Worldwide Trend toward Flat Taxes Should Guide Congress, Nation's Largest Taxpayer Group Says

NTU ^ | 01/07/2008 | Peter J. Sepp, Natasha Altamirano

[Kellis91789]

In general, I agree that creating blocks of voters that don’t pay taxes is a problem.

But these are very specific types of income I listed.

SS — any tax that comes out of this will just mean the benefit has to be increased or the elderly for whom it is the sole source of income will fall into poverty. Making it taxable would not encourage this group to lower government spending to get a lower tax rate, since the government would simply reduce the benefit to match the new lower tax rate.

Disability — the same as above. They have no ability to earn more income, so the state will have to provide it just so they can turn around and give it back in taxes.

Muni bond income — these bonds are at a lower interest rate BECAUSE they are tax-free. If they become taxable, then the local governments that issue them must pay higher interest, and pass along that cost to the taxpayers in some other tax. In addition, the existing muni bonds are a contract that making taxable would breach.

So taxing these special types of income will not leave the taxpayer better off, and the government will not collect any additional revenue. It would be a shell game that might or might not have the desired psychological effect of encouraging people to vote responsibly.