Paul L. Caron
Dean





Sunday, May 2, 2010

Compulsory Bond Purchase as Compromise to Income Tax Rate Increases

Stanley Veliotis (Fordham University, Graduate School of Business) & Kristen Gray (Graduate Student, Fordham University, Graduate School of Business) have published  Proposal: Compulsory Bond Purchase as Compromise to Income Tax Rate Increases, 8 DePaul Bus. & Com. L.J. 37 (2009). Here is the abstract:

It is a common-held expectation that the U.S. federal government will need to increase cash receipts over the next decade. While the highest marginal income tax rates for many years were more than twice what they have been in the last three decades, it is expected that political pressures will not allow more than a modest increase in the current marginal tax rates. This Article proposes that the formerly prevalent higher marginal rates be reinstated on excessive personal services income, which is least likely to be subject to disincentive effects. However, to address probable insurmountable political resistance, the portion of the rate in excess of the 39.6% tax rate should be converted to an asset for the taxpayer --U.S. savings bonds. Besides providing the government with an injection of cash, these bonds are a form of compulsory savings, along the lines of the Keynesian “deferred pay” proposal. The approach provides a way for financially fortunate Americans to reinvest in their country, a patriotic theme reminiscent of War Bond drives of the last century, as well as a tangible commitment to global lenders that such Americans share their financial risk.

https://taxprof.typepad.com/taxprof_blog/2010/05/compulsory-bond-.html

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