Kirk and Ian, if you reduce the corporate income tax much under the 36% (or 39.6% in some cases) marginal tax rate of individuals, you will have "mass exodus" of individual income into "corporate income" (it is no problem for an executive to incorporate and get his pay paid to the corporation), once more introducing dislocations into the tax system and raising an army of accountants to help everyone reduce its marginal tax to the new lower 25% rate. I think that would be a mistake. As or the main point Rubin is making, it is that the economy is suffering (even before Sep 11) from excess capacity, which can be corrected by increasing demand, thus a tax proposal that will allow additional demand to soak excess capacity will have a better chance of pulling us out of the current situation Yesterday, on the "Steve Channelling thread" made exactly the same argument and proposed to give a helping hand to those that do not make enough to pay income taxes, by reducing the "payroll" taxes (which everyone pays) by about 1% (from the current 15% to about 14% including the "medicare portion", half of which will go to employers, thus providing them with some immediate relief as well). This money will go at once into the economy. Part of the shortfall in the SS Trust fund, should be made up, IMHO, by simply admitting that these payroll taxes are a normal income tax, and thus impose it on all earnings without the current limitation of $75,000 (a number that creeps up, but too slowly, IMTO).
Zeev |
