Posted on 04/15/2013 7:01:21 AM PDT by SeekAndFind
They keep coming back, like the villains of a good zombie movie, chanting "more taxes, more taxes." Long ago, Congress passed the alternative minimum tax, or AMT—a simple flat rate to ensure that in an insanely complex tax code, no one escapes paying something. Now we need an alternative maximum tax as a simple, rough-and-ready way to limit the tax zombies' economic damage. Call it the AMaxT.
With Monday's deadline for filing tax returns looming, let's start a national conversation: How much is the most anyone should have to pay? When do taxes indisputably start to harm the economy and produce less revenue—when government takes 50% of people's income? 60%? 70%?
like half, but the principle matters more than the number. Once the country settles on a number, each of us gets to add up everything we pay to government at every level: federal income taxes, yes, but also payroll (Social Security, Medicare, etc.) taxes, state, city and county taxes, estate taxes, property taxes, sales taxes, payroll taxes and unemployment insurance for nannies, household workers, or other employees, excise taxes, real-estate transfer taxes, and so on and on, right down to your vehicle stickers and those annoying extra taxes on your airline tickets.
On April 15, once this total hits the alternative maximum tax, you've done your bit and federal income taxes can take no more. You compute federal income taxes as usual, but then you get to reduce the "tax due" that the total is less than the alternative maximum.
The zombies howl that the top federal tax bracket is still "only" 40%. Surely "the rich" can contribute a bit more? They forget that the economic damage of taxes comes from the total tax bite, not just the federal income tax.
(Excerpt) Read more at online.wsj.com ...
The idea behind the Alternative Maximum Tax:
Marginal taxes are a purer measure of economic damage. If you earn one more dollar, how much do you get to keep? Marginal rates are higher than average rates in a progressive system: If the government takes 100% of income above $100,000, then somebody earning $150,000 pays a 33% average tax rate but has no incentive to work at all after he reaches $100,000. Ideally, we would limit marginal rates, but this is not practical in a simple backstop like the AMaxT.
American governments also like to hide taxing and spending by passing mandates and regulations, forcing people and businesses to spend on their behalf. Ideally, we would limit this economic damage as well, but this is also not practical in an alternative maximum tax.
However, both considerations mean that the true economic damage will be higher than the AMaxT rate, so we should leave some headroom in setting that rate.
Every cent of corporate taxes comes out of some person’s pocket, in higher prices, lower wages, or lower returns to investors. For example, even the tax zombies don’t dream that we stick it to the big oil companies by charging gas taxes. To limit this damage, every single cent of tax that government assesses, at all levels, should be assigned to somebody and count against that person’s alternative maximum tax. It is easiest to assign all corporate taxes to shareholders. When corporations send you the annual 1099 dividend form, they also report all taxes paid by your shares, which count against your AMaxT. Some taxes could similarly be assigned to workers and reported on W2 forms.
God only asked for ten percent!
In the old days you would be set for life, and be able to relax for at least a little while and enjoy life.
But now, if you have a windfall year, they govt will take it away from you so that you are back to working your butt off again every year.
No incentive to do anything left.
Yeah. I've been working at a side business for six years now. I've put countless hours into it. Last year was the first year that I made a significant profit.
In two years, I will probably earn the equivalent of my last full-time job. Maybe five years after that I will be making some serious money. And then they'll tax the hell out of me.
It will still be worth it, just to be free, and also having the freedom to raise my prices as much as I need to in order to keep up with inflation. Although by then there will probably be wage and price controls, because of the "greedy business people" causing the inflation.
I have 7 children - so the Alternative Minimum Tax hit me hard. There was one year when I received a raise while at the margin for some deductions and AMT - ended up the differential was taxed at higher than 100% - I would have had more money in my pocket without the raise. Talk about disincentive.
You have pointed out something I have long tried to illuminate for wage earners. If your income is highly variable because, for example, you had to prepare for your occupation over many years of no pay, you are hit with punishing taxes in the short time you actually make a good wage. This hits movie actors, high-paid musicians, and supermodels—people who seem oblivious to this effect.
It also hits a lot of people who recognize the senselessness of being taxed on arbitrary “annual” blocks of time. The tax code encourages seeking low-paying jobs and stable pay—it discourages risk-taking and the persistence and sacrifice needed to become an expert/top performer in any field.
I had to re read the title, lol.
It says maximum, not minimum.
God isn't in the business of selling favors, the Federal Government s.
Take away all the special exemptions and exemptions to “encourage” behaviors as well as incentives for various businesses, I mean large donations for Congressional Reelection campaigns and the Federal Tax Code becomes very small and the total bite is greatly reduced.
Since the inception of the federal Income Tax (16th Amendment to the Constitution 3 Feb 1913) the tax code has become less about funding the government's activities and more about controlling the citizen's activities both private and public. IMHO this trend will only accelerate until the entire system collapses because it can no longer extort enough money to buy votes. The current annual deficits of a trillion or so dollars will become annual deficits of tens of trillions - sorry kids.
BTW - the nation with the largest public deficit no longer has its own currency. Does anyone know which country I am referring to? As a bonus question what was the highest face value bill they issued?
That is why a flat tax (if there has to be a tax on ‘income’) is the ONLY fair tax.
10% across the board- EVERYONE pays (except retiree’s)
EVERYTHING the anti-tax ammendment people warned about in 1913 has happend.
They take half your earnings while you’re Alive, then they take half of what’s left when you Die.
You net 25%, but it still isn’t enough Sacrifice for the Greater Good. And to think we are living in the Freest Country on the face of the Earth.
I’ll go with Dr. Benjamin Carson, if 10% is good enough for God, it’s good enough for the Government.
You are quite wrong about that. Every time you hear one of those pencil-necked liberal geeks whine about "Subsidies for Bush and Cheny's rrrrich Halliburton oil friends" they're talking about tax breaks and how they want to stick it to them with more taxes.
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