Government produces nothing (unless you count government owned GM and Chrysler...and we know how well THAT'S worked.Government gets its money from one source...you.
If government wants (or thinks it needs) more money, it just takes it from you, under threat of fines or jail time.
If government wants to give you some money, let's say in the form of a bonus or bailout, it must first take it from you.
If you don't make enough money, government thinks it should take some more from those who do have enough and give you a "rebate" or a "refund" on that which you have not paid in. (Absolutely impossible, by the way, without ignoring the meanings of "rebate" and "refund"...something the government is very good at.)
Some people (we'll call them liberals) think this is a very good idea. They seem to believe that there is no limit on what the government should be able to take from citizens to cover whatever "needs" it sees. If they DO think there is a limit, they don't know what that limit is. They sort of "feel like" such-and-such is the right amount.
Others (we'll call them conservatives), believe that the government has certain tasks it is to accomplish and that it should take from the citizens not a whit more than is needed to get those tasks done. Trouble is, they can't decide objectively how much is needed, either.
I, of course, have the ultimate solution to this issue.
Michael Savage is a strong proponent of what is called the "fair tax." It's a point of purchase tax, like a sales tax. You only pay tax when you purchase something.
That would become an accounting nightmare...not much improvement over what we have now.
Without going into the details, and having carefully studied the proposals surrounding the "fair tax," I'll just tell you that it is neither "fair" nor workable.
The only way to insure that citizens yield to the government an amount on which it can do what it MUST do (which is all any government should ever do) is to enact a flat income tax.
This is not the first time I have suggested such a thing, but now I have a strong ally, none other than Glenn Beck!
Some people will react in horror at having him as an ally. I see it as a good thing.
Here's how the flat tax works:
A minimum livable wage is established, let's for the sake of discussion say $20,000.00 per year (a $5,000.00 increase from the 1955 figure on which the minimum poverty is currently resting).
In a flat tax, the first $20,000.00 would not be taxed at all. Everything over that would be taxed at a set percentage of income, let's just say 10% for the purposes of this post, since it is an easy percentage to work with.
Using that standard, everything over $20,000.00 would be taxed at 10%.
If you earned $20,100.oo, your income tax would be 10% of $100.00, or $10.00.
If you earned $200,000.00, the first $20,000.00 would be exempt leaving you with a taxable income of $180,000.00, making your income 10% of $180,000.00 or $18,000.00.
This income tax would apply to ALL income, both corporate and individual, with companies being treated as though they were individuals. Self employed people would not incorporate, thus paying only their individual income.
There would be no deductions, no exemptions and no need for either the government manipulating people or people manipulating government.
Think of this: with this system there would be no need for an individual (think Charlie Rangel) or a corporation (Think Exxon) to seek tax loopholes, because there would be none. This system's only opportunity for fraud would be falsely reporting income, which could easily managed with a simple bookkeeping procedure.
Under a flat income tax system, a single, five line sheet of paper would be sufficient, making it possible for even a person educated in a government school to fill it out.
The income generated from this system would be 10% of corporate income plus 10% of all personal income. In today's economy that would amount to over $6 Trillion per year of "income" for the government.
Establishing a flat income tax would require a constitutional amendment (not an easy thing to accomplish) which would set the rate, which could only be changed by another amendment.
There is one more drawback to a flat income tax: it will take politicians with backbone and resolve, with a real sense of fair play and with enough self-sacrifice to make it happen, therefore it will probably never happen.
On the other hand (besides there being five more fingers) it could happen if enough people caught the vision and pressured congress to reach for it.
With the backing of national spokespersons with audience the size of Becks, who knows?
Income tax is here to stay. Right now it is an undecipherable mess. Both a "fair tax" and a "flat tax" would be infinitely easier to deal with.
In my humble, but correct, opinion, the flat income tax is the better of the two.
30 comments:
I'm reading your piece wrong, I guess...you say it's neither fair nor workable but you're suggesting it along with Beck? HELP!!
