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Fixing the broken tax code: a simple, effective solution

Posted By admin On 6. June 2010 @ 15:17 In politics, economy | 3 Comments

Any way you look at it, Americans are overtaxed.  There’s a tax for gasoline, and a tax for buying a car.  There’s taxation when you get paid, and taxation when you spend.  If you own a corporation, you have to pay ridiculous amounts of money for being a corporation, and if you just own a business, you have to pay taxes for unemployment funds.  If you buy a home, there’s a tax, and if you just sit in your home, there’s another tax.  If you’re in Washington State, you have to pay extra taxes for buying liquor and cigarettes, and if you want a carbonated beverage, you have to pay a special tax for that, too.  And the taxes are for one purpose: to ensure that the things our government pays for are paid for.

Now, it’s fairly obvious to everyone that despite our massive amounts of taxation, we’re still not meeting our budgetary demands ([1] Currently, we’re facing a yearly deficit of 1.5 trillion, on top of last year’s 1.4 trillion.  To put this in perspective, our [2] Fortune 500 only has a yearly net income of 391 billion dollars).  And despite the fact that we can’t pay for everything we want, both parties keep promising tax breaks to specific people.  Republicans want to tax everyone less, Democrats claim to want less taxation for the poor (a bizarre statement, since most truly poor people [3] pay nothing in federal income taxes), and both sides use these arguments against their opponents every time an election season comes around.  This is especially ironic, since our progressively mounting deficit is being met with a political demand: that the person receiving the majority’s vote never win on the promise to responsibly raise taxes across the board.

Of course, there may be merit to the argument that lowering taxation will actually increase tax revenue, but this is beside the point.  Whether or not lowering taxation has actually increased our revenue, our budgetary demands haven’t historically been met for a very long time.  To any sensible person, this should prove one thing: that taxation levels are no longer correlated with their primary purpose, which is paying for what we spend.  As such, the political value of taxation needs to go.  Neither party is helping America by buying votes with it, and neither party can claim a morally responsible plan of taxation: every day we pay for services we can’t afford, we are engaging in intergenerational taxation without representation, effectively putting our expenditures on a baby’s credit card.

Fortunately for Americans, a solution has arrived.  What we need is to scrap our entire system of taxation, and go for something much simpler: a basic consumption/sales tax, similar to the [4] FairTax.  Now, this truly American taxation system is going to get rid of our [5] bureaucratic, expensive, intrusive income tax system, and allow us to only pay taxes according to the kind of spending we engage in. If you buy more things, you obviously pay more taxes.  Everyone is charged the same taxation rate, we don’t have to deal with the IRS, and taxation is taken care of immediately.  If you don’t own a business, you don’t have to file your taxes every year.  No special benefits for off-shore tax-havens or even illegal immigrants and tourists: everyone who spends in the USA will pay to the USA.  And finally–most importantly–it will close all loopholes, and we’ll actually know [6] how the tax-code works.

But pay attention here, because there’s one major twist: with this new form of taxation, the rate of taxation will be reset quarterly to match our spending.  That means politicians will no longer have control over how much or how little we’re taxed, and Americans will immediately feel the burden of their newly enacted programs. If Americans don’t like their levels of taxation, then they will have to vote to lower spending.  No longer will a disconnect between our national debt and comfortability exist: we will be forced to pay for what we buy.  How revolutionary.

There will be one special case in which the national budget will not reflect our taxation levels, and that will be during times of warfare (not to be confused with occupation).  If we are formally engaged in combat with another country, our war spending will be budgeted separately.  In all other circumstances, people will see how they pay for whom they elect, which means they will care about who they elect.

Balanced budget, closed loopholes, fair application, more liberty from government oversight, responsible voting, less politics… what more could you want in tax reform?


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URL to article: http://americanclarity.com/2010/06/06/fixing-the-broken-tax-code-a-simple-effective-solution/

URLs in this post:
[1] Currently: http://www.reuters.com/article/idUSTRE64B53W20100512
[2] Fortune 500: http://money.cnn.com/2010/04/13/news/companies/fortune_500_profits.fortune/index
.htm

[3] pay nothing: http://www.newyorker.com/online/blogs/johncassidy/2010/04/who-pays-federal-incom
e-tax.html

[4] FairTax: http://www.fairtax.org/site/PageServer?pagename=about_main
[5] bureaucratic, expensive, intrusive: http://www.cato.org/pub_display.php?pub_id=5685
[6] how the tax-code works: http://www.cato.org/pub_display.php?pub_id=5685

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