Tag Archives: Income tax

What Tax System Would You Support?

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Taxes should be a fee for services rendered, not a penalty for success.

Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

With the hullabaloo about the fiscal cliff and April 15th on its way, it’s time again to think about taxes. I know you would rather slide down a fire pole covered in razor blades and battery acid than think about Uncle Sam’s yearly dues, but we can be the instruments of change. If liberty minded people can inject a little logic and reason into the somewhat socialist-minded which currently dominate our media, Senate, White House, and any number of voting blocks, change can happen.Uncle Sam

So with that in mind, let’s talk first about what taxes are for. The government is an extension of the people here in the United States. Everything our government does should be a service that you and I have elected them to do at our behest. We pay these folks for services rendered through taxes levied.

In the private sector, when we hire someone to do a job, they name their price, and we pay it. However, let me provide an example of what they don’t say:

How much do you make? Oh, you make $200,000 a year? Well in that case, I’m going to charge you $10,000. I know I only charged your neighbor $5,000, but he only makes $100,000 a year. I’m sure you understand.

I know that exchange sounded ridiculous because it is. But imagine the next person you hire to perform a service for you asking how much you make before giving their estimate. If you tell me that your response would be remotely different from, “none of your damn business” I’m going to call you a liar. Yet this is exactly how our tax system works, and we tolerate it year after year.

We the people must demand a complete overhaul to our tax system based on consumption, not income. Income taxes, property taxes, estate taxes, and capital gains taxes should be constitutionally abolished via an amendment, and all taxes should be attained by only two methods. A fee for services, such as when we buy license plates, or a consumption tax on commerce. Since the government provides infrastructure and protection so that we can conduct such commerce; that’s a more fair method.

The reasons this makes far more logical sense are numerous, so I’ll do my best to enumerate a few:

First, an income tax is a penalty for success, whereas a consumption tax is a fee for services rendered. In America, the land of opportunity, we shouldn’t be penalizing people for being successful, we should be encouraging it.

The Fair Tax is probably the most comprehensive proposal along these lines, but I haven’t read it all completely and am not necessarily endorsing it; however, it certainly seems better than the monstrosity we have now.fairtax[1]

Those who feel it would raise taxes on the poor may not be aware that they proposed a prebate to cover the taxes that would be applied to the basic needs of every American, so that in effect, your first $3,500 in taxes for instance (A made up number for purposes of this debate) would be paid for you up front. If you decide to spend more, those taxes are your responsibility.

I think we’ve all seen examples of wasteful spending from those who shouldn’t be doing so. Have you seen someone who has $2,000 wheels and a $5,000 stereo in a $500 car, yet never seems to have a money for the things that matter. I had one such example ask me for $5 at a convenience store.Random Hoopty

Second, those with money would still pay a higher tax rate because they buy more goods and conduct more commerce. It would effectively be a progressive system as it is currently; except now, there wouldn’t be write-offs and loopholes to take advantage of. Businesses would pay taxes on the products they buy, as well as consumers. Everyone benefiting from government services, is now contributing their equitable share, without anyone getting taxed twice.

Third, The IRS is massively reduced as a result, no more stress of getting your taxes done before tax day and what you might owe, and no more worrying about when and how you have to pay taxes.

For instance, if a family member helps you financially by giving you money, you won’t have to worry about reporting that. If someone is gifted or wins an expensive item like a car or a home makeover, they no longer have to sell that car or home just to pay the income taxes on it. Sadly, these beneficiaries of goodwill and fortune often end up losing all they have won or been given because of the income taxes owed. I’d like to think that reasonable people find this appalling.

Plue, there are many instances were you are expected to know what and when to pay that many are either ignorant of, or purposefully don’t report, in order to cheat.

Fourth, Imagine getting all of your paycheck instead of the 1/2 – 2/3 you get now, and then you decide what you’ll pay in taxes by how much you spend on goods and services out of that paycheck. If it was a bad week, you only buy the essentials, and thus you pay no tax, presuming we wouldn’t levy food and water.

The last point I’d like to make, which could be the most important of all—no more freeloaders. We all know that there are citizens and non-citizens who often work under the table or are involved in criminal enterprise and thus pay no income taxes. All of a sudden, the people gaming the system and not putting their two cents in (literally), will be compelled to pay their share for the services the government provides them too.

Sadly Republicans and Democrats alike seem to dismiss such a system. Libertarianism is catching on in the United States though, and this was part of their platform. Sharing this story and information about the Fair Tax on Twitter, Facebook, et al., will hopefully help to get a consumption and fee based tax system to take hold in the marketplace of ideas; furthering the national discussion. This should not be a partisan issue since the rate and prebates can be set at whatever number the current legislature decides.

However, it is a radical change; thus, a tough row to hoe. But if we passed the radical overhaul to our healthcare system, known as the Affordable Care Act (Obamacare), we can certainly achieve change as logical as a consumption tax if clear thinking Americans make some noise.