I'm confused on the flat tax; I hear pro, I hear con...I'm just not sure.
I've supported the Fair Tax for a decade now!
You know, I don't mind helping people who CAN'T help themselves (ie, disabled or handicapped people who are incapable of working or can work some, but can't earn enough to live one for example). It's the people who WON'T help themselve or choose to have baby after baby after baby after baby ... in order to live off the system who can starve for all I care. We should remove their children from their homes and then let happen to the adult whatever may.
I support NO federal income tax. We are so used to being serfs of the government that we can't imagine not being taxed on our income.
This country functioned quite nicely for 137 years before the ratification of the 16th Amendment.
About 95% of what the government does is unconstitutional. The only way we will get control of profligate government spending is to cut off their allowance.
Z: "Fair Tax" and "Flat Tax" are two different things. When I finish this post you'll see.
The stupid thing disappeared, came half way back and published itself.
!!!!.
Krystal: I would agree with you up to the point of the starving to death part...I might not go that far, but I understand the point of view.
I have no qualms about helping people who genuinely cannot help themselves, but when I see a man like Steven Hawkings (quadraplegic, wheelchair bound internationally known physicist) make it, I think those who CANNOT help themselves are few and far between.
LR: I totally agree that cutting them off would be best. However, that is not going to happen...I think.
If you'll lead the charge, though, I'll join you.
What of assets? There are assets out there, just sitting there, untaxed. Corporations get away with possessing billions of dollars in untaxed assets. If assets were taxed as income, wouldn't we be able to reduce the amount of taxes paid on individual income?
(I see the flaw in this argument, but I wonder if you do)
Joe, When I mean those who are unable, I'm talking about some of the adults and youth I work with in our special needs class at church. They have mental and/or physical disabilities. A guadrapalegic who is a physicist has a marketable skill and I applaud him for going for it!
But there are those in our country who aren't physicists. My hearing impaired autistic son who has seizures is amoung them. He can build things, with lots of supervision with the power tools. We're helping make some plans for waiste high book shelves, CD cabinets, doll houses, etc so he can partially support himself when he gets older.
But in reality, he'll always need suplimental income and help. He's lucky to have my husband and me plus amazing siblings to help him, but not everyone does.
Plus, these people need health care that NO ONE can afford unless they're multi-millionaires. These people, and their families, NEED help.
And for those who refuse to work ... way I see it is like this: If I'm willing to feed you breakfast, lunch, and dinner IF you agree to pick up trash off the side of the road, and you REFUSE ...
Yeah, you can starve. And I won't feel the least bit guilty about it.
"If a man will not work, he shall not eat." 2 Thessalonians 3:10
"Lazy hands make a man poor, but diligent hands bring wealth." Proverbs 10:4
"How long will you lie there, you sluggard? When will you get up from your sleep? A little sleep, a little slumber, a little folding of the hands to rest -- and poverty will come on you like a bandit and scarcity like an armed man." Proverbs 6:9-11
mark: I'll bite. What is the flaw? At some point the person who owns those assetts bought them with money he/she earned (unless they were given to him/her as an inheritance).
Krystal: I will be the last one standing when it comes to fighting for those who really need help. My son has cerebral palsy, and I totally understand the need.
However, there are those who have marketable skills not limited by their disabilities who choose to be "on the dole." Those people should not receive one cent of your money, not for food stamps, not for anything.
My son will never be a physicist. He IS a house painter, because he has learned how to work with what he has.
Those who cannot physically (or mentally) handle a job should not be expected to have to have one.
Stand next to a grocery line some time and watch who we are buying groceries for and ask whether or not there is SOMETHING productive they could do.
If there is, they should not receive governmental aid.
You got it, Joe. That IS the flaw in that argument.
Joe, I work with the severe and profound. A few have jobs, but most of them are unable to do work. Thing is, they WANT TO! But there's just no way for some of them.
