Sunday, November 1, 2015

Flat or Graduated?

Tax that is. A lotta Republicans pitched a flat tax during the CNBC debate last week.  A lotta TV lefties claimed that a flat tax would never produce the revenue they want for all the lefties redistribution plans and free stuff.
  I been figuring and paying my own income tax for 50 years.  Each year, after doing all the crazy worksheets and capital gains and deductions and bulls--t on the 1040, I wound up paying 17%, every year, for the last fifty years.  If everyone paid 17%, Uncle would have plenty of money.  Especially when you consider that under the current system, about half the taxpayers pay nothing at all due to "Earned Income Tax Credit".  When half the population starts paying 17% instead of zip  that's not revenue neutral.
    So arguments against a flat tax based on lack of money are wrong.  The true argument against a flat tax is fairness,  the idea that the wealthy ought to pay more than the poor.  17% income tax when you are just scraping by hurts a lot more than it does for Donald Trump. As a matter of fairness, the wealthy ought to pay a higher rate than the poor.
   Which is what we have now a graduated tax.  We have seven or eight or maybe too many to count tax brackets.  Last time the wealthy paid a huge slice of tax money, far far more than the middle or poorer classes.  This is a graduated tax.  In my estimation, it's too graduated.  I strongly feel that everyone ought to pay something.  From the poor, a few percent, from the wealthy, a lot more, maybe 25%.  Everyone ought to feel the pain of taxes, so they understand that voting for more free stuff is gonna hurt them.  When we allow half the population to escape tax free, they will march right out and vote for more free stuff, 'cause it doesn't cost 'em anything.
   Then, we come to the issue of tax breaks aka loopholes.  There are a lot of 'em.  We get a tax break for having children, for paying a mortgage, for calling it capital gains instead of ordinary income, for health insurance some times, for buying professional books and equipment, for paying state and local taxes, for charitable contributions, for being over 65,  and a ship load of other stuff that I forget, but Turbo Tax can remember for me at tax time.
   I think I'd like to abolish every single one of 'em.  That would cause a mighty howl from parents, the real estate industry, H&R Block, and every other special interest group in the land.  If the howling is too great, maybe I'd compromise on charitable contributions and the tax break for having children.  Set the middle tax bracket to 17%. and revenue would stay about the same. 

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