Fair and simple taxation should be the order of the day. Certainly a progressive tax, in which the rate creeps up based on your overall earnings is the appropropriate method with the wide disparity of income levels we have in our cash rich country.
But I also agree that all, or nearly all should have a level they pay so no one can claim we simply let people off the hook. It seems to me that only those at the extreme low point on the income curve would escape paying anything. In my mind, this is somewhere between $5K and $10K annually. You, or your economist can pick the specific income point, beloe which you pay no taxes.
From there, we have a large number of hard working citizens, part timers, seniors, and unskilled labor that sits below $20K annually, but who can all pay something. It would seem an easy plan to come up with a flat pay scheme that would limit the pain, but ensure they pay into our collective American dream. Fix their tax at $200, or create a small scale, $8K, 12K, 15K 20K levels with $100, $200, $350, $500 flat payments. We should ensure they all pay something, but that it is fair and does not punish them as the low earners. Again, this would seem to be an easy task.
Over $20K annually, I think this becomes very easy. But first, we must fix the deduction merry-go-round and investment/capital gains fantasy. Two scenarios: 1) you are a bus driver in a major metropolitan area, working 48 hours per week, and barely breaking $50K annually. Your tax rate is 25%. 2) you are an investment banker who makes $250K salary plus commission and bonus income. As you have the ability to do so, you generally have $500K invested in the stock market, and you realize relatively large capital gains on this money each year. Your base tax rate is 34%, but you only pay 15% on your investment and capital gains income. The current rich guy/investor/congressman viewpoint is that if we don't give the investment banker a break on his investments, he and his other wealthy buddies won't invest and our economy will shrink. If this logic is correct, the bus driver wouldn't waste his time working his ass off only to make $50K a year, and our transportation system will come to a halt. Neither is true.
First, tell me where else will the banker find the kind of returns on his money that the stock market or other investment opportunites offer him? Putting it in his savings account at the bank? Buying baseball cards? No. if you look at the kind of money that can be made with large investment ability, even if his capital gains tax rate went up, it would still be the smart thing to invest it. And for those who want to shriek and wail that the money he used for his investment has already been taxed, how can we think of taxing it again at the same rate? Wow. Income from rich guy job, taxed at 34%, portion of income spent on stocks, which bring profit (income) from investment which is NEW INCOME, and should be taxed. Please, can we just for the moment deal in reality, and not a parallel universe where those with means make up new definitions for stuff we thought we knew about?
Now, what we are talking about is what is the goal of our tax system? Is it to provide a place for the fairly rich to get richer? Is it a big card game like Wall Street where those that play the game properly can make gazillion's of dollars because they had bazillions to start with? Is it an engine that can be aimed at varying industries or other endeavors to make them work better and oil the wheels of progress and profit to make things work better? No. No, and no.
Our tax system is a tangible payment that we as Americans make to ensure national security, a working infrastructure, court system, and political administration to run the workings of our government and ensure order. Once we started diddling the deductions, sheltering the income and providing tax dodges that were oh so legal, but maybe a little shady, we handed over our economy to the wealthy, powerful and politically connected. Do you really believe anyone making under $30K a year had a lot of pull with getting our current plethora of deductions and tax incentives implemented to cover his corporate jet? We must demand an end to this greedy profit grab which has severely damaged the middle class. And how do we do that, you ask?
I'll tell you how. We eliminate, that's right, eliminate — "that starts with T and that rhymes with P and that spells trouble," ALL DEDUCTONS save the mortgage on your primary home, and charitable deductions. And we put limits on those. Again, I hear the shrieking and gnashing of teeth that this will stall business development and profits and make us communist and the world will end and....bullshit! This will return the tax code to what it should be—a direct method of funding our government, shared by all but the lowest income individuals.
Now here is the good news — I refer you back to my comments, "I think this becomes very easy." Over $20K in income, without all the loopholes and tax havens and corporate Cayman Island Investment Schemes, we can now make three simple tax rate categories, and lower the overall percentage rate for each from what we pay now. If it were up to me, I would only lower it a little to bring the broadest amount of income, aimed at increasing it say, 20-25% over what it is now from these levels. So, again, get your own economist to work these percentages for you, but mine would be 15%, for income of $20K to $250K, 20% for $250K to $1M, and 25% over $1 Million. And remember, this would include all investment and capital gains income because it is, after all, income!
Now run along, get your friendly local economist, and work the numbers. This plan could work, and you could file your taxes on a post card at year end. And, it would have the lovely effect of raising tax revenues while lowering the percentages paid. Right now, we have these falsely inflated percentages, but if you are rich, your actual percentage is much lower than your tax bracket because you have all kinds of delicious ways of sheltering income. You know, so it will trickle down to us peons. What a load of shit. The American system of Capitalism is built on people having the freedom to build a business out of nothing, and with their hands and minds making it profiatble. We have for too long given in to the investment banker and wall street financier that what we really need is to float a few IPO's, grab some investment income, borrow some venture capital, sheiled oursleves from taxes, and watch our portfolio grow even if we have a mediocre product and lousy service. Greed is killing us, and if you wonder where that great American manufacturing engine went, it went up in smoke from the fire that companies like Bain Capitol built under American companies to squeeze profit from them as they disappeared. Our tax code rewards this kind of behavior, and it has to stop. We must learn again to compete on excellance, and conduct business with integrity.
In my mind, this is what Mr. Obama should be promoting; instead of leaving himself open to right-wing criticism that he is "re-distributing" wealth and stifling new business and jobs by raising taxes on the job makers. My plan doesn’t re-distribute" wealth, it cleans and simplifies the tax code for us all. How long have we heard about Romney's complaint from Republicans that "47% of Americans don't pay any tax?" Well let's fix that. Let's ensure that with the exception of under $5K in income, all Americans pay their fair share, and this includes those over $1 Million without sheltering them from the full tax that the rest of us are burdened with.
Isn't it better if we all pay, and all our tax brackets come down, the code is simplified, and we raise more income to fix our economy, our infrastructure, Medicare, Social Security and the deficit?
Now, lest you think I am naive, it will take the people of this great country, big and small, rich and poor, well known and obscure, to give this plan a chance of seeing the light of day. What I would like are concrete ideas of how to achieve this. Leave me a post and offer your thoughts.
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