Podesta Advises Bush on Reform

Yesterday, Bush's Advisory Panel on Federal Tax Reform had a public meeting to hear suggestions about how to improve the system. Reform is badly needed after the last four years; President Bush's tax schemes have made the system more complex, shifted more of the burden to the middle class and exploded the federal deficit. Among the presenters yesterday was American Progress President John Podesta, who presented our comprehensive plan for progressive tax reform. (Hey, Byron York, are you paying attention?) Podesta explained that, including payroll taxes, a cook at a high-school cafeteria making $25,000 a year effectively pays 30 percent of his or her income in federal taxes. A two-earner family making $85,000 a year effectively pays 40 percent in taxes. Meanwhile, a millionaire pays just 15 percent on his or her investment income. The American Progress plan is fiscally responsible reform that simplifies the system, restores fairness and increases economic opportunity.

FAIRNESS   TAX ALL INCOME THE SAME: Under the Bush administration's tax policies, middle-class Americans are shouldering more of the burden. The American Progress plan corrects that by simplifying the rate structure and taxing each source of income at the same rate   whether it is dividends from investments or wages.

Sounds familiar.

Hoping to avoid more bumper stickers posing as arguments, let me make a serious suggestion.

What I'm saying here, so it's not obscured by reflexive resistance to a known progressive, is there's a kind of income that is privileged over earned income. Call it what you will, it's taxed at a lower rate than earned income.

Now, there are a couple of ways to react to this. The way I would suggest is that rework upcoming tax reductions so that they all apply to earned income. Resolve that earn and unearned income will be taxed on the same progressive schedule.

Why should a business that earns a dollar get to keep more of it than a man supporting his family would?

You should see how hard folks wriggle when you start talking about unearned income. Really screws with their heads.