**Chickering Cottage Concords (CCC)**

*A continuing discussion on the issues and what to do about them*

Chickering Cottage Concords, October 2004 -- we met during the first two
weeks of October and hammered out how to change the world for the
better, confining our task to the questions previously defined. On-site
participants and contributing thinkers included Phil and Camille Cox,
friends from Thousand Oaks, CA on site at Chickering (OSAC); Robyn Reed
of Arlington, VA via correspondence (VC); Lorie Reed of Irvine, CA (VC);
Jennifer Storey of LA, CA (VC); Dale and Barbara Reed of Hamilton, VA
(VC); Jan Ramquist of Cary, NC (VC); Chris and Randy Jones of Chicago,
Il (OSAC); Dustin Reed of San Diego, CA (OSAC); Lindsey Reed of San
Francisco, CA (OSAC); Dave Pollack of San Francisco, CA (OSAC); Allison
Reed of San Francisco, CA (OSAC); Gayle Reed of TO, CA (OSAC); Joanna
May of Brighton Beach, UK (OSAC); Julia of San Francisco, CA (OSAC);
Stacey and Tera Bowen (unmarried names) of CT (OSAC).

I, Dale Reed, have had the honor to serve as primary instigator and your
faithful scribe.

**Progressive taxation topic** -- we have had a socialist bias regarding
income taxes for decades, this is not new information. The rich (let's
call this a household declaring more than \$100k of W2 income per year)
pay a much higher percent of their income as tax than do the less rich.
And if you cut taxes, particularly an across the board rate cut like
Bush did, you certainly will help the rich since their dollar gain was
far greater than the less rich since they pay most of the tax. If you
took the total population of working people who pay taxes and did the
math, you discover that 80% of all income taxes and fully 60% of the
entire revenue of our federal government is paid for by the top 20% of
wage earners, sorted by income. The top 5% of taxpayers, sorted by
income, pay 54% of all the federal taxes raised by the IRS. Clearly,
this is a highly progressive tax structure.

Very mixed results here on a consensus of what to change. One of our
group persistently maintains that no additional taxes can accrue to
government; they have enough of our money already and can't seem to
spend it wisely. There was considerable support for the current
Kerry/Edwards plan to add back the Bush tax cuts on families who earn
more than \$200k per year, not because consumption would change but
because it would help balance the budget with additional federal revenue
(the comeback argument is that this would damage small businesses who
are taxed as subchapter S corporations on the earnings of the owner as
normal income).

Some confusion continues to exist on the issue of tax cuts helping only
"the rich" -- please remember that you can't benefit from a tax cut if
you don't pay taxes at all with your current income (not really true,
some years ago we put in the earned income credit whish is a negative
income tax).

Arguments for a flat tax on consumption (sales) are DOA (dead on
arrival) since this is not an income tax, which was the topic. If it is
a sales tax (to give the government their cut based on spending or based
on earning is a choice, possibly a good topic for some future CCC), it
is like the European value added taxes (and we don't really want to copy
the Europeans on tax policy - our economic model is based on selfish and
excessive consumption, we certainly don't want to slow that down by
taxing it). 

After some spirited debate, we ended up proposing a new minimum income
tax condition that kicks in as a reduction off whatever bracket tax rate
is in play above \$80k of income and drops to 1% for those under \$80k
of income (see "skin in the game" comments below\*). This would
absolutely end the fairness issue now worrisome to some that the rich
can use loopholes to escape income tax (example #1, if your W2 shows
\$200k of income and your incremental tax rate from the tables usually
is 40% at that earning point, the minimum income tax would be set at 10
points less or 30% of your W2 income (\$60k in this case) regardless of
your deductions -- this would take the "army of accountants" out of the
equation for the rich who can afford that; example #2, if your W2 shows
\$40k of income and your incremental tar rate from the table usually is
5%, your minimum tax would be \$400 regardless of deductions).

\*One argument that we heard that has merit is that there perhaps should
be a minimum income tax of 1% of income for everyone, regardless of tax
bracket, so that everyone has some "skin in the game". That may increase
our voter turnout for elections, which currently ranges around a
disappointing 50% of all eligible voters (voter turnout is yet another
topic for some future CCC). It certainly would eliminate the earned
income tax credit, which seems to be a form of welfare hidden in our tax
system.

Let me know if you want to participate, going forward. I am taking
issues now for consideration next year or whenever we feel like we have
an occasion to debate and publish....

Dale