How About a Democratic Approach to Income Taxes? Lower Rates, Treat All Income the Same

One of the things that is puzzling is the failure of the Democrats in Congress to get behind Senator Ron Wyden's plan for income tax reform. Basically what Wyden is proposing is that the current six rates of taxation be changed to three rates; that all income be treated the same; and that most deductions, exemptions, credits, etc. be eliminated. Wyden's plan would keep the home mortgage interest deduction, the charitable contribution deduction, and the credits for education and earned income.

This plan is fair and would end the discrepancy in way that earned income is treated from unearned income. Although Bush and his Republican allies claim to value work and working families, their claim is hollow given the fact that the highest tax rate for unearned income is 15%, compared to the top rate of 35% for the highest income tax brackets.

This plan is also a way to fight the Bush propaganda on issues such as the alternate minimum income tax. Congressional Democrats want to minimize the impact of that particular tax, but to do so, they wanted to raise the income tax on hedge fund managers, whose income is taxed at the same rate as investment income. Bush and the Republicans won't support this concept because they want to help their rich business allies. They are able to get away with this, though, because they just announce their opposition to raising taxes and count on the media not to explain to the public whose taxes would be raised.

This kind of deliberate confusion would be harder to do if the Democrats adopted a comprehensive approach to taxes such as Senator Wyden is proposing. Such an approach would get attention from the media and would be easy to explain to voters. Why Democratic candidates running for president aren't jumping on Wyden's tax plan is hard to figure. Maybe they like being beat over the head by the Republicans on taxes.