Regarding the Senate Finance Committee's latest sequel to tax reform, I feel compelled to offer a few comments. Overall, I am impressed with the quality of this piece of legislation; that the Senate can rework legislation so many times and actually come up with substantial improvements almost restores my faith in mankind. I hope that all the various interest groups will keep their hands off it.
My only cavil has to do with the status of the Individual Retirement Accounts. Recent statistics show that all but the lowest income groups are substantial users of this excellent retirement planning device. In view of the dubious future prospects for Social Security, it would make sense to keep it in full effect for those with, say, incomes under $50,000 a year (adjusted gross) while carrying through the recommended change for those of higher income. In fact, more incentives are needed to make the IRA attractive to low-income individuals.
I commend the committee particularly on preserving most of the deductibility of state and local taxes. Whereas a tax code can come up with any sort of formula to maintain its flow of revenues, the ability of governmental agencies to tax those tax dollars, which are paid to other government agencies, is nothing short of a legal pyramid scheme, a principle so odious that it makes possible a tax bracket in excess of 100% of an individual's income. Does anyone believe, however, that these changes will truly be revenue-neutral?