David Walker on Tax Reform
A: Are we talking about the effective tax rate?
Q: Most people mean a progressive marginal tax rate, where high-income earners have a much higher tax rate for their top marginal earnings than do low-income earners.
A: I am FOR making the EFFECTIVE tax rates more progressive, but I'm against making MARGINAL tax rates more progressive. Like a Reagan-style reform. Our current tax system is an abomination-- it needs to be simpler, fairer, and more competitive. And we need to broaden the base--fewer and better targeted tax preferences bring top marginal tax rates down to 25% for corporations as well as estate taxes and individuals. We should eliminate the differences with capital gains and ordinary income like Reagan did. So the bottom line marginal rates would go down but the effective rate would go up for the wealthy.
A: Yes, up to 25%. But we've got to get more people paying and less people taking a free ride--that's dangerous in a democracy. This proposal would also eliminate the need for the Buffett Rule.
Q: By the "Buffett Rule," you mean Obama's proposal that the top 1% of income earners, such as Warren Buffett, pay a surtax so that their marginal tax rate isn't lower than the bottom 99% of income earners, such as Warren Buffett's secretary?
A: Yes; eliminating the differences with capital gains tax rates would eliminate the need for the Buffett Rule.
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