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Former-Senator Pete Domenici (R-NM) and Alice Rivlin (former Vice Chairman of the Federal Reserve, first appointed to office by President Jimmy Carter, and twice again by President Bill Clinton) have a “bipartisan” op-ed in the Washington Post today, laying out the highlights of their Debt Commission plan to reduce the debt.
Part of their proposal includes:
To ensure a more robust recovery, we propose a one-year “payroll tax holiday” for 2011, suspending Social Security payroll taxes for employers and employees. We also would phase in the steps to reduce deficits and debt gradually beginning in 2012, so the economy will be strong enough to absorb them.
We would stabilize the debt held by the public at less than 60 percent of gross domestic product, an internationally recognized standard; reduce annual deficits to manageable levels; and balance the “primary” budget (everything other than interest payments) by 2014.
We would dramatically simplify the tax system, establishing individual tax rates of 15 and 27 percent (from the current high of 35), cutting the corporate tax rate to 27 percent (from 35 today), ending most deductions and credits while simplifying the rest, and ensuring that nearly 90 million households no longer have to file returns. To reduce the debt, we would supplement our spending cuts with a 6.5 percent “debt-reduction sales tax.“
This country is in dire need of a new (not just merely simplified) tax system. And that’s the only part of their entire plan that I agree with. The rest of it can be summarized as:
We lose our company provided health insurance, and our home interest deduction, and 25% of our social security, in exchange we get to pay higher social security taxes and more for health care while our home values plummet.
Of course Congress can all get behind this plan if they get their dream item passed: a value added tax — an entirely new bucket of revenue for them to steal from the consumer to squander away on growing the size and power of government.