Thursday, March 03, 2005

Thursday March 3, 2005 Consumer Tax?

Let’s think about this "consumption" tax for a minute.

Supposedly, we would eliminate many of the other taxes and only tax items which we buy.

When a person making $20,000 a year spends every cent on consumables, he will be taxed completely and when a person making $200,000 a year spends only 40% of his income on consumables and saves or invests the rest, he will be taxed on 40% of his income. Sounds fair, doesn’t it? It would lend itself to the faster accumulation of wealth by those already wealthy and faster debt problems for the poor.

So, maybe we can structure it with loopholes to allow people with lower incomes to get some kind of rebate. That will force most of the tax on the middle-income taxpayer. I don’t see any relief there, but it would start the special interest loophole legislation that dominates our tax laws now.

We all know that the Social Security problem could be forestalled for another 50 years if we just extend the current tax to "all" income. Of course the people with higher incomes don’t like the sound of that, but they will be putting in the same percentage of income that the poorer people do and they will be getting more retirement income out when they retire (sounds fair to me).

I’m a firm believer in a flat tax on all income above a certain poverty level. We would need to exempt the first say $25,000 and then pay 15% or 20% on all income above that level (with no exceptions). We would stop rewarding people for having kids. We would stop tax exemption loopholes. It would take 5 minutes to figure your taxes. We could stop playing games with the federal tax code. In times of real emergency, we could raise the tax to cover the cost.

Maybe we could even balance the budget. Of course we would need to somehow stop the special interests from buying congressmen, senators and presidents.

That will never happen.

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