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Scott Hodge, Tax Foundation president, on government entitlement programs and raising taxes on Americans who don't pay anything.
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Absolutely.
Well -- we've been reporting in our special series speaking of parallels on entitlement nation roughly half of Americans -- pay any income taxes.
But they may not be changing this system in -- next guest says -- legal loophole put in place by congress that's what we should -- -- Joining us now Scott Hodge president of the Tax Foundation Scott.
You say that the fact that half of Americans.
Are not paying any income taxes that -- -- unintentional.
Well that's right these are not your fat cats are taking advantage attack -- tax loopholes and shelters to dodge the tax man.
These are ordinary Americans millions of ordinary Americans.
We're taking advantage of very generous tax credits that him and put into place over the last twenty years like the child credit earned income tax credit first time home buyers credit.
Back to work credit and you name it all of these things add up to knock about 52 million Americans off the tax rolls.
And what's really remarkable is that about half of 125 million.
Still get a check back through some of the welfare like programs that are administered through the tax code so -- really turn the IRS into an ATM machine for welfare benefits.
And it's -- -- I mean this is so this is really what we're talking about is some form of social engineering.
Buying votes by politicians.
And of course -- gone to the point now word the majority.
Or getting these benefits it's gonna they're going to be low to vote them out -- who says you know what I don't want all of these goodies it's -- How we change it.
Well it's been pork barrel tax policy essentially as you say buying votes to the tax code.
To try to benefit certain industries how I don't know how -- we get -- in the pullback from this.
Well one of the ways we can do it is fundamental tax reform.
Where we mean by getting rid of all of these things we can dramatically lower tax rates but the biggest problem there is.
We have half of all Americans not paying anything how do you put those people on the Taggart back on the tax rolls it's going to be a very very political -- difficult political decision.
To essentially raise taxes on now this half of all Americans who pay nothing.
But who's gonna do this Scott we know Baghdad.
Getting tax cuts in the issues of tax cuts.
Mobilize voters and get sent to the polls and we are ahead of an election year so how does all of this going to get done -- get done.
In 2011.
And 2012.
At a time where neither side really.
Has that has this space in that -- or the power hard to give up any updates.
At this next election.
Well -- may have to be part of a grand compromise or a big -- Agreement between the parties to fundamentally reform the tax system.
To not only eliminate all of these loopholes that are in the code.
While bringing down tax rates but deciding how many people do we want to pay taxes and how many do we know while want to protect of the lowest income.
From the tax man and right now too many Americans are simply.
-- free riders they have no skin in the game and they're paying nothing toward the cost of government.
And it's sort of kind of ironic that we have a trillion half dollar deficit each year and yet only half of all Americans are paying toward the -- This does does not they tax payers trials got because all of this is legitimate and let's created by the tax code that congress allowed attacked half -- You have -- -- -- on the table here not all of them don't seem to be possible all certainly an and one -- if you more so if you mess once changed that you think would be the most meaningful the most in packed -- over the long term.
What one thing would you propose.
-- -- tax simplification across the board but that has to be brought brown with a reduction in tax rates you have to do these things together.
-- -- you can't just inflict pain on taxpayers you have to give some sugar with that and so if you take away benefits you have to do reduce rates.
And eventually people.
Come out better in the in the long run in the economy is better off -- that's the really the most important thing.
That is a tough tough sell Scott odds of the Tax Foundation thanks a lot we really appreciate it.
You bet thank.
