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Thursday, January 08, 2004

Taxes 

Well, I finally made it back from Montana, only about 36 hours after I was supposed to get back.

Anyway, Wes Clark has come out with his tax plan, and it's pretty good. Actually, Dennis Kucinich's plan is also pretty good. Both entail some sort of needed "tax reform."

Clark's plan, however, is revenue neutral, as of TODAY. That is, his plan would cut taxes for people making less that $100k a year by $30 billion, and raise taxes for those making over $1M by $30 Billion. This does help make the tax code more progressive, which is needed, and I think he also has some provisions that cut out some loopholes and simplify things like the EITC, which is also needed. However, the more immediate need is for more money overall for the federal fisc. By keeping revenue at today's level, government cannot afford to implement any new spending programs without Bush-like credit-card financing.

This is why Dean's "repeal all the Bush tax cuts" idea is necessary. Dean has been hinting lately that he will unveil a tax reform plan of his own at some point in the future. This was inevitable. The key to his plan is his starting point: Clinton-era revenue levels. So, Dean's plan most likely will involve tax reform at the revenue-neutral level of January 2001, not January 2005. This is really the key to any sound tax policy.

Now, hopefully, this plan will co-opt some of the best ideas of the other candidate's plans (Kucinich's reform of the EITC, Edwards' dual-level, progressive capital gains tax, etc.). We'll have to wait and see. But, the key, if you want to control the deficit, is to ensure that the goverment takes in more money overall than it does today, and that's why the starting point must be Clinton-era tax rates and revenues, not Bush-era rates and revenues.
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