Thursday, November 18, 2004

Enter Tax Reform (Exit Health Care)

As Atrios points out, the Bush administration is floating its proposal for tax reform, and from the vague suggestions leaked about it thus far, it appears to fulfill the expection we have learned to have regarding Bush administration policy initiatives: that it will be a dismal disaster. (By the way, do you remember any details for tax reform being part of the campaign, which were validated by the mandate of the election? Furthermore, after all the hype about an "ownership society" leading up to the last State of the Union address--the "speech to the nation, or whatever you want to call it," do you remember hearing more than a couple of vague lines about individual rights and the American spirit? I did not think so.) So this tax reform plan will "favor investment and growth" as the Post headline indicates; in other words, shift the tax burden from wealth to labor. The accountants are undoubtedly devising gimmicks to create some sort of nonexistent family or small business who will receive some modest benefit from this gerrymandered plan, all in an effort to divert attention from the massive shift that is really taking place. Alas, the media will take the bait. But the real kicker lies in this passage from the article:
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.
In other words, the cost of the loss of revenue from taxation on wealth (i.e., interest, dividends, and capital gains) would be recovered by eliminating the tax breaks on businesses for providing health insurance. Good-bye employer-provided health care.


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