{"id":18493,"date":"2017-07-13T22:28:37","date_gmt":"2017-07-14T04:28:37","guid":{"rendered":"http:\/\/lastbestnews.com\/site\/?p=18493"},"modified":"2017-07-13T22:28:37","modified_gmt":"2017-07-14T04:28:37","slug":"opinion-tax-reform-how-about-giving-plan-b-a-try","status":"publish","type":"post","link":"https:\/\/montana-mint.com\/lastbestnews\/2017\/07\/opinion-tax-reform-how-about-giving-plan-b-a-try\/","title":{"rendered":"Opinion: Tax reform? How about giving Plan B a try?"},"content":{"rendered":"
\"Bruce<\/a>

Bruce Lohof<\/p><\/div>\n

I wonder if, earlier this month, Montana\u2019s congressional delegation was listening when Steve Bannon, disrupter-in-chief in the Trump White House, suggested raising taxes on the wealthy to defray the costs of substantial middle- and working-class tax cuts.<\/p>\n

Bannon\u2019s balloon was quickly pricked by others in the White House: Treasury Secretary Steven Mnuchin said that he\u2019d \u201cnever heard Steve mention that,\u201d adding that, in any case, a higher top tax rate isn\u2019t on the table.<\/p>\n

Forbes reported that \u201cSteve Bannon wants to soak the rich\u2014or at least leave them a little bit damp.\u201d Not very damp, though: apparently, he \u201cwants the top income tax bracket to \u2018have a 4 in front of it,\u2019\u201d which isn\u2019t even a spritz in a world where the top bracket is already 39.6 percent.<\/p>\n

Here\u2019s a better proposal. Call it Plan B.<\/p>\n

One, discard every deduction, exclusion, exemption, deferral and preference in the U.S.\u2019s 70,000-page Tax Code. Discard, that is to say, what the policy wonks call \u201ctax expenditures.\u201d In Form-1040-speak: \u201cadjusted gross income\u201d disappears and taxes are paid on \u201ctotal income.\u201d<\/p>\n

Two, replace tax brackets with tax slabs, each $50,000 thick. In slab No. 1 are total incomes of $0 to $50,000, in slab No. 2 are incomes of $50,000 to $100,000, and so on to slab No. 20 where incomes of $950,000 to $1,000,000 are found. Total income in slab No. 1 is taxed at a rate of 5 percent. Income within each higher slab is taxed at 10 percent, 15 percent, 20 percent, etc., until, at slab No. 20, each dollar is taxed at 100 percent.<\/p>\n

I\u2019ll do some of the arithmetic for you: the average household income in Montana\u2014which I\u2019m told is $47,000\u2013would attract a 5 percent tax bill of $2,350. An income of $250,000 would be taxed at 18.3 percent, $500,000 at 38.3 percent, $750,000 at 51.7 percent, $1 million at 68.3 percent, $2 million at 91.9 percent. (Since you\u2019ve asked, taxes on $2 million would be $1.8 million and change.)<\/p>\n

(Older readers of the New Yorker will be reminded of Calvin Trillin\u2019s \u201cAlice Tax.\u201d Named after Trillin\u2019s wife, the tax reflected Alice\u2019s belief \u201cin the principle of enoughness.\u201d \u201c\u2026 at a certain point an annual income is simply more than anybody could possibly need for even a lavish style of living.\u201d At that point, Alice thought, \u201cgovernment would simply take everything.\u201d)<\/p>\n

The advantages of Plan B are obvious\u2014and attractive.<\/p>\n

One, it\u2019s simple. During the 2016 presidential campaign Ted Cruz spoke for many when he hoped for a \u201ctax [system] that would allow every American to fill out his or her taxes on a postcard.\u201d Plan B replaces every existing IRS form with a five-line filing: your identity (a Social Security number will do), your total income (no adjustments permitted), taxes payable (taken from the IRS\u2019 only publication), taxes already withheld or otherwise paid, taxes due (enclose check here). That\u2019s all.<\/p>\n

\"CapreAir_Variable\"<\/a><\/div><\/div>Two, it\u2019s fair. It\u2019s common knowledge that when tax policies are progressive\u2014as they have been in the U.S. for more than a century\u2014tax rates correlate with income, i.e., the more you earn the higher your tax rate.<\/p>\n

Less often acknowledged but equally true, progressive rates also correlate with benefits. Few government benefits\u2014Medicaid and food stamps come to mind\u2014are paid only to the poor. Most accrue to all, and incrementally with affluence. Do only the poor benefit from defense expenditures, or Medicare or Social Security programs? Don\u2019t you need an automobile or an airplane ticket to take advantage of the nation\u2019s Interstate highways or its airports?<\/p>\n

