September 6, 2004 - George Bush wants to simplify the tax code. At least that is what he says. “"In a new term, I will lead a bipartisan effort to reform and simplify and make fair the federal tax code." He has already floated one idea, replacing the graduated income tax with a national sales tax. He floated it and when it did not soar claimed that people were putting words in his mouth. His aides are touting a flat tax proposal. They would replace the graduated income tax with a tax in which every one would pay the same rate without deductions or credits. His aides say both suggestions “deserve consideration”. The White House says that the President will issue an executive order creating a special commission to report to the Secretary of the Treasury some time in 2005. The panel will be directed to come up with a revenue neutral plan; that is one that will not produce any more money than the present tax system – one that will not close the deficit gap from the revenue side.
Investment income, interest, rental income, dividends and capital gains would not be included in the definition of income under the flat tax plans the Republicans are touting. The Republican idea would tax only that income received by individuals as wages or salaries – a flat tax on paychecks to produce the same dollars as the present system. Under their proposals Bill Gates and Warren Buffet would pay the same flat rate on their paychecks as you and I. The bulk of the magnates’ income would come to them tax free.
According to the President and his advisors making millionaires’ income tax free produces jobs for the rest of us to do. In the economic world according to Bush small business men like Gates and Buffet and Ken Lay use their income to drive our economy and letting them keep more of their money will produce more jobs. The Lays of Bush’s world after all, need to employ a whole bunch of maids and gardeners just to maintain the ten mansions that they own. They have to hire deckhands to operate their yachts and cooks to run their kitchens not to mention the staff to serve snacks when they entertain. Each one of those jobs produce paychecks and the taxes that go with them. It is simple logic; very simple logic.
When Democrats point out that with every new tax cut more of the economic burden is shifted to the wage earners the Republicans cry in horror that class warfare is out of place in a classless society. They say we need more competition to make the economy grow and that the winners should not be penalized for success. The corollary is, of course, that the losers should be penalized for having lost. It is a difference in philosophy; whether we see America as a commonwealth sharing its benefits or a contest in which the working man is always the loser and the boss is always the winner.
Whether it is the Republican’s flat tax rhetorical twist or the a national consumption tax every proposal they make to “simplify” the tax code ends up taxing paychecks while the dividend checks are made tax free. That is the Bush economic plan for a second term – make more jobs by shifting the tax burden to your paycheck. It is a simple plan to create more taxing labor for the working man.
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