NY Times reports that Obama administration is planning on letting businesses completely expense capital investments through 2011, rather than depreciate them. The reasoning is that this will encourage businesses, who are sitting on mountains of cash, to spend some of it on capital goods, thus creating demand and jobs.
It's the wrong idea. Here's why:
Last night John Yarmuth, our excellent Dem rep from KY-03, spoke to the Metro Democratic Club. In answer to a question about the Bush tax cuts, and progressive taxes in general, he shared the Barbecue Principle. It's a wonderful story, an excellent sound bite, and really captures the concept in a nutshell. Make the jump to learn what it is.
As reported by the Washington Post:
A Republican plan to extend tax cuts for the rich would add more than $36 billion to the federal deficit next year -- and transfer the bulk of that cash into the pockets of the nation's millionaires, according to a congressional analysis released Wednesday.
The nonpartisan Joint Committee on Taxation states that "households earning more than $1 million a year would reap nearly $31 billion in tax breaks under the GOP plan in 2011, for an average tax cut per household of about $100,000."
Think that's bad? Check out the graphic just below the fold:
If you were listing characteristics of a well-designed tax system, what would you include? In today's Courier-Journal, Rep. Jim Wayne gives his list, and I think it's a good starting point:
Fairness. The tax code should promote justice, with every Kentuckian paying their fair share, including the wealthiest.
Adequacy. The revenue stream should be stable enough to support schools, social services, prisons, law enforcement, environmental protection and other programs and services people depend on.
Elasticity. Revenue should grow as the economy changes. If a certain section of our economy is expanding, as our service-based sector is, tax revenues should reflect that.
Simplicity. The system shouldn't be too complicated to understand. Taxes should be as low as possible — with everyone paying their fair share — and the tax base should be broad.
I've been yelling for months about the lack of leadership in Frankfort. Why? Because all the people in Frankfort know that our tax system fails ALL of these tests, and has for years -- and yet they have done nothing.
Here's what the cowardice in Frankfort has gotten us:
Thursday, February 25, 2010 at 8:42AM in Policy and Politics | tagged Kentucky, Leadership, Legislature, Taxes (Hat tip to Page One, that had the story and the PDF)
Two tax-reform bills were presented in Frankfort last week. The bill by Jim Wayne improves some of the inequity in our current tax system, AND improves the revenue picture. It gets a big YES from me, and should get a Yes from anyone who cares about both fiscal responsibility and an equitable tax system.
The bill by Bill Farmer, OTOH, deserves only this response: Are You Kidding Me?!?
Make the jump to see why ...
