Monday, November 27, 2006

Zillions of Tax Credits

The nonpartisan Tax Foundation has a very good blog on tax credits versus tax rates.

The zillions of tax credits legislated by Congress down throughout the years have caused the taxable income base to shrink significantly, causing higher tax rates for everyone.

These narrow-minded special interest tax favors should be abolished as part of broad based tax reform in order to slash marginal tax rates.

The Tax Foundation estimates that if all these credits and subsidies were eliminated, then an average tax rate of just 9 percent—less than half the current effective rate—could come into play.

Today’s tax code requires six tax rates ranging from 10 percent to 35 percent. Heck, I’d settle for a 20 percent flat tax rate—but that means getting rid of these special favors which are the tax equivalent of corrupt budget earmarks.

I don’t hear any Republican fighting for this, which shows the paucity of current GOP thinking.