Bush Plans Tax Code Overhaul (and Creation of Feudal State)

[Frederic Bastiat]

http://www.washingtonpost.com/wp-dyn/articles/A58554-2004Nov17.html?sub=AR

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Instead the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.

The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said.

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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.

[Florida_Geek]

1. Sweet

He sure knows how to care for his base.

[fertilizeonarbusto]

2. OK, values voters

I hope that keeping two hairdressers from getting married is going to be worth your vanished health insurance now that your employer will have no fiscal reason to pay for it. Enjoy your cat food, which is your new diet because all your money is going to pay for that flu you got last month, fuckers.

[JPZenger]

3. Screw Over the Blue States

The Blue states typically have higher state and local income taxes than the Red states. Some Red states don't have any state income tax. Therefore, the Administration is trying to screw over the Blue states. If the state and local income taxes can now longer be deducted, the people in the Blue taxes will be paying much higher total amounts of income taxes than the people in the Red states.

The proceeds of that tax increase would be used for another big tax giveway for the rich - getting rid of the alternative minimum tax that is designed to prevent excessive use of loopholes by the rich. Also, the rich generate much higher percentages of their income from stock dividends than the average person. So the guy who sits on a beach and collects stock dividends will be paying lower income tax rates than the guy who goes off to work every day and earns his money.

[Warpy]

4. Hey, let him

This is going to hurt a whole lot of people. This will financially ruin much of his voter base, which means the voter base of the GOP. Unless they're able to scapegoat Bush in the future and say the party at large had nothing to do with ruining the middle class (a tall order, since he needs the approval of the GOP congress to do it), some of them will start to wake up and realize who the enemy is.

The insurance industry is not going to be happy, because the health insurance gravy train will come to a halt. The healthcare industry is not going to be happy, because they've priced themselves out of the market for uninsured people. The pharmaceutical industry is not going to be happy, because a lot of people are simply going to stop taking their higher priced drugs and go for the older, generic drugs or simply do without and take their chances.

There is nothing like creating wholesale misery to start waking smug Repuglicans up, and this is only the beginning.