Sunday, December 9, 2012

Congressional Progressive Caucus on tax reform

With the looming fiscal cliff the CPC as usual has the most reasonable approach for the people, meaning the 98% of the rest of us. See this link for the details. The bullet points and highlights follow:

Corporate Tax Reform Principles

1. Revenue Positive: Plain and simple, the corporate contribution to our deficit reduction must increase from the status quo. As a share of GDP, corporate taxes have fallen from 4.7% in the 1950s to a scant 1.9% from 2000-2009.

2. Promote Responsible Corporate Behavior: We must eliminate tax loopholes that encourage reckless and undesirable behavior such as the overuse of debt financing and tax sheltering, and explore commonsense revenue streams like putting a price on carbon pollution or enacting a small financial transactions tax to reduce market volatility. We should also repeal the more than $95 billion in special tax breaks we are scheduled to give away to the established, highly profitable fossil fuel industry over the next ten years.

3. A Global System that Works for the American People: In addressing our serious revenue gap, we should reduce – not increase – the tax code’s bias towards overseas investment. The status quo allows multinational corporations to achieve extremely low worldwide and domestic effective tax rates, encourages shifting of profits and investment overseas, and costs billions each year in US tax revenues. 

Individual Tax Reform Principles 

1. Restore and Improve Progressivity: It is a bedrock principle of fairness that those with higher incomes should pay progressively higher tax rates. Any tax reform must ensure that each fifth of the income distribution (as well as the top 1% and top 0.1%) should have a higher average effective tax rate than the income group below. To maintain or strengthen progressivity, we should end one of the leading contributors to after-tax income inequality in this country, the special tax breaks for investment income. 

2. Fair Rates for the Wealthiest Taxpayers

We must ensure that the wealthiest Americans are paying their fair share of taxes. As a first and minimum step, instead of giving an average tax break of $160,000 to millionaires, the Bush-era tax rates on the richest 2% should return to the rates we had when Bill Clinton was president and the economy was booming. As a recent Congressional Research Service report found, reductions in the top tax rates have little association with economic growth, although it found these reductions were associated with increasing income disparities.

3. Reexamine Expenditures that Benefit the Wealthy; Protect those that Help Working Families, the Poor, and Seniors: Tax policy is economic policy, and tax expenditures are a form of spending. We must prioritize our spending through the tax code to remove expenditures that disproportionately benefit the wealthy, while protecting those that create ladders of opportunity, reward work, and protect the poor.

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