Tax Reform

Mort Kondracke has an article in Real Clear Politics about how the democrats have an opportunity to come up with some new propossals on tax reform. He also has a few examples of some interesting ideas floating around out there. This one peaked my interest:

To do this, she would eliminate the payroll tax and replace it with taxes on the difference between what a person earned and what he or she saved - a consumption tax like sales taxes and value added taxes, but more progressively imposed. Her idea is that people would pay no tax on the first $25,000 of spending, 10 percent on spending from $25,000 to $100,000 and 15 percent on spending above $100,000. 'The less you spent, the lower your tax rate would be,' she wrote. Low-income earners would for the most part be taxed less onerously, since they spend less. Middle- and high-income earners would have an incentive to save their money, preparing for retirement and bolstering the country's long-term economic prospects.'

I'll probably want to think about this a little more, but it seems like a very interesting idea and certainly workable. The biggest deal for me with reform though, is it should simplify the tax code, reducing the paperwork involved which is, I believe, an intrinsically regressive factor. Currently, only those who can afford good tax advice get to take advantage of loopholes. I prefer to just make it simple and fair. This is probably a dream though, as I doubt politicians will have any real motive to make things easier for average people. Update: Cube has his own post on this topic.