Reverse Tax Reform
January 7, 2004
Democratic candidate Wesley Clark is proposing what is best described as reverse tax reform: higher rates on an even smaller tax base, says the Wall Street Journal.
Highlights of the Clark plan include:
- Raising marginal income-tax rates even higher than Clinton did; he'd not only repeal the Bush tax cuts, thus restoring the top Clinton marginal rate of 39.6 percent, but he'd pile on another five-point rate surcharge on incomes of more than $1 million.
- That would raise the top marginal rate on income to 44.6 percent -- or about 46.6 percent counting the current exemption and deduction phase-outs -- higher than anytime since the pre-1986 rate of 50 percent when there were many more tax loopholes.
- Excluding millions of single folks and married couples without children who make less than $100,000; his unified tax credit (to replace the several that now exist) would take even more people entirely off the income tax rolls, thus shrinking the tax base.
- According to the study: the share of income taxes accounted for by the top 1 percent also climbed steadily in this period, from initially at 19.75 percent for 1979, before rising to 36.3 percent for 2000.
- The authors conclude: "The progressive nature of the individual income tax system is clearly demonstrated."
Clark can paint the facade of his proposal however he likes, but it still amounts to a monumental tax increase, says the Journal.
Source: Editorial, "Reverse Tax Reform," Wall Street Journal, January 7, 2004.
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