Sunday, July 16, 2006

Two good Sunday local stories

Two articles in today's Inquirer jumped out as useful to people trying to get a handle on Philadelphia politics.
  • Tom Ferrick responds to some recent letters and fleshes out a portrait of Northeast Philadelphia, its history and the uncertainties of transition. Along the way, he rebuts the common tendency to lay the blame for all unhappy changes at the feet of Mayor Street.

  • Tom Fitzgerald has a profile of Chaka Fattah as a Congressman and as a mayoral aspirant. It does a pretty good job of describing his strengths and some of his perceived weaknesses. Most amusing (and perplexing) to me was this throwaway bit:
    He also has a pending proposal to abolish the federal tax system and replace it with a national transaction fee.
    Come again?? Anyway, worth a read for those in his district as well as those mulling the mayoral field.


Anonymous phillydem said...

A while back I heard Fattah talk about his national transaction tax idea. Have to say it was one of the loopiest
proposals I've heard in a long time. Even HE had a hard time explaining it.
It seemed like a bureucratic nightmare
too. I guess Fattah deserves credit for "thinking outside the box", but this was 'way outside, about half way to Mars.

3:42 AM  
Anonymous Anonymous said...

Real tax debate is MIA in 2004

Aug 27, 2004

By Andrew Cassel

If we weren't waist-deep in Vietnam-era mudslinging, we might be using this presidential campaign season to debate some actual issues. Such as tax reform.

The subject of taxes hasn't been entirely absent from the race, of course. But the discussion has been pretty limited. President Bush claims we just need to make his 2001 and 2003 tax cuts permanent and our problems will be over. John Kerry claims all we need to do is roll the tax rates for high-income folks back to where they used to be.

Neither campaign is offering much depth or honesty. That's not surprising when you recall what happened to other candidates who made bold statements about taxes.

"Let's tell the truth," Walter Mondale said in 1984. "Mr. Reagan will raise taxes, and so will I. He won't tell you. I just did. " Mondale got trounced; 'nuff said.

Off the White House roller coaster, however, it's still possible to find some interesting ideas. One that's been quietly percolating since early this year comes from U.S. Rep. Chaka Fattah of Philadelphia.

An undiluted liberal Democrat, Fattah nonetheless isn't interested simply in rolling back Bush's tax cuts for the wealthy.

Starting over

Instead, he's among a number of people, many of them die-hard conservatives, who want to "reform" the federal income tax by throwing it out - all 4,000-plus pages - and starting over.

Fattah would replace the income tax with a "transaction fee. " Call it a fee or a tax, what matters is it would dramatically shift the basis for financing government.

Instead of taxing individual income or corporate profits, the feds would take a piece every time money changed hands. Like a sales tax, only broader, the transaction fee could apply to rents, loans, even bank account deposits and withdrawals. Fattah likens it to the extra fee charged at ATM machines, only on a much wider scale.

The advantage would be simplicity, he argues; no massive forms to fill out, no complex rules to keep lawyers and accountants busy, and no playing hide-and-seek with the IRS.

Since more than $53 trillion changes hands in our economy every year, the tax rate could theoretically be quite low - less than 5 percent, according to the Congressional Research Service. That's the kind of tax economists like: a low rate on a broad base. The less time people spend avoiding taxes, the better for the overall economy.

Coalition of the willing?

Fattah 's proposal has echoes of some others that emanate from way across the political spectrum. Steve Forbes pushed a flat tax during his brief run for the Republican presidential nomination in 2000. House Majority Leader Tom DeLay has endorsed a national sales tax, while others favor a version of the "value-added" taxes common in Europe.

But Fattah 's goal isn't to use tax reform as a back-door way to slash federal spending. On the contrary, he contends his transaction fee would raise enough to not only wipe out the federal deficit, but also to replace half the school funding that now comes from state and local property taxes.

It's a far-reaching, maybe even far-fetched, idea. Even a cursory analysis turns up a host of questions and potential problems, such as: Who would collect the tax? Would foreign transactions be covered? Would it apply equally to goods and services, luxuries and necessities, rich and poor? If so, is that fair?

But the fact that it raises serious questions doesn't disqualify Fattah 's plan from serious consideration; just the opposite, in fact. Thinking about a radical change in the tax structure is an excellent way to understand what's wrong - and right - with our current system.

Even if Fattah 's idea isn't fully baked, it can help challenge some old ideas - including the notion that only Republicans find the current income-tax arrangement oppressive and cumbersome.

For that alone, it can be a welcome part of the discussion. Now if we can only get the candidates to discuss it. . . .

9:14 AM  

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