Friday, June 11, 2010

Down With the IRS? I Think Not!

Across the nation, Americans express concern about our country's perilous financial position. Everybody can chant the problems that we face, including an aging population with fewer workers funding Social Security, increasing health care cost, mounting government spending, and a massive debt passed on to our children and grandchildren. Many are worried about possible tax increases that will stunt economic growth.

Politicians and candidates for office give a lot of lip service to these problems, but there are few concrete proposals for reversing our economic condition. As I listen, all I hear is Republicans trying to protect the rich and business and corporate interests so that "wealth can trickle down", while Democrats spend money on social programs to improve the lot of the masses.  The country's budget is tapped with funding for the Wars in Iraq and Afghanistan.

One of the proposals for balancing the budget calls for the eliminaton of the IRS. Supporters of this plan claim that such a change is fair and simple and would improve ecomomic growth. Take a look at how this would work as explained by Michael J. Graetz, Columbia Law School professor in the June 2010 issue of the AARP Bulletin:

  • First, enact a value-added tax (VAT)-tax goods and services. Graetz says this system exists in 150 countries worldwide. (How much would the revenues from the VAT generate vs what we collect now through the current system using the IRS?)
  • Second, use some of these revenues to exempt $100,000 of family income and to lower tax rates on amounts above that amount. (Hmmm, sounds like more tax breaks for the rich to me.)
  • Third, lower the corporate income tax rate to 15 to 20 percent. (More of the "trikle down" mind set?)
  • Fourth, get rid of the earned-income tax credit and instead provide lower- and middle-income families with tax relief from the VAT burden and payroll tax offsets. (What's the cost impact?)
Graetz explains what he calls "significant advantages" to this "competitive" tax plan.
  • First, it would encourage saving and investment, stimulating economic growth and creating new opportunities for American families. (Translate that to dollars and cents impact on our ecomomic current situation.)
  • Second, it would free 250 million American families from dealing with the IRS.(What's the cost value of that?)
  • Third, our corporate income tax would be among the lowest in the world. (What does that mean in dollars and cents?)
  • Fourth, politician would be much less tempted to promote income tax breaks as solutions for the nation's economic problems. (???)
Well, after hearing this "detailed" plan with no figures plugged in to compare what we have now vs. what we'd get with the proposed change, I'm not convinced of the plans viability and I'm not inclined to favor this action.  It still sound like Ronald Reagan's failed supply side ecomomics and follows the Republican model favoring the rich and corporations. Of course, I'm just the average "Joe", with little background in finance and economics, so it's hard to figure this all out.

Fortunately (or unfortunately) Nevada's Republican candidate for Senator, Sharron Angle favors such a proposal along with eliminating the Depts. of Energy and Education, withdrawing from the United Nations, and eliminating Social Security and Medicare in favor of privitization.  All I have to do is listen to her "detailed" explanation of how these innovative, creative plans will all work to bring our country back from the brink of economic ruin and I'll be able to decide how to cast my vote.

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