Wednesday, July 20, 2011

The Gang of Five is Dead! Long Live The Gang of Six!

Apparently our Senate overlords have a latest and greatest version of The Only Plan That Can Be Taken Seriously Because It Has Support In The Senate, a rehash of the old Gang of Six's deficit reduction plan. Considering the original version was an agreement between centrist Democrats, conservative Republicans, and Dick Durbin, it's not exactly my idea of sound public policy. Chiefly, the Gang of 6 continues the only in America idea of collapsing the upper-middle class and the ultra-rich into the same tax bracket. There's nothing "complex" about adding another bracket that kicks in at $500,000 or $1 million. What's more, having such a bracket is entirely consistent with the original aims of the income tax, which was almost purely a soak-the-rich tax.

I'm also not sure the numbers add up, though I will leave it up to the CBO. The idea is that by eliminating some deductions from the tax code (and the Alternative Minimum Tax!), you can end up with lower rates but still raise revenue. Except, to do this, you'd have to do an awful lot of stuff:
  • Treat capital gains income the same as earned income, or at least raise the tax rate.
  • Eliminate the "carried interest loophole" that allows hedge fund managers to treat income as capital gains.
  • Cap or eliminiate the mortgage interest deduction.
  • Further cap or eliminate the deduction for charitable giving.
  • Cap or eliminate the deductibility of employer-sponsored health insurance.
If you think any of those things have a snowball's chance in hell of making it through Congress, I can get you a great deal on the Brooklyn Bridge.

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