Monday, April 13, 2009

Everyone should pay Income Taxes...

So says Ari Fleischer:

Congress should start by refusing to go along with Mr. Obama's promise to cut taxes for 95% of the country. With the government running an almost $2 trillion deficit, no one should have their taxes cut -- no one. Given the size of the deficit, fiscal responsibility demands nothing less.

Republicans in Congress need to develop their own version of an Economic Growth Code, an alternative tax code that directly targets the current mess and helps us to grow our way out of it. Republicans should not doodle in the margins -- they should use their minority status to launch the next big movement in policy and politics. Nothing creates revenue like growth and that's where Republicans should make their mark.

I favor the abolition of all Social Security, Medicare and estate taxes. In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays. The bottom 50% won't be excused from paying the cost of government and top earners will no longer have the loopholes they're used to. The middle-class, whose wages have stagnated, will benefit from economic growth. Social Security and Medicare will be funded from income taxes, ending the myth that these programs are supported through government trust funds and payroll taxes. The tax base will broaden dramatically, allowing rates to fall and helping to foster what's most important -- economic growth.

I'd also create a mechanism so tax rates go up or down for everyone -- no more dividing the country by lowering taxes for some or raising them only for others. A revenue system whose purpose is to pay the government's bills should apply fairly to one and all. If Congress wants to raise or cut taxes, it should do so for everyone.

Another benefit is that such a system will create an environment in which spending programs receive the scrutiny they deserve. It's funny what happens when everyone pays the bills; Americans may want less spending so they can pay fewer bills.

Fleischer makes several well heeled points in his editorial. First, the idea that everyone should pay income taxes reminds me of the great Alexis De Tocqueville quote, "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." By having the tax burden fall equally upon the individuals in our Republic, it will be much harder for Congress to bribe the people as they will have to pay for whatever "goodies" that the people vote for themselves. This is a valid point in todays world as we will have all of the income taxes paid by a minority of the people of the country.

The thing that we need to remember about taxes is that it is the usury fee for general use of the government. The perverse thing is, as Fliechser points out in his piece, is that the people receiving the lion's share of government largess are the ones who pay no tax. What is the incentive for these individuals to work harder, save and invest to move up in society when the perverse incentive keeps individuals on the teat.

Again, I would call for a negative income tax to ease the transition into the tax paying base in a laissez faire economy. I can dream can't I.

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