R Street offers ‘Tax Hit List’ for 113th Congress
WASHINGTON (Nov. 28, 2012) — While Congress continues to debate the contours of a deal to avoid enormous tax increases and spending cuts set to take effect at the end of 2012, a commitment to long-term tax reform should, first and foremost, include looking to abolish completely those taxes that are most destructive of growth and productivity, R Street Senior Fellow Andrew Moylan argues in a new policy study.
Moylan’s A Tax Hit List for the 113th Congress singles out three particularly counter-productive taxes that combine to raise about $287 billion in federal revenue –- roughly 11.7 percent of 2012 revenue projections –- but do untold damage to the U.S. economy in the process. The hit list consists of:
- Corporate Income Tax: While politically popular, studies suggest that as much as three of every four dollars in corporate income tax costs are borne by a firm’s workers. The corporate income tax also encourages debt finance and enormous deadweight losses, as firms explore and implement various legal tax avoidance strategies.
- Estate Tax: A levy on dollars that were already taxed at least once when earned by the deceased, the death tax effectively punishes thrift and savings while encouraging consumption.
- Tariffs: Tariffs raise just $30 billion in revenue for the federal government, but at substantial cost to American consumers.
“Rather than just nibbling around the edges of a fundamentally flawed system, wholesale eliminations of these damaging taxes would constitute a revolutionary reform by American tax policy standards,” Moylan writes. “Corporate and import tax rates of zero would make the United States a premier destination for business investment and a death tax of zero would encourage savings and thrift over legal tax avoidance and consumption.”
For a copy of the full paper, visit:
http://redesign.rstreet.org/wp-content/uploads/2012/11/RSTREET6.pdf
