'Bizarre' effects: tax plans face off.TWO BOSTON University Boston University, at Boston, Mass.; coeducational; founded 1839, chartered 1869, first baccalaureate granted 1871. It is composed of 16 schools and colleges. economists, Laurence Kotlikoff Laurence J. Kotlikoff (b. January 30, 1951) is a professor of economics at Boston University. He is a leading scholar on the generational accounting of social security. He has written that the economic future is bleak for the United States without tax reform, health care reform, and David Rapson, recently compared our current tax system with the proposed "FairTax"--a 23 percent federal sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. , intended to replace all existing federal income, payroll, estate, and gift taxes. They wanted to see how a shift to the FairTax would affect Americans' incentives to work and save. Their answers favored the FairTax, which, they argued, would create a lower tax rate on wages for almost all American households across a range of income levels. It would also replace effective marginal tax rates Marginal Tax Rate The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate. Notes: Many believe this discourages business investment because you are taking away the incentive to work harder. on savings of about 23 percent to 54 percent with a rate of zero, since any dollar not spent would not be taxed. Before they got to those answers, Kotanswers, likoff and Rapson came to a conclusion that's significant in itself." "Thanks to the incredible complexity of the U.S. fiscal system, it's impossible for anyone to understand her incentive to work, save, or contribute to retirement accounts absent highly advanced computer technology and software" They also resorted to language you don't often see in analyses from the staid National Bureau of Economic Research The National Bureau of Economic Research (NBER) is a "private, nonprofit, nonpartisan research organization" dedicated to studying the science and empirics of economics, especially the American economy. , which published their study: "The patterns by age and income of marginal net tax rates on earnings, marginal net tax rates on saving, and tax-arbitrage opportunities can be summarized with one word-bizarre." |
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