|According to this article:|
About 47% of all households won't pay income tax for 2009. Either they did not make enough, or they had enough credits, deductions, and exemptions.
The top 10% pay about 73% of the Federal income tax.
The bottom 40% actually make a profit (they get more in credits then they owe).
I don't think this is a good idea. I think everyone should pay something. Then, the tax rate could be lower because there will be a bigger number of payers. More importantly, there is currently no incentive for 1/2 the people to vote against politicians who waste money.
Also, I recognize that many big corporations also escape taxes. I realize that they enjoy some of the biggest loopholes.
What if we got rid of all loopholes - for rich and poor alike? No exemptions, deductions, or credits. Instead, everyone pays a single, low rate. Let's say it's 10%: Then someone making $10,000 a year pays $1,000 while someone making $1,000,000 pays $100,000.
You might argue this is regressive and shifts the burden away from the higher earners. The traditional argument against a single flat rate is that a lower-income worker pays a higher percent of his income in essential expenses.
But high earners have demonstrated creativity and achieved success. They are the ones driving human progress and job creation. Why should we penalize them for their achievements?
I recognize that supply-side, or "trickle-down", economics is controversial. But the fact is that life doesn't happen in a vacuum. Lower income workers will have to pay more but a flat tax should compensate them somewhat by spurring job growth.
Also, maybe it's good that lower-income workers feel some pain from a "regressive" tax. A fix is only as far away as the next election. They can choose to vote for small-government candidates.
What are your thoughts? I welcome comments.
Wednesday, April 07, 2010