Bush Tax Reform Panel proposal requires $1.2 trillion in tax hikes

[Bush_Eats_Beef]

Conservatives pan ideas of Bush tax-reform panel

By Donald Lambro
THE WASHINGTON TIMES
October 14, 2005

http://www.washtimes.com/national/20051013-110722-8952r.htm

The panel, whose final suggestions will be made Nov. 1, revealed this week that it might recommend cutting back on popular tax deductions for home mortgage interest and tax-free employer-provided health insurance.

It would use these tax increases to help offset the cost of repealing the alternative minimum tax (AMT), which was enacted to ensure that higher-income people cannot avoid paying taxes, but increasingly has been hitting middle-class taxpayers, concentrated in Democratic-heavy, coastal blue states, as incomes have risen. Sen. Jim DeMint, South Carolina Republican, called the proposals "a few Band-Aids on the current code. True tax reform requires the complete replacement of the IRS code with a new system that is simple, fair, and that promotes savings and investment."

Mr. Hunter said in a memo on the panel's preliminary plan that even these "two sizable tax hikes together still won't pay the tab for AMT repeal, so the panel also is floating the idea of limiting the deductibility of state and local taxes, another major middle-class tax hike." "Regardless of the details, the approach the panel is taking requires finding $1.2 trillion in tax hikes, which will hit the middle class and the economy hard," he said.

John Berthoud, president of the National Taxpayers Union, praised the commission's proposed repeal of the minimum tax, but said it dodged its central mission by failing to come up with a simpler system that would replace the current code with either a national retail sales tax or a flat-rate income tax. "How will raising taxes on home mortgages and health care grow the economy?" asked Rep. Tom Tancredo, Colorado Republican. "If the president's panel gets its way, a majority of homeowners in Colorado would see their taxes go up. This tax increase would be aimed straight at the middle class."

[stepnw1f]

1. They Are Destroying America from Within

It's sickening... and many people are losing their patience. I guess they want to create the perfect climate for a civil war.

[alarimer]

2. Crappy ideas

You lose the tax deduction for employer-paid health care and NO ONE will have health insurance. My guess is companies will drop coverage across the board. And no one can afford to self-insure either because that is way more expensive. For once, Tancredo is right.

I think they can get rid of the alternative minimum tax by, ....
ELIMINATING THE TAX CUTS ON THE RICH!!!!!!!

I bet this panel was compised entirely of rich assholes.

[Bush_Eats_Beef]

4. I'm self-employed and I pay Blue Cross $500 a month.

I'm on the "HIPA" plan. It's a penalty plan they throw you on if you've ever seen a doctor, basically. In the past they could deny you coverage for anything they determined to be a "pre-existing" ailment. The laws were changed to forbid them from doing that, so now they charge you twice as much. Seriously. I pay 200% of the cost of the IDENTICAL plan for the "non-HIPA" folks.

I suspect that many would not be able to afford this (and for me, paying this every month is the equivalent of opening a frigging VEIN).

[1932]

8. The problem with expensive insurance and people not having insurance

is caused by problems much broader than this tax break.

And the insurance companies are some of the biggest criticis of eliminating this deduction. And it's because they are able to charge higher prices for their insurance because of the deductibility of the premiums.

I'm not saying that eliminating the break is the best idea, but you need a broader solution to this problem that includes making it the law that people get health insurance, providing some form of national health for people at the margins, and, perhaps, requiring by law the insurance companies to provide some minimal level of health insurance for people that isn't tied to your job.

As things exist today, giving businesses a tax break for buying a good in the private marketplace just encourages the private sellers of that good to charge more than they would otherwise, and it's the taxpayers who underwrite their profit by sacrificing tax revenue. I do think society benefits from a healthy society and that it should underwrite health care costs for others, but I don't think society should underwrite the profitablity of already incredibly profitable private health insurance companies.

[alarimer]

10. National Health Care

Maybe this proposed tax increase would spur the discussion for a single payer system, which is what I think would be best. It would save everyone money and provide health care for everyone. But removing the tax deduction would hurt a lot of people in the short term at least.

[1932]

11. I agree.

People should not be hurt even in the short term in order to create a mandate to do something better.

What I think people should do is tie the elimination of this deduction to a set of arguments that include, perhaps, that health insurance should not be tied to jobs, but should be provided some other way (regardless of whether it's provided by a company or by the state) -- eg, perhaps people should have portable private plans at costs fixed to salary that employers should be compelled to pay for by law; and the government should be compelled to pay for, say, 90% of your premiums when you're unemployed. I'm sure there are lots of other better ideas. However, bottom line: this tax break probably does more to inflate the profits (and political power) of insurance companies than it does to insure that Americans have affordable health care throughout their lives.

[gizmo1979]

3. I don't quiet understand

the health insurance part.Do they mean they are going to tax the employee on benefits or the employer.Either way it's a horrible idea.Health care isn't expensive enough?What do thet hope to accomplish?

[yankeedem]

5. Health care benefits

are excluded from income tax. For example, your premium is $300/mo, you don't pay taxes on that portion of your income.

[gizmo1979]

6. Ok I was looking at it

the wrong way.Thanks.

[rockymountaindem]

7. They seem to have every idea except

repealing tax cuts for the top 2%, which accounted for most of the Bush tax cuts.

Why?

[1932]

9. Seriously. The rich are making 30% more than they did when Bush

entered office. How about a new 40% tax bracket on that extra 30% of income? Actually, they probably made most of that from selling stock and from dividends. How about lowering earned income tax rates across the board and getting a real progressive income tax on dividend and capital gain income?

How about those oil companies that just made 9 billion dollars last year? What do they pay on the first 3 billion in income? 10%? How about doubling that to 20% on the next three billion and then 25% on the next 3 billion?