Monday, August 18, 2008
Fundamental reform of our tax system is urgently needed!
We the people pay the taxes that fund the government. Corporations do not pay taxes. They collect taxes embedded in their prices from consumers and turn the money over to the government. Thus, if you raise corporate tax levels, it is the individual that pays for the raises. The idea of taxing corporations instead of individuals, thus giving people the benefit of "free" tax money from business, is erroneous (Source: Dr. Milton Friedman, to the Advisory Panel on Federal Tax Reform, March 31, 2005.).
The sole purpose of taxation should be to provide revenue for the operation of the government. There should be no "redistribution of wealth" function added to our tax policy, as that is pure Marxism-- a totally discredited economic and political philosophy. We have allowed this redistributionist idea to be implemented in our nation because of the penetration of liberal socialist ideas into the body politic and our legislatures. It gives unwarranted power to those in the legislature that control tax policy. The idea of redistributionism is clearly rooted in envy--envy of the Haves by the Have-nots. What a subjective way to make national policy! The progressive tax code is simply theft by the government of the rightful property of an individual--his earnings. It is theft by that amount over and above a fair percentage share per person.
The tax code is so distorted now that the top 20% of earners pay 85% of the income taxes, while 40% of the population pay either nothing at all or actually receive money! (Source: data from the Congressional Budget Office, 2005.). There is a significant possibility that the new administration will make an attempt next year to raise upper quintile individual and corporate taxes by large amounts to further their social aims, such as new entitlements, while ignoring our gigantic deficits and broken current entitlement systems. Such shortsighted tax policies are neither ethical, democratic, nor conducive to economic growth and job creation, and will send our nation along the path of leveling and increasing misery for all. We witnessed this in the Soviet Union for over 75 years. We Americans, however, should not rob the well-to-do Peter to help pay the poor and unfortunate Paul (before he hits his stride and outearns most of us!).
My vote goes for the Fair Tax approach (see www.fairtax.org), which has been demonstrated in multiple nations, including several former USSR states, to be far more attractive for all economically. Even a Flat Tax would be far preferable to the ethical morass we now have, so long as we don't end up with both a Progressive and a Flat or Fair Tax! To sort this out will require an extensive national education program and debate, followed eventually by a Constitutional Amendment. The sooner, the better!