Of course, the people I'm talking about aren't the problem. I totally agree that if someone can do something though, they should!!! The lovely law though pays people NOT to work! Over at Fredd Spews I wrote a comment about a woman on the dole. Her husband was laid off and then she quit! Between food stamps, WIC, free child care, free breakfast/lunch for her child, free housing, free utilities, FREE COLLEGE TUITION, etc, they are getting $39,900+. And she was complaining to my friend (social worker) that she wasn't getting enough.
THOSE people are the problem.
As far as I'm concerned, if you're on the dole and there's garbage by the road, there is work for you to do.
Of course my son wanders off and needs constant supervision. He would pick up a piece of trash and then go on about the amazing things he could create with that piece of trash. Then you have to explain to him that some things are just trash and NEED to be tossed out.
He collects tubes ... toilet paper, paper towel, mailing, etc, LOL! Wouldn't trade him in for the all the money in the world!!!!
I'm with you Joe. I do offer one minor change in how the exemption is applied.
I think it should be tied to people who work. Instead of just offering up the exemption let's make it more direct.
If you work 1600 or more hours in a year you get to deduct $6000 per full time worker. If you work more then 1000, you can deduct $5000 per full time worker. Anything under 1000 hours worked would only receive $3000 per person.
I don't think giving people a $20K head start is necessarily a good plan.
Businesses I would offer a straight $5000 deduction per employee working 1600 hours or more. That's it. You want more deductions hire and retain more people.
I am also against the minimum wage being a so called living wage. The minimum wage needs to go back to a training wage. It encourages employers to hire and train people up into a career. It should never be a static point of pay. No one should be at the minimum wage for more then six months doing the same job. either they become proficient enough to earn a reasonable living or they get replaced.
I have gone off many a time on the minimum wage.
Taxes need to be flat and incentivized to achieve the goals.
ablur: It would be such a good thing for the country on so many levels to have a flat tax. Sadly, no significant politician in DC today has the desire to do what's best for the country, although I think that some have convinced themselves that they d.
An interesting article from the WSJ from back in 2008, regarding the "redistribution of wealth" in the US.
One of the problems with a flat tax is that to remain revenue neutral, the burden of actual taxes paid shift dramatically to the middle class. I would imagine most people think that's a bad idea.
For example, in our progressive system, a person at the US median income pays about 13% total to the fed. A person at $200k pays about 23%. That's total federal burden (payroll, etc.) and not just income tax. If you tax everything past a certain "standard deduction" at the same rate, the rate would have to be set high enough to maintain revenue, right? That "standard rate" would be higher than 13% and probably quite a bit less than the 30% that top earners make, thus taxes would drop dramtically for the wealthy, and raise substantially for the middle class.
Tom: Bad math on your part.
"...thus taxes would drop dramtically for the wealthy, and raise substantially for the middle class."
What's wrong with the wealthy's taxes dropping? Is it somehow unfair that they are wealthy? Is it fair to take more from them because they have been creative enough, successful enough and energetic enough to earn more than me?
I say let them earn as much as they want to earn. Period.
As to the middle class, your basic premise is wrong. If the rate is set at or near 13% on EVERY EARNED DOLLAR, revenues would go up and the cost to the middle class would be less, not more. A more realistic tax rate would be 11%, I just used 10% 'cause the figures were easy to work with.
The idea that if one works hard and earns more his/her "fair share" somehow increases as a percentage of income is elitist, immoral and confiscatory.
I reject the idea out of hand as being stinkin' thinkin'.
ablur, my state representative and I were talking one day. He was all about raising the "living wage" thinking it would get me on his side. I told him raising it helps no one and hurts a lot of people. He asked me how.
I explained that raising the living wage results in a higher cost of living for EVERYONE because supermarkets, for example, have to raise their prices to make up for the higher cost of workers. I told him that within 3-6 months the people who gots the unearned payraise are right back where they were before, but all the OTHER people who DIDN'T get a pay raise are now paying more for utilities, milk, bread, meat, veggies, etc.
