- Tax Reform: Tax Americans in the most efficient and fairest way possible for everyone involved: Consumption tax. We need a National Sales tax. Property taxes, income taxes, estate taxes: These are all redundant taxes, creating undue burden on the economy and inefficient "profits' for the government. Marginal income tax rates are inherently biased, discriminatory, and open to widespread abuse.
Example:
I'm everyone's favorite 4 person family example: husband, wife, 2 kids. Let's say mom and dad make about 75k a year total. 25% of that income is going to go away in the form of income tax. "But wait!" you chime, reminding me about deductions and exemptions. Of course, we're going to deduct a standard married deduction with 2 dependents. They would owe about $4400 in income taxes after deductions. Now in reality, they won't be cutting a check. They likely will get a refund because throughout the year their employer withholds a certain amount from every check to pay Uncle Sam, and most people leave their withholding numbers a tad high to prevent owing taxes. So in reality the IRS will spend a lot of resources mailing refund checks. Back to the point: Now this family goes out and spends their remaining 70ish thousand income on the various things they wish to purchase. Sounds pretty spiffy huh? I mean $4400 is a pretty small amount of taxes, percentage-wise, on 75k. Of course, they have deductions, make a modest income, and fall into a nice sweet-spot of our system. Now let's say they take $5000 of that money to go spend at a store. Remember this money is "non qualified" meaning it has already been taxed. Ignoring local sales taxes for the moment, let's just assume they spend all $5000 buying widgets at Bob's SuperMart. Bob just made $5000 income. After his deductions, he will pay income tax on this at HIS level. Then Bob spends his net gains buying new equipment for his store with his non qualified monies, and sure enough Jim's Wholesale Inc just made X amount of non qualified money they will pay income tax on.
I'm everyone's favorite 4 person family example: husband, wife, 2 kids. Let's say mom and dad make about 75k a year total. 25% of that income is going to go away in the form of income tax. "But wait!" you chime, reminding me about deductions and exemptions. Of course, we're going to deduct a standard married deduction with 2 dependents. They would owe about $4400 in income taxes after deductions. Now in reality, they won't be cutting a check. They likely will get a refund because throughout the year their employer withholds a certain amount from every check to pay Uncle Sam, and most people leave their withholding numbers a tad high to prevent owing taxes. So in reality the IRS will spend a lot of resources mailing refund checks. Back to the point: Now this family goes out and spends their remaining 70ish thousand income on the various things they wish to purchase. Sounds pretty spiffy huh? I mean $4400 is a pretty small amount of taxes, percentage-wise, on 75k. Of course, they have deductions, make a modest income, and fall into a nice sweet-spot of our system. Now let's say they take $5000 of that money to go spend at a store. Remember this money is "non qualified" meaning it has already been taxed. Ignoring local sales taxes for the moment, let's just assume they spend all $5000 buying widgets at Bob's SuperMart. Bob just made $5000 income. After his deductions, he will pay income tax on this at HIS level. Then Bob spends his net gains buying new equipment for his store with his non qualified monies, and sure enough Jim's Wholesale Inc just made X amount of non qualified money they will pay income tax on.
The moral of the story is this, every product you buy, every dollar you spend generate extra taxes for the government in the form of income tax for someone else. The problem is that not only are you double, triple, and infinitupling (yeah, I made that up) the taxation of the same monies, but you are doing so in an inefficient, inaccurate way that ultimately passes the higher tax burden onto the working class. As a small business owner, if I know I'm paying a higher rate of tax because of my income, I'm going to look for deductions. Deductions = cronyism and lobbyists pushing for obscure new legislation to sneak a break to their clients. Some deductions are fair, some are absurd, easily abused, and untraceable. The IRS spends about 12 billion a year to collect taxes, compared to the 3 trillion or so it brings in, this seems like a drop in the bucket. However, how many dollars are being taken from the government unfairly? How many countless deductions, exemptions, etc screw Uncle Sam out of what is rightfully his? We are given every incentive to avoid income taxes.
Now how does all of this burden the working class? Because the wealthy are, on the whole, pretty smart folks. They usually get to their status by cutting deals, working efficiently, and knowing how to maximize performance and minimize expense. They can afford the crazy accountants that know every single way to get some bogus deduction. The taxes they actually have to pay? Well those just get lumped into product cost anyway. Now when that family feels all warm and fuzzy from their "low" tax burden of only $4400, they can expect to wonder why their dollars aren't going as far.
Finally, marginal tax rates are inherently discriminating. Why should people who decide to marry pay a lesser tax burden than those that remain single? Why are your fellow Americans asked to shoulder the burden so you can have a kid? Why are your fellow Americans asked to pick up the tab because you had medical bills to write off? A more common complaint is that we are given a punishment for earning more in a capitalistic system...which is frankly bonkers. There's this bizarre left-wing concept that the wealthy don't pay their fair share because they have so much money. A doctor might make 500k a year. That's pretty damned good money to live on. I think I could get by on that. However, (depending on the type obviously) he likely will take responsibility for the life and well being of many people in his time. He may at some point hold the life of someone's child, brother, mother, and grandparent in his hands. A surgeon may be a slight twitch away from being a hero and a villain. 12 years of his/her life have went to studying, vast amounts of debts were likely accumulated with the hopes of this career paying off, with no guarantee that it would. Now you want to tell me that this guy should be punished for his investment paying off by paying a higher rate of tax than a guy who decided to make the biggest responsibility in his career whether or not he rung up someone's lunch order correctly? No one calls George up at 4am urgently screaming about "We need you here in 15 minutes or people will die! Also, if you make the wrong decision you're going to lose everything you own and be unable to go back to work again."
Fair means fair. Everyone pays the same rate, period. Tax reform not only will generate more money in the private sector, but for the government as well. Tax reform also has wonderful side effects in social equality. Hard to complain about how the lack of gay marriage is limiting the rights of a couple when the incentive for married tax rates disappear. I realize there are many other facets to the overall issue, but that's one aspect gone with social cons having no real argument against it. My next entry is going be be focused on a social issue so I'll save further talks on this portion of the topic for that.
Fair means fair. Everyone pays the same rate, period. Tax reform not only will generate more money in the private sector, but for the government as well. Tax reform also has wonderful side effects in social equality. Hard to complain about how the lack of gay marriage is limiting the rights of a couple when the incentive for married tax rates disappear. I realize there are many other facets to the overall issue, but that's one aspect gone with social cons having no real argument against it. My next entry is going be be focused on a social issue so I'll save further talks on this portion of the topic for that.
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