Making prescription drugs a Medicare entitlement could be poison
for tax reform.
The costs of the $400 billion drug proposal, currently being
hammered out by a Capitol Hill committee, would make proposals for
a pro-growth tax system in America harder to achieve, says Heritage
Foundation tax expert Daniel Mitchell in a July
25 study.
Some future tax reform ideas that would likely be scrapped
include:
• Alternative minimum tax (AMT) repeal. This tax is a
"Catch-22" system that forces many taxpayers to calculate their
taxes twice. If this results in a higher tax liability, the
taxpayer must pay more.
• Corporate tax rate reduction. America has a top corporate
tax rate of 35 percent-the highest of any developed nation. This
hinders the competitiveness of U.S.-based companies.
• Universal IRAs. People should not be taxed twice on income
that is saved and invested, which is why individual retirement
accounts should be universal.
• Ending territorial taxation. The United States taxes income
earned in other nations-even though this income is already subject
to foreign tax.
"Many of the reforms needed to bring the tax code closer to a
simple and fair flat tax involve a reduction in tax revenue,"
Mitchell writes. "This will be a daunting challenge."
Read more of Mitchell's study and other Medicare research at heritage.org.
For more information or to receive an e-mail version of "Medicare
Maladies," contact [email protected]
or call Heritage Media Services at (202) 675-1761.
Report Health Care Reform
Medicare Malady #12: Prescription Drugs Bad Medicine for Tax Reform
July 29, 2003 1 min read
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