What’s Ahead for U.S. Tax Policy?

What is ahead for U.S. tax policy?* The Dubya Squad are well-known for their bold, angels-fear-to-tread moves, and yet I think that when it comes right down to it, a tax revolution along the lines of the “Fair Tax” Act is just too weak of a limb for a sufficient number of legislators to go out on.

More likely by far will be a move to make permanent the various cuts that were enacted with expiration dates in Dubya’s first term, along with AMT relief. This, with any luck, will result in 3.3 trillion fewer dollars going in to the U.S. treasury. “The net budget loss (including higher debt service payments due to increases in federal debt) would be almost $4.5 trillion.”

It appears that Dubya and Osama are united in wanting to plunge the U.S. government into bankruptcy. I hope that we, as a nation, can unite in support of this bold plan.

The current momentum of tax policy has been on the whole very good for tax resisters like myself. It’s become increasingly easy to live a life of comfort and financial security without either paying income tax or stirring up the hornets at the IRS.

Expansions of personal savings accounts (of various flavors) are being floated as second-term possibilities, which would help us shield yet more income from the tax collector. A yet-to-be-fleshed-out idea of “privatizing” social security is also being floated — and whatever its other merits or lack thereof, such a plan might become a way of keeping even more of our money out of the hands of the Republicans in power by creating an “out” within the stubbornly difficult-to-dodge FICA payroll tax.

* — You could ask Dubya, I suppose, but then you’d get an answer like this:

I was anticipating this question; that, what is the first thing you’re going to do? When it comes it legislation, it just doesn’t work that way, particularly when you’ve laid out a comprehensive agenda. And part of that comprehensive agenda is tax simplification. The — first of all, a principle would be revenue neutral. If I’m going to — if there was a need to raise taxes, I’d say, let’s have a tax bill that raises taxes, as opposed to let’s simply the tax code and sneak a tax increase on the people. It’s just not my style. I don’t believe we need to raise taxes. I’ve said that to the American people. And so the simplification would be the goal. Now, secondly, that obviously, that it rewards risk and doesn’t — it doesn’t have unnecessary penalties in it. But the main thing is that it would be viewed as fair, that it would be a fair system, that it wouldn’t be complicated, that there’s a — kind of that loopholes wouldn’t be there for special interests, that the code itself be viewed and deemed as a very fair way to encourage people to invest and save and achieve certain fiscal objectives in our country, as well. One of the interesting debates will be, of course, in the course of simplification, will there be incentives in the code: charitable giving, of course, and mortgage deductions are very important. As governor of Texas, when I — some time I think I was asked about simplification, I always noted how important it was for certain incentives to be built into the tax code, and that will be an interesting part of the debate. Certain issues come quicker than others in the course of a legislative session, and that depends upon whether or not those issues have been debated. I think of, for example, the legal issue — the legal reform issues, they have been — medical liability reform had been debated and got thwarted a couple of times in one body in particular on Capitol Hill. And so the groundwork has been laid for some legislation that I’ve been talking about. On an issue like tax reform it’s going to — tax simplification, it’s going to take a lot of legwork to get something ready for a legislative package. I fully understand that. And Social Security reform will require some additional legwork, although the Moynihan Commission has laid the groundwork for what I think is a very good place to start the debate.