Missouri’s legislature has approved nearly $2 billion in tax incentives for Boeing after a House vote today, and the plan awaits Governor Nixon’s (D) signature. We’ve written on this issue extensively, following it from...
- The Tax Policy Blog
- Democratic Platform Proposes More Complexity for Tax Code
Democratic Platform Proposes More Complexity for Tax Code
- You cannot both reduce tax complexity and create lots of new special interest deductions and credits. Simplifying our tax code is a great idea, and the plank is correct in noting that the Internal Revenue Code is littered with deductions, credit, exemptions, and exclusions that cause much of the complexity. However, far from proposing to eliminate these and lower rates overall, the platform actually proposes to create new special interest deductions and credits, worsening the complexity.
Among the proposals (each with their vested interests and lobbyists) are expanded EITC and child tax credits; exclusions for small business capital gains and seniors earning less than $50,000 per year; and new tax credits for health insurance, "college students who serve," and for "keep[ing] and maintain[ing] good jobs here in the U.S." Each special interest granted an exemption, of course, means that taxes must go up on everything that's left. A better approach would be to junk all these special interest provisions, tax everything the same, and broadly lower rates with the money saved.
- Why is having to pay income taxes an affront to seniors' "dignity and respect?" Or if it is, why only seniors' dignity and respect?
- As for "ask[ing families] to give back a portion of the Bush tax cuts," do they mean "ask" or "require by law?"
- Later on, the draft platform pledges to "finally end the tax breaks that ship jobs overseas." Of course, there is no line on the corporate tax return giving you credits for each job you send overseas. Perhaps the reference is to the U.S.'s practice of taxing all income worldwide earned by citizens (most other countries tax only income earned within their borders), necessitating credits for taxes paid overseas, and taxing income only as it returns to the U.S. Fiddling with this system should not be done piecemeal or lightly, as it could have huge impacts on cross-border investment.
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