Lincoln Chafee OK With Tax Code As Is With Higher Top Rate And Exemptions
Debbie Rich sent me a press release dated September 24th titled “Chafee Proposes New Tax Bracket For The Wealthy”. Unlike Bernie Sanders, Chafee would preserve the favorable rate on capital gains and dividends, but would raise the rate to 25% for taxpayers with total income over $750,000. He would also put in a new top ordinary rate of 45% for those with income over $750,000.
Chafee estimates that the $41 billion raised by the higher rates could be used to raise personal exemptions by $1,000. He is also open to further increasing the personal exemption for low and moderate incomes by phasing it out for incomes over $200,000.
Jindal Tax Plan Creates A Wonderland Of Dodging
More to the point, though, Jindal’s plan opens up a veritable wonderland of tax dodging . There is no corporate income tax. So if you have a C corporation that is profitable, there will be no tax unless there are distributions (Under this regime I doubt anyone would want a flow-through entity except while it was unprofitable). The plan also calls for up to $30,000 per year in contributions to a tax-deferred account. So if you are really doing well and can afford a plane or a boat or a second home or an expensive art collection who is going to own it? Well say there is $100,000 of cash in your corporation. Do you take a distribution of $100,000 and buy a $75,000 painting with the net or just have the corporation buy the painting leaving $25,000 in the till?
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.