iret.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