With the House Ways and Means Committee voting on repeal of the death tax next week, there is renewed hope that this inappropriate tax will soon kick the bucket. Although descendants of the deceased are most directly hurt by the death tax, everyone else gets hurt economically as well.
Repeal of the death tax would create a small, but significant, economic boost, according to Alan Cole of the Tax Foundation. “Repealing the estate tax in the United States would increase investment, add jobs, and expand the economy,” Cole says. Over the course of a decade, repealing the death tax would create 139,000 jobs. It would also boost the economy by 0.8 percent, or by over $100 billion dollars. Wages would rise by 0.7 percent.
The boost comes from lifting the tax burden on accumulated wealth, which Cole says improves the economy. When accumulated wealth is taxed, the government redistributes it in inefficient ways, and those hit by the tax try to shift their assets into less productive endeavors. As a result, money flows into life insurance policies and government coffers instead of into job-creating capital.
Read the rest at the Washington Examiner…
To many in Washington, DC, comprehensive tax reform seems like a mirage. It is something to be spoken about, to float dream-world proposals of, and for bureaucrats to build careers chasing, without ever amounting to anything in law.
Yet, periodically, we see serious proposals emerge to fix the tax system once and for all. Some are good, some come up short, but all aim to make the system simpler and easier for average people to deal with.
The latest of these plans is the Economic Growth and Family Fairness Tax Plan, better known as the Rubio-Lee plan, after the senators who proposed it. The plan would fix many, if not the large majority, of the problems with the current federal tax system.
Some highlights include the end of damaging extraterritorial taxation of corporate income, ending taxation of capital income, and ending the vast majority of itemized deductions. All of these would dramatically simplify the current tax system for both corporations and average citizens, and remove much of the confusion that confronts taxpayers each April when they file their income taxes.
Simplifying the corporate tax system and ending taxation of capital income are clear and well-understood measures that would boost the economy. Ending extraterritorial taxation of corporate income and lowering the overall corporate tax rate are major components of the Rubio-Lee proposal.
We know the United States has one of the highest and most burdensome corporate tax regimes in the developed world, lagging behind her peers in Europe. The Rubio-Lee plan would put an end to that, encouraging companies to invest in new US operations, and bring some of the cash they have abroad for tax purposes back to the United States.
Read the rest at the PanAm Post…