Income tax, what else?
What is the point of taxing a person's productivity? Will it make him/her work more or be more productive? Not hardly. So many people think the Income tax isn't what it really is. For example:
- Nobody gets money from the Government. Its a refund of the money you all ready paid. If you borrowed that same amount, you'd be required to pay interest, but not your "so caring" government. They want your money interest free and you have no choice but to give it to them.
- The "rich" don't pay the bulk of the taxes. If you hear a politician claiming that some tax is going to make the "rich" pay more, not the "common person", don't believe them. The middle class pay 70% of the income taxes in this country.
- There are so many loop holes and exceptions in the tax code that's its impossible to comply 100% with total accuracy.
- If you call the IRS for clarification on the same tax law more than once, there is a very high probability that you will get multiple answers....none of which are guaranteed to be correct.
Then there is the very real question of whether the Income Tax is constitutional in the first place. According to the constitution, the federal government can not impose an 'un-equal' tax on a federal level. In other words, if they wanted to charge everyone the exact same for a given service or product, that would be acceptable, but the Income tax is not spread out evenly to all.
Is the income tax necessary to run the government? Of Course Not! The type of tax is not what's important. Granted, the nation needs funds in order to provide necessary services, but how it acquires those funds is discretionary. There are lots of methods that can be used to collect monies from the citizens.
Why then, tax people on what they produce? By its very nature, taxing productivity generates a lack of interest to produce. We've seen this this taken to its very worst extreme with Communism. When the state tries to supply everyone's needs, then there is no incentive for the individual to actually do anything. If, at the end of the day, a worker goes home with the same amount regardless of how many widget's he/she produced, what is the incentive to produce 10 widgets a day, or 5, or even one? Its not uncommon for under a progressive income tax to find they actually make less after a pay raise because it puts them into a higher tax bracket! So why work harder when it will cost you money if your boss decides to reward you with more money?
Is there a better way? I believe so. From my research, I am fully backing the Fair Tax. Different from a flat-tax (based again on income) or the European VAT (Value Added Tax), the Fair Tax allows people to make decisions on what amount of tax they will pay and is equally imposed on all people. The "rich" will pay the exact same amount of tax on the purchase of a shirt as a "middle class" consumer would. If you look up the definition of fair, this process fits perfectly.
The Fair Tax is based on spending, not earnings. When you work hard and earn $1.00 for your efforts, you get to keep $1.00 for your efforts. However, when you spend your money, a fixed percentage of the retail sales price is your taxed amount. For example, if the Fair Tax is set at 10%, and you purchase a shirt for $10.00, then $1.00 of that is tax, sent to the federal government. The price already includes the tax, so the shirt is not $10.00 plus $1.00 tax, its a simple $10.00. A $100.00 purchase would garner $10.00 in taxes for the government and it doesn't matter who makes the purchase....even tourists will pay it adding to the coffers of the US citizens!
But what about exemptions? Simply. There are none. Everything you buy is taxed equally, this includes products and services.
Isn't this unfairly hard on the "poor" and those who have to buy basic necessities on a fixed income? No. One of the beauties of the Fair Tax is the concept of a pre-bate. Each month, every citizen will receive a check (or electronic deposit) from the government to off-set the taxes they will pay for the necessities of life, food, shelter and clothing. This amount will be paid as actual cash that can be used for any purpose, but it assures that no unnecessary burden is placed on anyone for things required to live on.
Some have said it would be better to simply have a few exceptions to the taxable items, such as food and clothing, instead of the pre-bate concept. However, history has proven over and over (just look at the current tax code!) that once you make exceptions, all sorts of corruptions begin. Special interest groups will lobby for certain exceptions and before you know it, the whole tax system is corrupted! So the pre-bate solves the problem perfectly. No exceptions, but the burden of taxing necessities is removed.
Just think of it, no more IRS. April 15th is just another day! And best of all, the government gets the funds it needs to operate and all pay an equally fair share.
The Fair Tax actually has a large following and excellent support in congress. But it won't become law unless the people pressure their elected officials to enact it. You can help. Just visit the Fair Tax web site and learn more about it. There are plenty of ways to help, and many don't require you to pay anything :)
