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Reform away! Or … careful with reforms
The March 25 Business section was the best ever! Every article was priceless, but the one by Jim Graves (“A broken tax code, and how we can we fix it”) stood out. It is the first meaningful analysis of our corrupt tax system I have seen in print. However, I would go even further. The current code is not worth fixing. Repeal it entirely and start from scratch.
Never even think about “tax base” or rate structure; a simple, progressive, straight-line tax formula applicable to all income is entirely feasible. Eliminate corporate taxes completely; allow corporations to retain nothing more than reserve funds, and require them to hold it in U.S. Treasuries or state-issued bonds. In other words, all profits must be paid to shareholders, and all new expansion capital must be raised on the open market.
The two basic principles I would follow are:
1) Righteousness: The system must clearly be honest and just, with no foundation for cynicism.
2) Capitalism: The system must be supremely intelligent; it should fund the capital portion of our American enterprise (education, infrastructure, research) primarily by levies on accumulated wealth, with only the current operating expenses of government funded by current income levies.
Too much of our national wealth is devoted to rank speculation, not to investing. Taking too much from current income just as it is beginning to create wealth is clearly counterproductive. So-called “consumption taxes” are the most economy-depressing taxes ever devised. Finally, the tax system must be integrated with the currency control system. Leaving management of our money supply entirely to the Federal Reserve has proven to be disastrous on at least a dozen occasions over the last 30 years.
James M. Peterson, Richfield
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Graves suggests federal tax code reforms. Has anyone studied the outcomes of these changes? Three things concern me about the Social Security and Medicare portions:
1) Since these taxes are currently levied on wages and salaries, how would they be collected under his system, especially from retirees?
2) Medicare premiums are currently based on income brackets with top rates quite high. Does Graves believe that further “means testing” might jeopardize support for Medicare by powerful constituencies? President Franklin Roosevelt was very conscious of this support problem for Social Security.
3). Where will Social Security’s “chained CPI” end? Can beans or Spam be substituted for chicken, which has been substituted for beef?
The simplification of the tax code in 1986 eventually produced tax expenditures and multiple tax avoidance schemes by those able to employ persistent lobbyists. Let us not repeat that mistake — and penalize our citizens up front in the process.
Mary K. Lund, Minnetonka
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.