Progressive Income Tax Reform in Fiscal Commission Co-Chairs' Proposal

[deaniac83]

This is an excerpt of the first in my new mini-series covering the Fiscal Commission Co-Chairs' Proposal (released Wednesday) in depth. Why an excerpt? One because it's long, and two because I'd have to reformat the whole thing to post it with links and everything.

...The proposal, however, is about more than just Medicare and Social Security. It is about a wide range of changes to the federal budget and the federal tax code. While a lot of it entails painful choices, the proposal presents some unique and valuable opportunities for progressives that most of the coverage is completely missing. So today I start this small series to cover Chairs' proposal in detail. Today's part will focus on the income tax reform proposals (both individual and corporate)...

A lot of liberal activists are prone to put up a defensive wall as soon as the words "tax reform" are spoken, as the right has used it to serve their regressive tax agenda. But the tax reform proposals by the co-chairs of the Fiscal Commission are thought-provoking and mostly with progressive policy merit. They propose three plans, which I will go through one by one.

First is the "Zero Plan," which will significantly lower the tax rate while eliminating all the tax expenditures (i.e. itemized deductions), and then it forces Congress to raise the rates as exemptions are put back in. At the bottom-line, all-deductions-gone level, the current 10% and 15% rates drop to 8%, the current 25% and 28% rates fall to 15%, the top rate falls to 24% and the corporate rate to 26%. And it makes some very important progressive changes:

First and most importantly, it treats income from capital gains and dividends as ordinary income, ending their special tax treatment...

Read the full article here: http://www.thepeoplesview.net/2010/11/fiscal-commission-chairs-proposal.html