Saturday, October 6, 2007

McCain: Lousy Tax Reform Ideas

Posted By on Sat, Oct 6, 2007 at 11:30 PM

Shortly after George W. Bush took office, U.S. Sen. John McCain made his first and last visit to Weekly World Headquarters. In a Q&A with a group of reporters, he predicted that the Bush tax cuts would not pass the Senate.

McCain clearly overestimated his colleagues' sense of financial responsibility. In the years since, he appears to have abandoned his own. Despite the fact that the U.S. government has been running deficits since Bush took office, McCain now wants to make the Bush tax cuts permanent.

In an appearance in South Carolina earlier this week, McCain said he wanted Alan Greenspan to review the U.S. tax code, dead or alive. according to The Associated Press account.

"If he's alive or dead, it doesn't matter. If he's dead, just prop him up and put some dark glasses on him like, like Weekend at Bernie's," McCain joked. "Let's get the best minds in America together and fix this tax code."

While the quote got the attention, it's McCain's eagerness to serve the nation's wealthiest citizens that deserves scrutiny.

McCain says he would support a flat tax that charges everyone the same percentage of their income, rather than the current progressive system. Given the wealthiest U.S. citizens pay the lion's share of income taxes, that would mean that the richest would get a nice break and the poor would have to make it up. Either that, or Congress would have to enact massive spending cuts that would cut services that the poor--and middle-class--depend on. Or we could run up more debt.

McCain also said he supports scrapping the income tax altogether and instituting a national sales tax.

Before you jump at that idea, keep in mind that the supporters of the so-called FairTax are extraordinarily deceptive about how their system would work. They use math tricks to distort the real percentage of their own tax and aren't honest about how much it would raise. I've written about it in the past; The New Republic recently had a piece about how the how idea was ginned up by Scientologists.

Plus, since state income taxes are based on data sent into the federal government, you'd probably have to scrap state income taxes as well, which would mean a higher state sales tax. By the time you're done reforming the tax system, your sales tax would be up to about 50 percent, which creates all sorts of incentive to find ways to avoid paying it. Like, for example, shopping on the Internet, or buying things second-hand.

The tax code could use a lot of trimming, but the reform shouldn't shift the burden from America's richest citizens to the poor and middle-class.

McCain either hasn't given the matter much thought, which is bad; or he's pandering, which is worse.

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