The End of Federal Income Taxes?
One of the things that has bothered me about President Bush's plan to eliminate the dividend tax is that people who own companies can easily use this change to pay absolutely nothing in federal income taxes. Many people have made this point, including Warren Buffet.
I am in full agreement that people should be able to keep more of their own money, but would rather see the entire federal income tax abolished and the government funded via consumption taxes. The more you consume, the more you pay. However, I am not optimistic about this happening any time soon.
George Will theorizes that this day may come sooner than I expect.
Others will continue the incremental but brisk march toward truly radical tax reform. It is a march away from taxing investment income--the new rates on capital gains and dividends are the lowest since the Depression--and perhaps away from taxing all sorts of income, and instead taxing consumption.
If this is indeed President Bush's long-term strategy, the next few years will be even more interesting than I expected. And if this is actually President Bush's plan, I wonder if he will announce it during his reelection campaign.
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