Thursday, August 2, 2012

The Bottom Line

We will probably never see more of Mr. Romney's tax returns and we will be left wondering if he is hiding something. But what we do know now is that Mr. Romney's overall tax rate is less than most of ours. That is because the tax code is designed, maybe not intentionally, to benefit those who can afford to hire tax advisors to lower their liability. To eliminate that inequity will require more than eliminating the Bush era tax cuts for folks with incomes above $250,000. It will require a major overhaul of the tax code, one that will not be about soaking the rich, but about establishing greater fairness. Given the size of the the deficits in the federal budget, the overhaul of the tax code may mean somewhat higher taxes for most of us, as it seems impossible to me that budgets can be balanced simply be cutting expenditures. However, I agree with one of the early investors in Amazon that it is middle income households that are the true job creators as they have enough disposable income to buy things. Companies don't hire more workers unless there is more demand for what they produce. Any overhaul of the tax code that leaves more money in the pockets of the very rich and less in the pockets of middle income households will not be good for the economy.

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