“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”
John Adams
In the endless debates over reducing federal deficits Republicans offer little other than spending cuts, too many of which impact the most vulnerable in our society. They and their Tea Party allies have made any tax increases or cuts to defense spending untouchable sacred cows.
Their Democratic counterparts seem only willing to tinker around the edges of reigning in spending while demanding that the tax rates for the “rich” are increased so they pay their “fair share”. The Occupy protestors are now echoing this divisive class warfare refrain.
Tragically, reelection and party majorities have become the paramount concern of our elected officials rather than making sane but clearly difficult and likely painful decisions.
On the spending side, perhaps Congress and the Administration ought to start by dramatically trimming their bloated staffs, office overhead, and Cadillac salary, benefit and retirement programs; bringing the latter in line with the average constituent they purport to represent.
Where taxes are concerned, I am at a loss as to understand what constitutes an individual’s “fair share”. If one listens to its most vocal proponents, it sounds a lot like “from each according to his abilities, to each according to his needs.” (Karl Marx – 1875)
Given that our Constitution contains an equal protection clause, one could make a case that no one should be required to pay a greater percentage of his or her income than anyone else … and that there should be no special interest tax loop holes benefiting certain individuals that are not reasonably available to everyone.
If we, as a nation, truly believe in equal protection, than the only answer is a flat tax. However, such a concept has been demonized by progressive taxers as being unfair to the poor, which it would be if there was no safety net for the less fortunate.
However, a flat tax which eliminated all deductions (perhaps other than charitable donations and catastrophic health care costs) and under which there was an income floor, below which no taxes would be due, is both a workable and fair system.
For example, if the tax rate was 20%, on the marginal income above a safety net of $50,000 for a family of four; someone earning $50,000 would pay no taxes; at a $60,000 income level they would pay only $2,000 in taxes, at $100,000 their tax would equal $10,000, at $1,000,000 in earnings they’d pay $190,000, and so on.
For those earning less than $50,000, they would receive a lump-sum payment to bring their income up to the $50,000 level. Thus, if a family of four earned $36,000, they’d receive a check for $14,000.
Such a system is fair as it treats everyone earning above the safety net level equally and high earners will pay more taxes without the benefit of a myriad of tax shelters realistically unavailable to the “middle class”.
In its implementation, the elimination of most deductions could take place almost immediately. For existing homeowners, the home interest deduction (for a primary residence only and a mortgage amount of no more than $500,000) should probably be phased in over a ten year period.
The enabling legislation should require a super-majority (perhaps 70%) vote in both houses of Congress to change either the flat tax rate and/or modify the very limited deductions. The safety net floor might be adjusted a base rate of inflation/deflation and perhaps tied to the social security index.
This simpler and infinitely fairer system would also (a) slash the size of the present 7,500 page, 3.4 million word tax code down to a few pages, (b) eliminate the excessive costs many individuals pay for annual tax preparation advice, (c) reduce the size of the bloated and expensive bureaucracy which administers current welfare systems and (d) reduce the role of the IRS to checking returns and chasing deadbeats.