And it hurts the single parent more than anyone else!
He just looked at me for a moment and said, "I've never thought of that."
Well that's because he's a die hard liberas in his 60's. He no longer thinks for himself.
Tom, another problem with our tax system is that it doesn't take into account the cost of living where people live. $50,000 is a pretty good wage in the mid-west, but in California and Washington state, you'd be living on PB&J. I got to talk to Rush Limbaugh about that one and he said he'd never considered that angle and congratulated me for my independant thinking! HA!
Joe, "The idea that if one works hard and earns more his/her "fair share" somehow increases as a percentage of income is elitist, immoral and confiscatory."
Not to mention it prevents private business owners from hiring more help and expanding their business.
It's illegitimate and unConstitutional, and we must fight this tyranny in every way.
Time to tell Obamy and the CommieCrats just where they can stick it.
I do support the flat tax, however, it will never happen. No way will the government relinquish an inch of its control over the people.
Leticia: Sadly, you are quite correct.
Actually, Joe, you have not demonstrated where my math is bad. I actually did all the math. I wrote a post about this topic a while back. It can be read here. I used the published tax data from the CBO.
I actually took all the data, plugged it into a spread sheet and did the calculations. You can also look at the marginal rates for the highest earners from the CBO historically, and see that they are at all-time lows.
I'm not going to argue the data with you. It's in the CBO report.
Again, the idea of a flat tax is that you must be revenue neutral. This means that the wealthy will have a much lower tax burden, and the tax on the middle class will go up in order to keep the revenue exactly where it is at. It is a fact that if "every earned dollar" is taxed at 13%, revenue will decline sharply. Do you even know how much revenue is produced from the top 4% earners? Do you know what would happen if you changed their marginal rate from 30% to 13%? Revenue would plummet.
Philisophically, I don't get why people think it's a great thing that we raise the tax burden on the middle class and lower it on the wealthy, when again, it's already at historically low levels.
Actually, I think it's bizzare. If you go out and poll working class Americans and ask them if they'd like their taxes to go up so the wealthy can become even more wealthy, you'll get some pretty strange looks.
I just cannot fathom how people can reason that way. But they do.
Tom: "Do you even know how much revenue is produced from the top 4%of earners? Do you know what would happen if you changed their marginal rate from 30% to 13%? Revenue would plummet."
Yes, I do, and that's the point.
What kind of reasoning says one person should pay 3%, another 7%, still another 18% and others 30%?
What possible difinition of "fair" applies there? Just because they can pay more they should?
By that logic, a person in the grocery store should pay $2.00 per gallon for milk if they are poor, $12.00 a gallon if they are rich, just because they can.
Why should I pay more for a road or fire service, or defense or anything else just because I am rich and "can?" (I am not rich, BTW: I earn just barely above the poverty level and have almost no savings left...not complaining, just explaining) .
I can understand having contempt for people who are rich due to some magnanamous inheritance, but I can see no reason to punish people who have worked hard, taken business risks, been creative and had it all pay off for them.
Bill Gates did not get to be one of the richest men on earth because he was lucky and "won life's lottery." He got there through hard word, being innovative, shrewd marketing and by providing tens-of-thousands of people gainful employment along the way.
Why should he be penalized for having done so? What is "fair" about that?
Where does this disjointed concept of "fairness" come from? Who made it up? Robin Hood?
At least Robin Hood stole from the government to give to the poor, not from the average rich guy. (I'm not advocating stealing from the government.)
I jsut want to know why a person who EARNS more should have to pay a proportionally higher amount to the government just because he/she can. That makes absolutely no logic to me in any way, shape or form.
Tom: I read your post and left a comment (even though it is an old post).
In it you say, "...look at the amounts of money they have left over after their tax bill, and compare it to the middle class..."
So what? They earned it. You didn't and I didn't. Why should we get one whit of it via the government?
Joe and Tom: The problem here is that the two of you are talking about two different things.
