Wall street journal analysis – Assignment Example
Reforming our Tax According to Dave Camp A recent op-ed article by Dave Camp outlined a very comprehensive reform to the tax code that will be proposed to congress, and it gleaned more than 300 comments in one day and that is still rising. This topic is as hot as a chunk of obsidian in the Sahara desert. The proposals made within the article would make most personal income-tax payers extremely happy. It proposes simplification of the code itself, elimination of weighty benefits that cost the country revenue from high earners and a more level tax responsibility for all. While there is no guarantee that this proposed reform will ever see the light of day as it is, without tons of attached modifications, if some of the simplification and the benefits for average earners gets through it will be a welcome reform.
Camp suggests that the simplification of the code is absolutely necessary, because it is now "ten times the size of the Bible", and too complicated for most people to understand. He calls this proposal a plan to make the tax code simpler and more fair. He suggests that the tax code should make it easier for companies to bring back foreign-made income so that it can build our own economy. It should also promote the growth of small businesses rather than get in the way. Finally, he suggests that it should be fairer and flatter, that is taxing everyone who earns, no matter how that income is earned, at approximately the same rate. He claims that if this proposal were adopted the tax code would be simpler, fairer and flatter for everyone.
The simplification that he suggests would make it so that every family could file their own taxes without the need of an accountant. It would also eliminate the worries that hiring an accountant might get them a better refund. Things like tax breaks for education, losses, and other such middle-class benefits would be consolidated into simple rules. The number of required forms would be reduced to the bare minimum. These benefits would be extended across the board to include businesses making it both easier to file and easier to understand. Camp claims that following this plan 95% of all taxpayers would be able to file the simple form and get the best possible refund.
In looking at the fairness, his proposed reform would include fairness to the government and all taxpayers. The proposal would get rid of special interest benefits and lower tax rates for individuals, families and all businesses. By using this standard, 99% of taxpayers would face a top rate of 25% and an introductory rate for the lowest income earners, with incomes above a certain minimum that equates to the current poverty level, of 10%. As a result, the government would get at least 10% from all persons earning over the poverty level and have more revenue, even though the top rate for most earners would be 25%. He also expects this to result in higher wages and economic growth amounting to $3.4 trillion over the next decade, about 20%. This is really not so amazing if one looks at the numbers. The problem lies in getting it through both houses of Congress without having hundreds of "pork belly" bills attached to it. These are things that legislators add to benefit their own constituents and the attached bills do not have to have anything at all to do with the subject of the proposal. (This is likely a good part of the chaff already in there.) It would mean that the average family of four earning around $51,000 a year would have $1300 more per year to spin if this miracle of legislation could be achieved. Camp cites some of the reasons that this will work in just the way described, and the article explains everything in plain English.
The comments on this article range from disbelief that he could be accomplished and disbelief that he would do anything that claim to, "lets get it done!" This article presents an interesting overview and outline of what could be done and what we hope will be proposed and pass into law. The comments are coming in so fast that one by Michael Lipman suggesting parallel processing for the new and the old has already scrolled off by several pages since reading it. That parallel processing would mean that filers could choose to use the old forms or the new until everyone had switched to the new or been given sufficient time to do so, before there would be only the new forms. That makes a great deal of sense. I really hope Camp is reading the comments.
Just reading all the comments can already take hours to do, but it is worthwhile. They are very interesting and some are quite entertaining. Many of them mention things that we all will want to know, so it will likely prompt a lot of research. This is a good read, including the comments, for anyone who pays taxes. I think it is time for this to be done.
Camp, D. (2014). Dave camp: how to fix our appalling tax code. [online] Retrieved from: http://online.wsj.com/news/articles/SB10001424052702303426304579403252458098042 [Accessed: 2 Mar 2014].