Recommendations for altering the Tax System are coming in, now that the President's Commission is due to report in July. Almost Everything under the Sun finds some Advocate, and some Alterations even possess widespread support. The Author's own proposal was first published some Years back, but was not examined in detail. He intends to do so here.
The current Tax System handles Credits for Investment and Savings very badly. It accomplishes very little, with a great loss of Tax revenues. Those Taxpayers who utilize the Credits would have invested anyway, and therefore the Tax Credits simply grant them unfair advantage in terms of propelling greater financial security for Households. But how to change the Tax System to ensure maximum participation?
1) Tell Business interests they will not get Investment Credits or even Depreciation Expense. These will be replaced by a set Credit for each Employee, including themselves. This will reduce pressure for Protectionism, spur Employment, and generate domestic Capital investment. The Employee Credit can be adjusted to provide approximate reward for Investment to the current Investment Credits, but it would be a directed award to achieve maximum domestic economic performance.
2) Investment Credits would again be eliminated for individual Taxpayers, replaced with a partial or total Deduction per individual equal to the Investment at all times up to a set limit. This amount can be invested not only for the individual Taxpayer, but also for Anyone else he chooses--the main choice likely to be Dependents. A properly-set Investment Deduction could operate so well, that the Personal Exemption could be eliminated. It is an admitted Capital Redistribution scheme, but one operated by the individual Taxpayer. It would spread Investment throughout the populace, and pressure for a higher Savings rate. Tax rates could be lowered substantially, and Personal Exemptions and Investment Credits canceled. lgl
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