Tuesday, March 15, 2016

The Annual Discontent (and What We Can Do About It)

Many Americans have complained for years that our
tax code is too long, too complicated, and too harsh
on anyone who is financially successful, be it in
their jobs and careers, their businesses, or in their
investments. The Internal Revenue Code, as it is
officially titled, is 74,608 tortuous pages which
confound most people no end, while masking tax
increases and giving cover to political pocket-lining.

With the tax season here, the annual pain that we all
feel to varying degrees is upon us once again.

Alternatives to the sorry status quo have been brought
up many times over recent years; among them a flat tax,
which would levy a constant marginal rate on personal
and/or corporate income. A true flat tax would be
proportional, but implementations often have some degree
of progressivity. Other methods of implementation would
prove to be regressive, depending on the deductions and
exemptions in the tax base. Another idea is the Fair Tax,
which would replace all federal income taxes, payroll
taxes, gift taxes, and estate taxes with a single, broadly
implemented national consumption tax on retail sales.
This tax is designed to protect low-income earners from
higher income taxes by a large tax transfer program called
a "prebate". The prebate would give every such household
a cash transfer equal to the amount of tax that a family at
the poverty level would owe. However, here's the rub:
very high-income folks in fact spend but a fraction of
their income, while middle-income people spend a
larger portion of their earnings, and those at the bottom
section of the income hierarchy spend most, if not all
of what they make. So that makes the Fair Tax a huge
welfare program --- in truth, the largest welfare program
ever. Charts created by the Bureau of Labor Statistics
bear this out.

An idea that came to light in the 1980s has long been a
favorite of The Peasant: have a flat tax, but not a perfectly flat
tax; have three marginal tax rates, one for the lower-income
earners, one for the middle-income makers, and one for the
high-income people. Set the rates at reasonable levels,
each appropriate to each income level group's ability to pay
without any financial discomfort imposed on them from
said rate, and make them known to all. Furthermore,
eliminate all deductions, tax credits, loopholes, and
exemptions for all individuals and organizations --- business,
political, educational, or what have you. This would, among
other benefits, eliminate political manipulation, such as that
done by the IRS to political groups which disagree openly
with the current president and his party. No more targeting
and bullying of such organizations and citizens. We could
file our tax reportings on a form the size of a post card!

Moreover, the IRS would be eliminated as well. With the
tax code so hugely simplified, the IRS would have no need
of so many examiners, collectors, filers, or account servicers.
We would be able to get rid of the Obamacare taxes (remember,
the U.S. Supreme Court ruled that Obama's Affordable Care Act
is a tax), as well as other onerous taxes which the Obama regime
relies on to fill government coffers, and save the $386 million
that the IRS spent on administering the payment process for
Obamacare alone! And the Washington big shots will be forever
restrained from siphoning astronomical amounts of our income
for their selfish purposes! Cronyism would wither and disappear!

The economy would certainly benefit, as many new businesses
would be started, existing businesses would grow, many jobs
would be created and current jobs would be secured, wages
and salaries would increase, and American exports would
be unshackled of burdensome, unnecessary taxes, and be more
attractive in the world markets. And we could, at long last,
shrink our national debt and replace our budget deficit with
a surplus, as this tax system would impose fiscal discipline
upon the federal government and make it balance the budget.

This is an idea which we should urge the Republican presidential
candidates to support, as well as all Republican congressional
candidates to get behind. We can have fiscal and financial healing
at last! We have nothing to lose and so much to gain. How about it?


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