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October 1985

November 1985

October Unit Meeting
Speakers' Bureau
President's Message (Dorothy Lum)
Financing the Federal Government
LWVUS Position on Federal Tax Policy
Questions and Answers on Federal Tax Policy
H Power (Welcome Fawcett)
Vote Count Flash
League Co-Sponsors "Pau Hana Preview of Marine Legislation"
State Studies
Channel 20
Running to Win
Calendar
Aloha to... New Members
America in the Third World (insert) (Helen Whorton)

Questions and Answers on Federal Tax Policy

Q: Why does the League want tax reform?

A: We support tax reform because we believe the current tax system is unfair and too complex. We support a broader based federal income tax with minimal tax preferences and a progressive rate structure.

Q: Does the League support the Treasury Department tax reform plan?

A: The November 1984 Treasury plan was a very encouraging signal. As a base-broadening measure, it was a step in the right direction. A crucial question in evaluating any reform proposal will be whether the plan contributes to progressivity and equity.

Q: Do you support the Bradley-Gephardt or the Kemp-Kasten bill?

A: These proposals, like the November Treasury plan, are headed where the League thinks tax reform ought to go -- toward broadening the tax base. The League is concerned about overall progressivity, also.

Q: Do you favor postponing the move for tax reform?

A: Absolutely not. The need for tax reform is now, and it is urgent. Congress and the Administration must cooperate to provide tax reform for the American people

Q: Do you support deductibility of state and local taxes?

A: The League wilI evaluate any tax preference according to the criteria established in the League position. We are concerned about the state and local tax deduction because it does mean that some state residents get bigger tax breaks than ethers because of different tax rates. Also, like many other deductions, it is not available as a deduction to lower income taxpayers. In addition, it does account for a large revenue loss.

Q: Does the League support a value-added tax, a national sates fax or a flat tax?

A: No. All of these are regressive taxes. However, this position deals only with federal tax policy and does not address any issues of state tax policies.

Q: Do you support the November Treasury proposal on charitable deductions (namely allowing no seductions until charitable giving exceeds 2 percent or adjusted gross income)

A: No. The proposal would effectively remove deduction options for middle and lower income taxpayers while preserving them for the wealthy. That's inequitable.

Q: Do you support other tax preferences such as child-care credits, investment tax credits, accelerated cost recovery, and others?

A: In each case we will examine a proposal to determine whether the tax preference contributes to progressivity and equity or meets other important social goals. We also will look at the degree of revenue loss, which, in the case of accelerated cost recovery, is great. Overall, we support a broad tax base.

Q: Does the League think that corporations should pay more taxes?

A: Yes. The corporations should pay their fair share. Any base broadening with a concern for fairness and progressivity will mean a relative increase in the corporate share. This is especially true since the corporate share has declined because of the tax changes enacted in 1981.

Q: Does the League support the deduction for mortgage interest?

A: There have been no politically viable proposals to eliminate the deduction for mortgage interest. The mortgage interest deduction should be made more progressive by setting a reasonable cap on the amount that is deductible. This issue needs to be considered as part of the large issue of how to treat interest in general.

Q: Doesn't the League position really mean that there will be a big tax increase?

A: Substantial broadening of the tax base does not necessarily imply higher taxes. With comprehensive tax reform, there can be increased federal revenues while many taxpayers would pay less in taxes.

Q: Does the League support revenue-neutral legislation?

A: Politically that may be necessary in order to get reform. But in practice we would support some increased level of revenue to provide adequate resources for government programs.

Q. Are you in favor of a surcharge on the present income tax?

A: A surcharge on the current tax base would only exaggerate the inequities and inefficiencies in the present tax code.

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