Forget the Bogus Republican “Reform”: Here’s What Real Tax Reform Would Look Like
Forget the Bogus Republican “Reform”: Here’s What Real Tax Reform Would Look Like by Charles Hugh Smith – Of Two Minds
The point is to end the current system in which billionaires get all the privileges and financial benefits of owning assets in the U.S. but don’t pay taxes that are proportional to the benefits they extract.
As has been widely noted, the Republicans’ proposed “tax reform” is not only just more BAU (business as usual, i.e. cut taxes for the wealthy), it’s also not real reform. At best, it’s just another iteration of D.C. policy tweaks packaged for PR purposes as “reform.”
You want real tax reform? This is what real tax reform would look like:
1. Shred the entire 2,700 page tax code and replace it with a 25-page code. As I explained in The Fetid Swamp of Tax Reform (November 10, 2017), the 2,700 page current tax code is a complexity thicket designed to hide tax breaks and subsidies for big political donors.
Politicos give lip service to simplifying the tax code for PR purposes, but no politico actually wants radical simplification because this would eliminate the biggest grab-bag of political favors available to pass out to big donors.
Though radical simplification is politically impossible, it’s the first and most important real reform.
2. Replace the entire convoluted mess of income tax for the bottom 99.5% with transaction taxes collected at the point of transaction. A transaction tax is similar to a value-added tax (VAT) or sales tax, but it’s radically different in key ways: a transaction tax is levied on financial transactions, not just sales.
A transaction tax would be levied on every high-frequency stock trade, every loan that was sold, every financial transaction anywhere in the U.S. or any transaction anywhere in the world involving a U.S.-based entity or asset.
Since the vast majority of financial transactions are executed on behalf of banks, corporations and wealthy individuals, a transaction tax would naturally collect more taxes from those at the top of the wealth-power pyramid. The transaction tax could be very modest because it would be collected on billions of transactions–everything from stock trades to purchases to loan payments.