OIL'S WELL THAT ENDS WELL
It's been widely publicized that GOP vice presidential candidate Dick Cheney left his job as CEO of Halliburton with a pretty sweet severance package. Nobody's yet pointed out, however, that American taxpayers may have helped finance Cheney's good fortune. Last year the oil supply company reported $257 million in U.S. pretax profits to its shareholders. But rather than paying 35 percent of that in federal income taxes, Halliburton says it got an $85-million tax rebate from Uncle Sam! At least in 1999, this was one company that certainly didn't want to eliminate the IRS.
THE DLC WAY
Senate Minority Leader Tom Daschle told a Democratic Leadership Council
(DLC)-sponsored seminar on August 15 that our nation's next "critical step" should be to give more tax loopholes to the high-flying technology sector, including research tax credits, bigger depreciation write-offs, and tax breaks for donations of used computers to schools.
Daschle, a South Dakota Democrat, co-chairs a New Economy Task Force with Gateway Chairman Ted Waitt, under the auspices of the DLC's Progressive Policy Institute (PPI). One of the group's dubious proposals would shorten the tax write-off period for computers and other technology equipment from five years to three years. PPI argues that such a change is needed because "the economic lifespan of much of the equipment is only three years."
Now I don't know about your office, but mine has lots of working computers considerably more than three years old. In fact, even PPI doesn't really seem to believe that computers wear out in only three years. Witness another of PPI's New Economy proposals, which would give companies a tax credit for donating their three-year-old computers to schools--equal to 30 percent, or sometimes 50 percent, of market value at the time of the donation. But if PPI is right that computers are worthless after three years, then the proposed tax credit wouldn't amount to much, since 30 percent times zero is zero.
So once again, we see an illustration of how New Democrats make policy (as hilariously described in The New Republic in 1998 by Jonathan Chait). Start with the fact that current law provides computers with a fairly liberal five-year write-off period. Then note that many conservative Republicans such as Dick Armey want to shorten that to zero years. Therefore, a conscientious New Democrat simply splits the difference and aims for three years. Of course, if the tax law were so changed, then the DLC would probably propose cutting the write-off period to a year and a half.
FANATICS AGAINST INTERNAL REVENUE (FAIR)
If you thought the prospects for replacing the income tax with a regressive national sales tax might have been dampened by last fall's official estimate that the sales tax rate would have to exceed 50 percent to break even, well, you were right. But the true believers at Americans for Fair Taxation
haven't given up. Their latest flyer to cross my desk offers to sell me a variety of pro-sales tax paraphernalia to promote the joys of the sales tax--"no records to keep, no filing and above all, no worries." These include Ask Me about the Sales Tax name tags, Abolish the IRS bumper stickers, and, for $20 each, No Income Tax golf shirts. Antitax golf apparel struck me as particularly eccentric at first, but come to think of it, those shirts might be pretty popular on some of the ritzier courses I've played.
RUSSIA GOES FLAT
Steve Forbes and Dick Armey have finally seen their dream come true--except that it's happening in Russia. Starting next year, the Russian personal income tax will be set at a flat 13 percent. (Russia also has a 20 percent sales tax.) Presumably, flat-tax advocates will soon add the former Soviet Union to the short list of places--Hong Kong and the Isle of Man being the previous stalwarts--that the U.S. should look to emulate.