Publisher and former presidential candidate Steve Forbes says a flat tax is still the best way to balance the budget and get the economy moving again.
"I think about 26 countries have the flat tax now, and it’s worked wherever it’s been tried," Forbes tells The Fiscal Times.
"You have a low rate, generous deductions for adults and for children, and you can literally do your tax return on a single sheet of paper.”
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The $200,000-to-$250,000 a year incomes President Barack Obama considers “rich” occur during a couple’s peak earning years, says Forbes, making increasing taxes on salaries unfair.
“Also, because of our tax code, a lot of businesses are taxed at personal rates, so it will hurt businesses that employ 20-50 people,” he says. “It’s a capital destroyer.”
“Buffett only pays 17 percent of his income in taxes. When he talks, he mixes taxes on dividends and capital gains with taxes on salaried income.”
In this country, Forbes explains, salaried income is taxed at the federal level at the high rate of 35 percent, and when state income taxes are added that figure can rise to 45 percent.
“Raising taxes on dividends, which Buffett implies we should do, destroys capital,” Forbes says. “And raising the tax on capital gains, where there is no certainty, as the market’s always reminding us, reduces risk-taking, which hurts enterprises for the future.”
Forbes says Congress “should repeal Obamacare and start over for a more patient-oriented health care system,” and “repeal Dodd-Frank because it does far more harm than good."
Pensions and Investments reports that a proposal from the Brookings Institution to replace the current 401(k) tax deduction with a flat tax credit has opened the door for further congressional brainstorming on ways to boost retirement savings, despite a lukewarm response from senators and dim prospects for legislative change.
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