In a Letter to the Editor in today’s Wall Street Journal, C|M|LAW Professor Deborah Geier commented on “The Weekend Interview with Dave Camp: Is Tax Reform Politically Possible?,” by Stephen Moore, August 11, 2012. In her letter, she states that “Rep. David Camp engages in selective memory when he implies that both the Tax Reform Act of 1986 and Steve Forbes’s flat tax are similar.” She clarifies that the Tax Reform Act”increased the capital gains tax rate from 20% to 28%, treating all income the same at the individual level, which ensured that the distribution of the tax burden was not made radically more regressive. The flat tax, in contrast, applies a 0% tax rate to capital income (whether dividends, capital gain, interest, etc.) at the individual level where it is a tax on labor income only.” Specifically, “[t]he TRA ’86 retained “income” as the tax base, while the Forbes flat tax would have shifted to a form of consumption taxation. To illustrate this distinction, she notes that under the Forbes flat tax, Mitt Romney’s tax rate would have been 0% (as opposed to 13.9%) in 2010.
To read Professor Geier’s Letter to the Editor, click here: http://online.wsj.com/article/SB10000872396390443324404577591042394246160.html