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A New Way to Pay; Reforming the Federal Income Tax Code

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One of the most frequently debated ideas in American politics is the reformation of the manner in which our federal government collects its revenue. Of course, at present this is done almost exclusively through a progressive income tax structure which essentially rewards only members of its highest or lowest brackets. This leaves those taxpayers who are in the middle of these two extremes, namely the vast majority, responsible for picking up the tab for others standing either far above or below them. Needless to say, the status quo is criminally unfair and leaves untold millions feeling as if they are being scammed by Uncle Sam because, quite frankly, they are.

Fortunately, a host of remedies have been proposed for this most dire problem as of late. Some have suggested the implementation of a nationwide sales tax as a replacement for the income tax, while others believe that high tariffs on imported goods would be apropos. I personally believe that, while both ideas seem to be attractive in theory, if actually put into practice, they would prove equally disastrous; the latter because it would essentially destroy free trade and the former as it might require a rate of almost thirty percent to function as an effective fundraiser for the Feds. This is why I have devised my own plan; a flat income tax of twenty percent with absolutely no possible write-offs or exemptions. The wealthy, poor, and middle class alike would pay the same rate. For the first time in close to a century, all Americans would be paying their, as many pundits and politicians like to say, fair share.

While many leftists might say that such a policy would be “morally reprehensible” or “outrageous” as it does not punish personal success, it is this attitude of entitlement which has brought the United States’ fiscal house to the deplorable order which it is currently in. The time has come for new, legitimate ideas to be discussed about alternative methods of taxation; our country can, simply put, no longer afford to sit on its collective hands about a matter as important as this. From my perspective, at least, a flat tax seems to be the most logical, plausible, and ethical course of action for bringing about sustainable economic relief for the most important segment of the American public; its silent majority.

Perhaps the greatest challenge a flat-rate federal income tax might face is that it just makes too much sense. Seeing as remotely sane ideas have been out of vogue in Washington for a while now, it probably would be best for all of us rationalists to not raise very much hope of something this workable ever coming to fruition. Oh, well. Back to serving as loyal wage slaves for our friends at the Internal Revenue Service.

About Joseph F. Cotto

  • Clavos

    Your idea of a flat tax with no deductions or exemptions has a major flaw: 20% of the income of a family below the poverty level is unsustainable and very injurious to that economic class.

    A better and far more equitable form of flat tax is the FairTax, which taxes not income, but consumption, and does allow for a substantial upfront exemption for all classes of necessary purchases such as food and shelter.

    It’s a lot fairer to the poor, and by taxing consumption, leaves control of how much tax to pay to the individual taxpayers themselves, who can reduce their taxes by consuming less (beyond the exempted necessities). The proponents of the FairTax have proposed that a 23% tax on all purchases (except necessities) is sufficient to generate the necessary revenue to replace current income tax collections.

    Adoption of the FairTax will eliminate the need for the IRS. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

    Legislation for the FairTax is already before both houses of Congress: H.R. 25 and S. 15.

  • http://handyfilm.blogspot.com handyguy

    If it sounds too good to be true…it usually is in fact too good to be true.

  • Clavos

    You’re right,handy, especially if we dismiss ideas out of hand; without consideration or debate.

  • http://handyfilm.blogspot.com handyguy

    I didn’t dismiss it, I am merely skeptical. The current system is a thoroughgoing mess. But the likelihood of replacing a big messy system that just happens to benefit a lot of powerful people seems remote.

  • Clavos

    That is unquestionably a very good point which will impact any potential solution proposed, handy.

  • Cannonshop

    The fundamental problem is what Handy hit on directly-the current system’s flaws aren’t flaws to large segments of the Lobbying and powerbrokering industries. Hell, there is an ENTIRE industry built around the complexity of the Tax-Code (heard of H&R Block?) not to mention massive employment that would be endangered in the government, were the Tax-Code to be rationalized and simplified. A lot of rice-bowls rely on the system being mind-blowing in its complexity and fundamentally unfair and unequal in its execution.

  • Clavos

    @#6:

    That’s generally true, of course, Cannon, but interestingly, my own tax accountant, who owns a thriving small business in the field, was the first to introduce me to the FairTax concept, which he strongly supports. I kid him about lobbying himself out of a job.

  • Dutchman3

    Clavos,

    Please ask your Fairtax expert accountant to answer the following Fairtax criticisms: (1) Isn’t it unconstitutional for the Federal government to try and tax State/Local government consumption under our federal form of government? (2) How is it fair to force retirees, who have paid in to the SS Trust Funds for 45 years or so, to resume paying for their health care and pension benefits with their sales tax dollars? (3) Why is it fair to double tax everyone’s after tax savings? (4) Why does he think it would be a good idea to create a group of 45 million workers who would pay no net federal tax, yet would still qualify for full SS retirement benefits? (That is the unintended consequence of the “prebate”)
    (5) Assuming we all take home 100% of our pay/pension, does he understand that retail prices will rise by 18% on average? (6) Is he aware that all 50 Governors are opposed to any kind of federal consumption tax?

    In short, the Fairtax is a very bad plan, and does not deserve serious consideration.

  • http://handyfilm.blogspot.com handyguy

    Both Pres. Obama and congressional Republicans like Paul Ryan have expressed interest in combining significant tax reform with long-term deficit reduction. It could be a rare and important opportunity to get something done.

    But with a big election looming next year, with the GOP applying concrete-rigid tunnel vision to any possible increase in revenues, with the utterly irresistible political advantage for Democrats in protecting the status quo regarding Medicare…well, it’s going to be a heavy lift.

  • Cannonshop

    #9 I think part of the problem, Handy, is that the Left refuses to acknowledge that increasing the price is not necessarily going to increase the Net.

    That is, Tax Hikes aren’t a guarantee of increasing revenues-they could, in fact (esp. with a weak economy) result in the opposite-increasing liabilities while choking off revenue streams as marginal enterprises go under.

    I think we can agree that putting people in the Private Sector (that’s the people who actually generate those revenues) out of work and onto government assistance is probably NOT a desirable outcome?