...and how it's applied

Updated Again, with the cooperation of the Washington Post.

The Shrubberies are dropping broad hints as to the kind of changes in the tax system they're going to be pushing. As the Post described it on Thursday,

the administration plans to push major amendments that would shield interest, dividends and capitals gains from taxation, expand tax breaks for business investment and take other steps intended to simplify the system and encourage economic growth, according to several people who are advising the White House or are familiar with the deliberations.

The changes are meant to be revenue-neutral. To pay for them, the administration is considering eliminating the deduction of state and local taxes on federal income tax returns and scrapping the business tax deduction for employer-provided health insurance, the advisers said. [Emphasis added.]

Get that? More simply put, they want to shield major income sources for the filthy rich and corporations and pay for them by killing one of the most common itemized deductions for middle-class taxpayers and jettisoning employer-provided health insurance - unless, that is, you imagine employers will pay for it out of their own pockets. But the frame is that the "revenue-neutral" purpose is to "simplify the system and encourage growth." Growth in the number of people without health insurance, anyway.

The claims about "economic growth" are totally bogus and without foundation: There is no evidence that cutting such taxes spurs productive investments; in fact, it's more likely to spur speculation such as the sort that drove housing prices mad in the 1980s. But it sure sounds good, doesn't it, as the same people who smugly declare we can't solve our social problems by "throwing money at the poor" claim equally firmly that we can solve our economic problems by throwing money at the rich.

But oh, it goes beyond just growth, oh of course, it's also that equally important issue of fairness.

Pamela F. Olson, a former Bush Treasury official in close contact with administration tax planners, said the president will pursue a tax system where all income - whether from wages, dividends, capital gains or interest - is taxed only once. That would mean eliminating taxes on dividends and capital gains paid out of fully taxed corporate profits.

Well, I mean, that's only fair, isn't it? I mean, we don't want to be unfair to those dollars, do we? You know how sensitive they are! Tax them twice? The very idea!

There are a couple of pieces of crap mixed here in a fetid pile. First, by their own argument, it's even more "double taxation" to eliminate the deduction for state and local taxes - indeed, it's triple taxation, since those affected would now paying three separate taxes on the same income. What's more, such triple taxation is already inflicted on anyone who doesn't itemize.

Second and more importantly, the whole idea of "double taxation" is complete bull. Unlike things like food or fossil fuel, dollars are not consumables. That is, once food is eaten, once oil or coal or whatever is burned, they're gone. There may be waste or byproducts, but the resource itself is gone. While a given individual can only spend a given dollar once, the dollar itself can be spent numerous times.

So a company may pay dividends out of "fully taxed" profits - but those dividends are new income to the recipients that can be spent exactly the same way as any other dollar, bring the same benefits to them as any other dollar. There is no reason they should not be subject to taxation in the same way as any other dollar.

In fact, by the "double taxation" logic we could easily argue that no one should pay any taxes on anything, because certainly those dollars have previously been taxed somewhere, sometime, by someone.

So we have proposals being floated that would benefit the haves and the powerful at the expense of the have-nots and the powerless, that will serve to further concentrate more wealth in fewer hands - but which are being presented as "simplicity," "fairness," and "promoting growth."

You want some framing for us? Try this: Tax the rich! Make those who have the most pay the most! Make those who have benefitted the most give the most back! And when we're accused of "Class warfare!" throw back "Damn straight! And it's about time!"

Footnote: A good number of years ago - Omigosh, almost 33! Can I have my shawl and warm milk now, please? - I outlined a revised tax system. I admitted at the time I didn't have the numbers or the actuarial skill to be certain the numbers I used for rates, etc., would work but that I thought the basic principles were valid. I think I'll drag that out and put it up later just to throw the ideas out there for a looksee. (Unless after all these years, upon looking at it again, I say "What a crock! I'm not going to embarrass myself by putting that up!")

Updated to clarify some language and an explanation and to add the Footnote.