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A Dishonest Disincentive

11:11 AM, Dec 10, 2012 • By GEOFFREY NORMAN
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One problem with the unearned income Medicare contribution tax is the name Congress chose for it, which is a triple misnomer. The income that will be subject to the tax isn’t unearned -- it is earned by savers who receive market rewards for delaying consumption and providing funds to finance business investment.

Alan D. Viard, writing for Bloomberg, shines a light on another of Washington's attempts to deceive the voters as it picks their pockets.  What is called a "contribution" is, of course, anything but.  Just as when the president speaks of "asking" the wealthy to "pay a little bit more," and what he is describing is not a request.  But we all know that.  It might be intellectually bracing, however, for the people who write these laws to stand up and call them what they are.  Are they not proud of their work?  Say it loud and say it proud, "We just raised taxes and we feel good about that.  Just as soon as we finish this victory lap, we're going to go back to work and raise them some more."

A little plain speaking might move us in the direction of clear thinking which might even deliver us from the coils of a tax code so Byzantine that neither the people who wrote it, nor the people paid to enforce it, can entirely understand or explain it.  

Here is a suggestion, which doesn't stand a snowball's chance but just the same:

As long as Washington's attention is locked onto the very narrow question of raising the taxes of one small sector of the population, why not just get it done and then open the whole thing up for review with the twin objectives of simplification and getting rid of those breaks that favor the loathsome rich? Let's spend the next year considering the entire universe of federal taxation.  Among the obvious fat targets are: the mortgage interest deduction, the deductibility of state and local taxes, and charitable contributions.  

Everything up for discussion.  All forms of income subject to taxation at an equal rate.  No special carve outs. And everyone in the game.

One can dream.

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