Possible Tax Changes
A story in today’s Washington Post discusses some of the possible tax changes that seem to be most likely in whatever “tax reform” package that Bush proposes:
[T]he 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.
Despite Bush’s claims that he will not raise taxes on anyone, such changes would of course raise taxes on many people. Specifically, taxes would go up for those who live in high-tax states and localities and who earn most of their income in the form of wages. (Yes, we all know where those people live.) Taxes would go down for those who earn income from capital. And businesses would lose their principle incentive for providing health insurance. Sounds about as I would have expected.