Comment: I. Description of Proposal Purpose of Taxation: I believe the purpose of our tax system should be to raise money to operate our government. Period. I do not think we should use taxes as a means to redistribute wealth. Tax Base: The tax base should be as broad as possible. I think everyone should pay some taxes because each of us benefits from our government services. Paying taxes is a reminder that government services have a cost. I also think taxpayers are more connected to our political process and are more likely to vote. Exemptions and Deductions: Deductions for some people or purposes makes other taxpayers pay more. This also is means of redistributing wealth. Therefore I do not think there should be any deductions or exemptions. Exemptions for some also open the door for exemptions for others. Tax Rate: We should keep the tax rate as low as possible. This will reduce the incentive to cheat. Distribution of the Tax Burden: All citizens should pay some tax; poorer people should pay less than richer people. A single tax rate, I believe, is the fairest tax system, with all citizens paying the same proportion of taxes. Treatment of Charitable Giving: Deductions for charitable giving are not necessary. With a lower tax rate, people will give more. Charities will need to do a better job of competing for money. Treatment of Home Ownership: Home ownership should not be given preferential treatment. Already, 65% of us own homes. Collection Methods: The tax system should be simple and should not have to rely on paid preparers to compile. On the other hand, it should not take a great deal of government workers to figure or audit. This should lessen the antagonism between taxpayer and tax agent. Treatment of Businesses: Business taxes are really just passed on to the customers in the form of higher prices, so businesses should not be taxed. Real estate taxes and usage based taxes should not be exempt, however. II Impact of Proposal Relative to Current System Simplicity: The tax system should be simple. It should be easy to figure for both taxpayer and tax collector. It should be transparent, without hidden taxes or complicated loopholes. Fairness: The tax system should be fair to all, meaning that all will pay in the same proportion to their income or purchasing habits. There should not be any special privileges for anyone! Economic Growth and Competitiveness: A simpler and more fair tax system should re-direct some of our energies into more productive uses, rather than into filling out IRS forms. This should stimulate economic growth, increase investment, and make the US more competitive. It is important that Stability of the System be emphasized, too. The system should not be changed frequently or complicated. Economic decisions should be made on the basis of what is best economically rather than on tax considerations. Compliance and Administration Costs: Simplicity and fairness will result in less cost to taxpayers, businesses, and the government. There will be fewer honest mistakes, fewer misinterpretations, and less tendency to cheat! And we won’t need to pay an expert to figure our taxes! III. Transition, Tradeoffs and Special Issues Flat Income Tax: We already have a Flat Tax that works very well up to $90,000; the FICA or Social Security Tax. It collects a lot of money; everyone who gets a W2 pays it; there is very little cheating; it is easy to figure; there are no IRS disputes about it; and when did you last hear a complaint about it? We could adopt a Flat Tax like FICA and go with it. That would not be a bad idea. The problems would come when congress starts to “improve” the flat tax with deductions, special exemptions, etc. Then, we might get back to the mess we now have! FairTax: I think a better approach would be to start over with the FairTax. Abolish the income tax and establish a National Sales Tax that taxes consumption rather than income. It would be a clean break and a new approach! I think the FairTax might be easier to sell to the American people, too. I think they are sick of Congress’ shenanigans with the income tax. I Recommend You Recommend the FairTax as Your Preferred Proposal |