TAX OVERHAUL: KEY TO A STUNNING NEW AMERICA

By James N. Sites

The President has now told us about the state of the union (grim) and submitted his latest budget plan (grimmer, with red ink everywhere). And the state of the economy? Grimmest -- despite the recent flurry of upticks.

He also made some telling points about the grave consequences of the Great Divide between the minus-1% of the US population living in luxury and the 99% struggling to hold on or falling by the wayside. His "Jobs Bill" will provide some short-term relief. But more Federal spending (and budgets deficits and borrowing and deficits and borrowing won't move us an inch toward reducing the Divide.

What the President did NOT say is also crucial. He failed to propose anything resembling a coherent, inspiring, truly effective plan that would jump-start the stalled economy, send the unemployed back to work, launch a new era of national expansion and prosperity, regain our tattered standing in the world…and, not so incidentally, assure his re-election.

People also missed a clarity of vision, a sense of urgency. Perhaps governmental problems have become too multifaceted, too detailed, too overwhelming for basic, commonsense analysis. But try, we must. For present approaches are NOT working. And the American downslide is too severe, and the need too great, for anything but drastic counter-action.

Here are some things that need to be done:

TAX FACTS: The President talks much about need for the wealthy to begin bearing their fair share of the national tax burden…but he needs to DOCUMENT his case. The White House or Treasury should issue a FACT MEMO detailing the tax loopholes, accounting tricks and special rates for special income flows that allow the wealthy to get away with what amounts to grand larceny when it comes to avoiding taxes. He needs, then, to show the corrective changes he would make.

3-TIER FLAT TAX: The present US income tax system is a horrific, backfiring, self-defeating mess, and should be scrapped…then replaced by a 3-Tier Flat Tax. The one size-fits-all flat tax presently proposed, whether 18% or 20% or whatever, would simply continue to give a relatively free ride to the wealthy on the backs of other taxpayers. A 3-TIER FLAT TAX, however, could achieve both simplicity and fairness. Thus, a 10% flat tax could be leveled on taxable annual incomes of under $100,000, a flat tax of 20% on incomes between that figure and $1 million, and a 35% flat tax (the present maximum) on incomes of more than $1 million.

BREAKTHROUGH: The present 35% corporation profits tax should also be scrapped…BUT ONLY ON CONDITION that advocates of this step agree to the above-mentioned 35% flat tax on the main beneficiaries – the investors, CEOs, Wall Streeters and other Big Money people making more than $1 million a year. This would allow recapture of the lost $2.3 billion now produced by the corporation tax. In short, those demanding an end to this tax should get a chance to PAY for its end.

Tne impact of this move would be AWESOME. The huge profits now being stashed abroad by global US firms could be returned to the USA, providing funds for new investment in expanded and modernized plant, creating more US JOBS; US firms would stop or reverse their shutting down of US factories, keeping production and JOBS here at home; exporters could cut prices sharply, spurring sales abroad and JOBS in the USA and finally moving America toward a favorable trade balance; firms all over the world would want to set up and expand operations within the USA, creating more US JOBS; the fiercely competitive US retail industry would cut prices, spurring consumer buying and follow-up output and more JOBS; increased economic activity would increase US Treasury tax receipts, opening the way toward finally balancing the Federal budget and paring down our mountainous national debt.

A potential political GRAND BARGAIN could lead to these grand results. The question is whether Big Money will accept it. Will Big Money interests go along with higher taxes on their own incomes in order to get rid of the much-despised corporation tax? Or will they dig in behind the Anti-Tax Stonewallers in Congress and kill off these basic tax changes that could lead to a stunning revival of America here at home and around the world?

Especially since the strange recent Supreme Court decision unleashing a flood of new money into politics, , Big Money stalks the streets, corridors, offices and homes of Washington as never before,, threatening political oblivion to anyone who refuses to do its bidding. Big Money dictates the terms of the pallid Republican primary campaigns; what candidate dares say one word that might offend it? And Big Money will surely call the shots on this Fall’s campaign for the Presidency.

So is this what American democracy has now come to? With every official and would-be official kowtowing to the demands of Big Money? No, thank heavens…not necessarily. We, the voters, will have our turn at bat in November. And we’re mad as hell at the whole Washington esaablishment! So what? Well, if I were an incumbent office-holder up for re- election, I would be very, very nervous about the future.
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