Perhaps we could just get rid of income taxes altogether? No forms, no fuss. Instead, just have a sales tax. Income credits could be used for any social welfare issues.
To replace income tax, sales tax would have to be 18%. If you exclude housing, medical, and food you'd need a 30% rate.
Even if you give credits to the poor (which means we still track all income) how would you ever take a 'fair' amount of tax from the rich? The current tax on someone making $400K from a job is ~37% with federal/state/local. So you're reducing their tax burden more than half (if they spend 100% of what they make). In fact, they spend much less than they save, so if they buy $50K of stuff a year, their taxes are nearly eliminated ($8K in taxes versus $400K income). You can't provide the lower income people enough relief without adding to the debt (or raising the sales tax to something absurd, in which case low income people would need weekly credits or something).
> To replace income tax, sales tax would have to be 18%.
Finland has a VAT of 24%. We also get taxed for income, and there are lots of other hefty taxes too. Strangely enough, this doesn't seem to be enough for our little country to live within its means though. Go figure.
> Even if you give credits to the poor (which means we still track all income) how would you ever take a 'fair' amount of tax from the rich?
What's a "fair tax" on "the rich"? Do you deserve to get raped harder just because you've made a few hundred thousand dollars for yourself?
In case it wasn't obvious, the word "rape" was used metaphorically. Taxes represent forcefully taking your money away from you. "Rape" seems fitting.
Oh, and it's not about "affording" anything. If it were, it would be a voluntary transaction, much like buying a Retina MacBook Pro if you can afford one.
Regardless of how "progressive" you think an optimal tax system should be, it's neither equitable nor sensible to tax income far in excess of that an individual/family/estate's consumption needs over any conceivable period of time at a zero rate whilst taxing income from a person who (for whatever reason) spends more than they earn at a high marginal rate.
Sounds pretty fair to me. I'm not using an order of magnitude more government services, so why should I pay an order of magnitude more taxes?
Yes, yes, I get that a graduated income tax might be necessary to pay for the things our society has decided to pay for, but calling the current situation fair is Orwellian.
"With the prebate program in effect, those earning less than $15,000 per year would see their share of the federal tax burden drop from -0.7 percent to -6.3 percent. Of course, if the poorest Americans are paying less under the FairTax plan, then someone else pays more. As it turns out, according to the Treasury Department, “someone else” is everybody earning between $15,000 and $200,000 per year." [1]