And perhaps it\u2019s best not to mention how the \u201cbenefits\u201d of the criminal justice system morph with movement from actual wealth through affluence and down into poverty. The bottom line: everyone enjoys the public table. It\u2019s just that the well-to-do get larger portions.<\/p>\n

Three, it raises public revenue, which is the purpose of a tax system. The public should get\u2014and pay for\u2014the government that it wants. If Plan B attracts a surplus, the rates per slab can be reduced; if it creates a deficit, rates can be increased. The plan doesn\u2019t reward homeowners for paying mortgage interest or hedge fund managers for carrying interest or landlords for property depreciation or farmers or fishermen for being farmers and fishermen. It just raises public revenue (which, in a climate as politicized as ours is nowadays, is worth repeating).<\/p>\n

Would Plan B attract critics? You bet.<\/p>\n

In the largest\u2014but not the most influential\u2014group would be folks who believe, mistakenly, that the plan would increase their taxes. Lose exemptions for us and the kids, a family of four might argue, and then lose those juicy itemized deductions in Schedule A, and we\u2019re toast. Probably not. Probably their new and lower tax rate\u2014\u00b18 percent for an income of $100,000 or less\u2014would mean a new and lower tax bill. Still, their anxiety is understandable.<\/p>\n

A second group, smaller but vastly more influential, would include folks who believe, correctly, that the plan would increase their taxes. Discard the tax expenditures enjoyed by the wealthy\u2014think capital gains rates, carried interest scams and the whole panoply of goodies available to, say, real estate developers\u2014and then move the maximum tax rate from 39.6 percent to 68.3 percent and higher (on the first $1 million and beyond). Anxiety morphs into political action.<\/p>\n

In a still smaller\u2014but at the upper reaches equally influential\u2014group would be folks who make up the \u201ctax industry,\u201d folks familiar with a tax code too cumbersome for the average filer. The bottom feeder is the high school social studies teacher who moonlights each spring semester with H&R Block. The sharks are the white-shoe lawyers and\/or lobbyists who interpret and\/or write tax law. What do these folks share? An addiction to complexity. What do they fear? A tax plan so uncomplicated that a taxpayer could \u201cfill out his or her taxes on a postcard.\u201d<\/p>\n

Despite its attractions, and considering its critics, Plan B is a long shot. Still, double back with me to the Forbes take on Steve Bannon. He \u201cwants to use tax hikes on the rich to pay for tax cuts for the middle and working class. Apparently, President Trump\u2019s chief political strategist believes such a move would be a \u2018potent populist idea.\u2019 Bannon may be right. Raising taxes on the rich tends to poll pretty well. … [M]aybe tax hikes on the rich will be Trump\u2019s \u2018Sister Souljah moment<\/a>.’\u201d<\/p>\n

Not only a Sister Souljah moment. Think Nixon in China, 1972. Only a virulent anticommunist like Nixon would have survived rapprochement with the Peoples Republic. Just so with tax reform. Only a plutocrat\u2019s politician like Trump could survive the rollout of Plan B.<\/p>\n

Besides, in the first six months of his presidency, Trump has delivered nothing to his political base. Plan B, by contrast, would be something that they could, quite literally, take to the bank.<\/p>\n

Bruce A. Lohof is a native of Montana. A former professor and a retired diplomat, he lives in Vienna and in Red Lodge.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

I wonder if, earlier this month, Montana\u2019s congressional delegation was listening when Steve Bannon, disrupter-in-chief in the Trump White House, suggested raising taxes on the wealthy to defray the costs of substantial middle- and working-class tax cuts. Bannon\u2019s balloon was quickly pricked by others in the White House: Treasury Secretary Steven Mnuchin said that he\u2019d […]<\/p>\n","protected":false},"author":76,"featured_media":18494,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3864],"tags":[2853,5229,5698,6055],"class_list":["post-18493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","tag-donald-trump","tag-forbes","tag-steve-bannon","tag-tax-reform","prominence-category-featured"],"_links":{"self":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/18493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/users\/76"}],"replies":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/comments?post=18493"}],"version-history":[{"count":1,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/18493\/revisions"}],"predecessor-version":[{"id":18495,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/18493\/revisions\/18495"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media\/18494"}],"wp:attachment":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media?parent=18493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/categories?post=18493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/tags?post=18493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}