The Next American Tax Rebellion Has Begun
My father, Ronald Reagan, battled successfully to simplify the tax code but his work has been largely undone. The arrogance of those who use the tax code to manipulate citizen behavior and Congressional ambitions for personal advancement have again corrupted the already destructive income tax system. It will fall to the American people to once again reject unfair taxation that favors the mighty at the expense of the public.
...
My father said, “Our federal tax system is, in short, utterly impossible, utterly unjust and completely counterproductive, it reeks with injustice and is fundamentally un-American... it has earned a rebellion and it’s time we rebelled.” That second great tax rebellion is now underway at www.onlinetaxrevolt.com.
Tea Party patriots, FairTaxers, Flat Taxers, and most Americans of every political persuasion understand that the federal tax system fuels unchecked government spending, hides the cost of government from the American taxpayer and has become corrupted into indecipherability by Congressional profits and power. Citizens are coming together from across the political spectrum and across the nation to wake Washington up to the voice of the American people.
I have discussed this idea of replacing our federal income tax system with a simple, federal economic or sales tax, with my friends here in San Diego. I did not realize that not only are there websites (like this one), pertaining to this, “Fair Tax”, but that House and Senate bills have been proposed! I am a STRONG supporter of this federal sales tax, and elimination of the IRS. Please know that I will be writing/emailing our two California senators, and my local congresswoman, regarding this legislation. Back in 1776, we applied “Common Sense” to our revolutionary break with England. Now, we need the same common sense and logic applied to our own federal government! I have read H.R. 25. There is some refinement/revision needed, however, before this bill would become law (as do most bills coming out of committee). Since this new federal sales tax would replace the federal income taxes, a transition period is required, wherein, individual savings/funds already taxed under the income tax system, would NOT be subject to the new sales tax. That is, wages, salary, etc cannot be taxed twice! A simple mathematical formula could be used to calculate the proper federal sales tax owed. Again, this is great! I think Thomas Jefferson would be quite pleased!
I too believe in curbing government spending, cutting the taxes middle class Americans pay, and turning the national deficit to surpluses. The truth is besides controlling health care costs (especially Medicare payments), there is little way to significantly cut spending without slashing things like Social security, the military, public education, VA spending etc.
So if you do the math, the only way to achieve the goals above is to increase taxes on the very wealthy, say the top 20%. They now hold 87% of the national wealth and by far profited most from the financial bailouts we all paid for. As shown in the next paragraph, they are not paying their fair share in taxes if you consider all the taxes we pay at the federal, state, and local levels.
In an analysis which includes all our taxes (income, social security, sales, excise, property taxes), a struggling middle class family can easily pay four times more in taxes than a millionaire couple living off their investments. Considering all these taxes, a middle class family’s tax rate on income from work is seven times higher than the millionaire’s tax rate on investment gains and income. Middle class families often pay more than half their entire wealth (>50% net worth) in total taxes each year, a 2500-fold higher rate than the third richest man in the world, Warren Buffett, who pays about 0.02% of his net worth in taxes each year. (For calculations: http://fairsharetaxes.org)
I know what you some will say: Taxing the welathy will hurt investment and so lead to job loss. That’s what what they said when Clinton raised taxes on the wealthy, but it lead to the best decade in job growth and federal surpluses. Bush cut taxes for the wealthy and it lead to the worst decade in job growth and the biggest federal deficits. Wealth concentration causes over-investment in which too much investment money chases to few worthy investments...investment bubble..investment bust....recession...job loss for the middle class. Wealth concentration in the very few also concentrates too much political power in the wealthy, which let’s them get more tax cuts and so on in a vicious cycle.
The proposed Fair Tax (or a VAT , or a national sales tax) would only place a bigger burden on the middle class. The rich only spend a small portion of their income and wealth, so their taxes would drop even further . Much of the middle class spends everything it earns to get by, so their taxes would increase. No serious economist disputes that the Fair tax is regressive. Same for a Flat tax in the setting of all our other regressive taxes.
My essay shows (http://fairsharetaxes.org) that the only way to make taxes commensurate to the ability to pay (and the extent to which the wealthy have profited from the services provided by all taxpayers) is to consider wealth, as well as income, in determining taxes. If we add a very small wealth tax on the wealthiest 20%, we could eliminate the regressive payroll, sales, and property taxes, reduce income taxes, cut the total tax payments of each middle class household by thousands, and eliminate the federal deficit. Even a tiny 1% tax on the portion of any family’s net worth over one million dollars would cut the 2011 federal deficit by 30%.
Thanks for reading.