This article from CNN resonates with me unlike anything else that has been proposed with the current US tax code.
A very simple premise: instead of taxing income, tax spending.
Going back to a post from last year, and now with Mitt Romney paying an effective tax rate of 14.1% – because almost all his ‘income’ are not traditional income, i.e., income from labor, but capital gains and investments.
Mr. McCaffery makes a very cogent point: “For most Americans, living paycheck to paycheck, spending (after taxes) pretty much equals income (after taxes). It’s a good guess that the Romneys are spending a great deal more than the income they are showing on their tax returns.”
He goes on, “Meantime, we have a tax system set up to encourage spending and borrowing, especially by the rich. The only way to raise taxes under today’s income tax is to increase the burdens on working and saving — just about the last things we should be doing.”
Thank you, Mr. McCaffery, thank you!