Joe is talking about the percentage of income one pays to taxes.
Tom is talking about the actual monetary amount.
Although it seems fair that wealthy people should pay more than the poor because they have more to "spare", it isn't.
(BTW, the term, "middle class" was coined by Marx and Engles in their manifesto.)
If someone who makes $100,000 a year has to pay 13% in taxes, he pays only 13%. If someone who makes $1,000,000, or 10,000,000, or 100,000,000 or even 1,000,000,000 a year, and they each pay 13% of their total income in taxes, they end up paying exactly 13% of their income.
Everyone receives an equal amount of loss to their income.
In percentage of income.
When you break that percentage down into real dollars and cents, the wealthy end up paying more actual money than the poor.
The rich pay more. Isn't that what you Liberals infected with class envy want?
Mark: Well said. You have correctly interpreted my meaning...something few people are smart enough to do.
"If assets were taxed as income, wouldn't we be able to reduce the amount of taxes paid on individual income?
"(I see the flaw in this argument, but I wonder if you do)" (Mark)
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...At some point the person who owns those assetts bought them with money he/she earned (unless they were given to him/her as an inheritance)." (Joe)
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Whoa!
THAT'S NOT the only flaw in that argument.
Yes, those assets were bought with previously taxed income...even if inherited, they were taxed upon earning and if one owns property, you can dispose of it as you see fit.
BUT, the real flaw is that if we taxed assets we'd quickly bankrupt most people.
Imagine the farmer having to pay a federal asset tax on the value of his property every year...or the worker having to pay an asset tax on the value of his/her pension plan, &/or 457, &/or 401k, etc.
The truly "rich" do not rely on income for wealth. People like the Keane's, the Heinz's (yes, even Teresa Heinz-Kerry, who spke of paying "only 5% of her annual earnings in taxes during the 2004 campaign), the Kennedy's etc. garner the overwhelming bulk of their wealth from Capital Gains (investments, Trusts, Family Foundations, etc) NOT from income, but taxing assets would virtually eradicate the private ownership of property by making it virtually impossible for anyone to earn enough to pay taxes on the full, real value of all their accrued assets.
The double taxation (which we already have on savings interest and the inheritance tax) would be the least of our problems with the asset tax.
JMK: I totally agree with you about an asset tax.
Earnings should be taxed when they are earned. Every asset was paid for at some time in its history. The income earned to pay for those assets should have been subjected to income taxes when it was earned, but after that...no.
Yes, an asset tax would be ponderously burdensome to ALL.
Imagine being taxed on the value of all your assets each year - your house, your car, your pension plan, health care plan, etc. - most people don't even consider the extent of those assets and how low a percentage of that sum it would take to virtually bankrupt them.
Still, we seem to disagree over where the focus of the tax burden should be, productivity (work, entrepreneurialism, etc.) or consumption (spending), but reasonable people can disagree on such things.
JMK: Are you accusing me of being reasonable?
"Are you accusing me of being reasonable? (Joe)
I suppose I am....you're a good ambassador for your ideas, being able to disagree without rancor.
There are too many people who are overly emotional today....we saw 6 or 7 years of unbridled BDS - even from some in the MSM, and today we have a fair amount of ODS.
The idea that either Bush or Obama are "evil" seems foolish, many of their ideas have been wrong. BOTH overspent, although Bush's largest Deficit as a percentage of GDP was 3% to today's staggering 10%....BOTH are stalwart Keynesians, but neither seems "evil" to me, just simply wrong on the way things work.
JMK: You are the first to accuse me of having no rancor. Thanks.
Go back a few posts and see what some called me especially Sue (with a capital "S") and a fellow named Xavier Onasis.
I have no love for Bush-the-last-9-or-10 months' policies.
I have less love for President BO, who can't seem to get a grip on what his job is.
As for Pelosi, Reid, Rangel, Waters, Dodd, Frank and their pals, I have nothing but contempt for them. I can find in them no redeeming value.
I find plenty in you, though.
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