9/18/2023 0 Comments Has the us ever had a flat tax![]() ![]() In the same vein, the 2001 tax cut repeals the Estate and Gift Tax by 2010, but revives it in 2011. The president and Congress have been conspicuously silent about the AMT, aside from enacting limited, temporary relief from it. ![]() After-tax dollars can be used to buy tax-free financial assets. Flat tax treatment of savings exactly parallels existing Roth IRAs, but without the income limitations. The individual pays no tax on interest, dividends or capital gains. Its investments - capital expenditures - are analogous to contributions and deductible to the firm its returns - profits used to pay interest and dividends - are taxable. What about IRAs? There is no provision for IRAs in the flat tax. No politician has been caught favoring the taxation of interest paid by business firms. Profits include funds used to pay creditors. Instant depreciation is consistent with flat tax treatment of business income, but it goes along with the full taxation of profits. None of these measures accord with the flat tax. Reducing the top marginal rates makes the bumpy income tax somewhat flatter, but the president also boasts of the new 10 percent bracket, the expanded, partially-refundable Child Tax Credit and extended marginal brackets for couples that reduce marriage penalties. Norquist claims that tax cuts enacted over the past three years fit the enlightened design embodied in his five-step program. Norquist cites five steps to fundamental tax reform: elimination of the Alternative Minimum Tax (AMT), the Estate and Gift Tax and taxes on capital gains, plus immediate depreciation of all capital expenditures, and fully-flexible Individual Retirement Accounts (IRAs) that permit sheltering all savings from taxation. In either case, the rough beast of federal income taxation is slouching not towards the flat tax, but to something quite different. It is certainly a fundamental reform whether it is desirable is a different matter. The Norquist ideal is the flat tax invented by Robert Hall and Alvin Rabushka and promoted by Steve Forbes: the famous tax you can do on a postcard. Where others see budget-busting largesse to the rich, he sees inexorable progress towards fundamental tax reform. Opinion pieces and speeches by EPI staff and associates.Ĭonservative activist Grover Norquist has essayed the daunting feat of putting a sober face on the Bush administration’s bacchanal of tax cuts. ![]()
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