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PROSPERITY: Economic Policy | June 1, 1985



An Unpublished Letter to Los Angeles Times

Most experts agree that the Reagan tax reform plan would directly benefit upper- and lower-income people the most. Indirectly, however, it would most hurt middle- and lower-income people, who spend a larger share of their income than the rich do and who would, thus, be hardest hit by the Reagan plan's increase in corporate taxes, routinely passed on to the consumer: Although it does some good up-front for the poor, the Reagan tax plan directly cuts away at the progressive individual income tax and also quietly imposes a regressive, "value-added", national sales tax (as levied outright in Britain). This inflationary policy is unfair and uneconomical.

Tax simplification can be better done by eliminating loopholes but making the individual income tax more progressive and also by preventing the tax-sheltering of individuals' wealth within corporations, which should be legally restricted from passing on to consumers any increase in taxes. This, like any comprehensive tax reform plan, would be a substantial chore; but that is part of the job our legislators are well paid to do -- to serve the legitimate needs of the majority of the taxpayers, not the necessarily selfish interests of most P.A.C.'s or lobbyists.

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