“Pamela F. Olson, a former Bush Treasury official in close contact with administration tax planners, said the president will pursue a tax system where all income -- whether from wages, dividends, capital gains or interest -- is taxed only once. That would mean eliminating taxes on dividends and capital gains paid out of fully taxed corporate profits. Most investment gains are currently taxed at 15 percent.That’s your brave new Bushworld. The tax burden will further shift to the working class, as they lose their deductions (but not the taxes) for state and local taxes. Employers, already squirming under health insurance costs for employees, will be even more motivated to unload the whole mess on their workers, who will have only the cold comfort of Bush’s hare-brained health savings accounts in recompense. What this administration has been unable to digest is that people who don’t have money to spare in the first place aren’t going to set any aside for health savings accounts. When faced with an economic crunch, folks always put going to the doctor last. And when you are only making enough to just pay your bills from week to week, you aren’t going to put any of those precious funds somewhere you can’t get at them, like a personal retirement account, because you just may be facing a crisis sometime soon.
“The administration will also push hard for large savings accounts that could shelter thousands of dollars of deposits each year from taxation on investment gains, according to White House economic advisers who have been involved with the planning. And any tax reform, according to Treasury Department officials, would likely eliminate the alternative minimum tax, a parallel income tax designed to ensure that the rich pay income taxes but one that increasingly ensnares the middle class.
“To pay for those large tax cuts, the administration is looking at eliminating both the deduction for state and local taxes, and the business tax deduction for employer-sponsored health insurance. That would raise nearly $926 billion over five years, according to White House and congressional documents.
“Eliminating the state and local tax deduction, for example, would allow the administration to scuttle the alternative minimum tax and raise an extra $400 billion over 10 years, said Leonard E. Burman, a tax policy expert at the Urban Institute. That would be twice what the White House needs to fund the planned tax-free savings accounts, expanded retirement savings accounts and tax-free health savings accounts.”
But the wealthy will get richer, and that vaunted “trickle down effect” we heard so much about in the 80’s, and saw so little of, will once again be trotted out under the new mask of “encouraging economic growth”. Yeah. We’ve got some great results happening with those last couple of tax cuts that went down, don’t we?