"We believe that this would just empty the air out of the room of anxiety over bringing in a new tax code," Forbes said. To cushion the tax burden on middle-income households, a family of four would not pay any federal income tax on its first $52,000 in annual wages.ĭuring a speech in March at the Heritage Foundation, a conservative nonprofit organization in Washington, Forbes hoisted a challenge: "When the new system comes in, you can go with the new system, or if you wish - if you lack self-esteem, if you want to torture yourself - you can stay with the old system," he said. Forbes would kill virtually every deduction - including home-mortgage interest - in the tax code and replace the seven brackets with one 17 percent rate for everyone. Some Republicans, such as Huckabee, are pushing a national sales tax, an idea that some analysts dismiss as shifting the tax burden to lower-income Americans.įorbes, meanwhile, has resurrected his flat-tax plan from his 1996 presidential campaign. There is a lot of needless complexity."Ī number of Democrats are embracing major revisions but want to retain the progressive brackets that result in wealthier people paying at higher rates.īy contrast, Republicans have rallied around plans that would lead to lower tax rates for everyone. In an effort to make the code more progressive, they increased the number of income-tax brackets from two to seven, including a 39.6 percent rate for the wealthiest Americans.Ĭongress also inserted a variety of oddities into the code, such as the infamous credit for Starbucks to roast coffee, prompting Alan Viard, resident scholar at the conservative American Enterprise Institute in Washington, to say, "This is a flawed system. The law scrapped billions of dollars in tax loopholes, slashed the top marginal income-tax rate from 50 percent to 28 percent, set the only other tax bracket at 15 percent, and removed the tax break on long-term capital gains, which are profits from the sale of assets such as real estate, stocks and bonds.īut throughout the next two decades, presidents and Congress tinkered with the code. House in 1986, Kasich had a say in the tax overhaul signed into law by President Ronald Reagan. "You either have to raise taxes on everyone else to pay for those tax cuts for those at the top or accept much, much higher deficits."Īs a member of the U.S. "They can't find a way to square those commitments with a tax code that is fair for the middle class and low-income people, because you can't do it," Stein said. and have made commitments to reduce or eliminate taxes on investments, such as capital gains. Harry Stein, director of fiscal policy at the Democratic Party-leaning Center for American Progress in Washington, said, "Republicans have made these commitments to sharply reduce top marginal tax rates. The only place to go is middle- and lower-income families." "Any move to a flat tax includes huge cuts to the better-off," Gardner said. "If you ask its advocates why it's a good idea, one of the first things they'll say is it's a simpler way to tax," said Matt Gardner, executive director of the Institute on Taxation and Economic Policy, a left-leaning nonprofit organization in Washington. But the lure of reform always has foundered against the reality that under most single-rate income-tax plans - known as a flat tax - the wealthy would receive a major tax break. Simplifying the mind-numbingly complex federal tax code has held a tantalizing appeal for many conservatives and some Democrats. "Now, I haven't seen all the distribution tables, but I think flatter makes more sense, and there's no question that we need to get the corporate tax lower." "You've got to make sure that people are going to view it as fair," Kasich said. "I'll have more stuff when I'm ready to do that. "I don't want to get into details of tax plans nationally," Kasich said last month in South Carolina. In particular, Kasich said he has been working with Forbes, a fellow Republican, on "an intriguing idea" to allow Americans to stick with the current tax system or embrace a revolutionary new code after determining which plan would save them more money. Mike Huckabee unveiling major plans to revise the tax code, Kasich is talking about a "flatter" and "fairer" code that might reduce the seven current income-tax brackets into as few as one. With Republican presidential candidates ranging from Florida Sen. John Kasich considers running for president, he also is flirting with another idea: backing a variation of magazine publisher Steve Forbes' plan to overhaul the federal tax code while giving taxpayers a unique choice.
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