Friday, July 29, 2011

Tax the poor!

I keep hearing those on the left saying that people must pay their "fair share". These are buzz words for "increase taxes". However, it is curious that with 49 percent of workers not paying any taxes at all with the heaviest burden falling mainly on high earners, the only group not paying their "fair share" are those who are not paying any taxes. Thus, this group does not have any skin in the game. Campaigns to lower taxes do not find empathy with those who pay no taxes and neither do campaigns to raise taxes. It seems to me that a minimum requirement of citizenship should be the paying of federal income taxes. This is why I am for a flat tax. A flat tax of 20 percent would provide the government with "revenues" sufficient to cover its expenditures - except with the current administration. It would also mandate that everyone have skin in the game. I know you will hear the hue and cry about taxing those with the lowest incomes, but that is no tragedy. Low income people receive subsidies through things like food stamps, housing subsidies and numerous welfare programs. Thus, although they will pay taxes, they will get the money back through these programs. However, they will now have an interest in any discussion on taxation. A flat tax is simple and elegant. First, eliminate the federal income tax. Second, count as income all earnings regardless of source. This is must preferable to the so-called "fair" tax which is a consumption tax. A consumption tax is hidden. This is bad because it is important for all to know exactly how much of their income goes to the government. A flat tax accomplishes this while the "fair" tax does not. So in order for people to pay their "fair share", everyone must pay.

5 comments:

tom said...

Dr. Black, has a study ever been done to see how much money would be raised doing this?

H.A. Black said...

I have seen estimates based on a 10 percent bracket. But if you have a flat tax, then it is that percent times national income. So the amount from the lower incomes just get added into all the others. The point for me is not how much income is raised but rather to get everyone paying taxes. A flat tax with no exemptions seems ideal.

Michael said...

Since taking your class, I have been convinced this is the one way to fix the problem. Let everyone pay via the flat tax so the government can receive their tax "revenue".

Stacy said...

Dr. Black I don't agree with you on this one. As someone who doesn't receive any kind of "assistance" from government programs, I wouldn't even consider myself middle-class. BUT...how do you think a 20% tax rate would affect people like me and the middle-class???? To me, it seems a flat-tax would only worsen the issue of the disappearing middle-class.

H.A. Black said...

Stacey, I certainly do not want to aid in the disappearance of the middle class. The two tax brackets below 20 percent are 10% on incomes up to $8,350 and 15% up to $33,950. After $33,950 the bracket is 25%. Currently more than half of those earning less than $33,950 do not pay any federal income taxes. One criticism which is valid is that many tax payers end up paying less than 20 percent because of deductions, exemptions, write-offs, carry forwards and the like. Then the argument devolves to cost of compliance and productive hours lost.