Source: Townhall Media
Posted on 09/19/2021 4:50:43 AM PDT by Kaslin
Source: Townhall Media
resident Biden wants to finance his huge spending plans by raising taxes mostly on the highest income earners. He argues he wants the wealthy to pay their “fair share.” He has never defined exactly what their “fair share” would be. In theory, though, most Americans would probably agree that all income earners should pay their fair share.
Biden’s proposal would end up over-taxing the wealthy. While he does not seem to be concerned about that, over-taxing the wealthy really hurts hard working Americans. The reason is simple.
The US economy is capital intensive. There are two basic inputs into the economy: labor and capital. For the past 50 years, our economy has been switching from labor intensive to capital intensive. Years ago, manufacturing was done with numerous workers on an assembly line.
Modern manufacturing is done with numerous robots on the assembly line and few workers. Companies need capital to purchase the robots. Even in the service sector, each worker’s productivity has greatly increased because of the technology they use. The technology needs to be purchased with capital.
Capital comes primarily from high income earners, whose income allows them to pay taxes, spend on their lifestyle and still have large amounts of income to invest. Their investments create new capital.
New capital also comes from corporations who pay their taxes and then pay dividends to stockholders. The remaining income is creates new capital to be used for investments.
By raising the marginal tax rate on the highest income earners to almost 40%, less capital is created. By raising the corporate tax rate from 21% to 28%, less capital is created. Doing this at a time when the federal government is nearly $30 trillion in debt, which is financed by selling bonds that remove capital, means a capital shortage will be created.
Without capital a capital intensive economy cannot grow. That will lead to stagnation. Worse, since the federal government continues to deficit spend and the Federal Reserve continues to rapidly expand the money supply, excess demand is created.
When there is excess demand and restrictions on businesses’ ability to grow, inflation results. That means Biden’s policies will lead to inflation and a stagnant economy. In the 1970’s we called this stagflation.
There is a much better way to insure that all Americans are treated the same and that every income earner pays their “fair share.” It is a very simple plan.
First a livable minimum is determined. This is how much can be earned before any tax liability is incurred. This livable minimum should be two times the poverty level. That would be about $25,000 for an individual and about $50,000 for a family of four. Once income exceeds that, tax liability would be incurred.
So the Busler Single Rate Tax plan would be:
A 15% single rate tax on all income above the livable minimum with no deductions for anything. All income, whether wages, rent, interest, profit, dividends or capital gains is treated exactly the same. The corporate tax rate is also 15%.
This plan is approximately revenue neutral in the short term. In the long term it would add ½% to 1% to the annual growth rate which would lead to greater future tax revenue.
For a family of four that earned total income from all sources of $80,000, their tax liability would be easy to calculate. They would simply subtract the livable minimum of $50,000 leaving a balance of $30,000. Then just multiply the taxable income of $30,000 by 15% to get a tax liability of $4,500. That’s as simple as can be.
Some would argue that a progressive tax system, where the tax rate increases as income increases, is fair. This system actually is progressive, although admittedly far less progressive that many would like. See below for a family of four;
Total Livable Taxable Tax liability Tax rate as a
Income Minimum Income 15% percent of total income
$50,000 $50,000 0 0 0%
$80,000 $50,000 $30,000 $4,500 5.6%
$100,000 $50,000 $50,000 $7,500 7.5%
$200,000 $50,000 $150,000 $22,500 11.25%
$500,000 $50,000 $450,000 $67,500 13.5%
$1,000,000 $50,000 $950,000 $142,500 14.2%
$10,000,000 $50,000 $9,950,000 $1,492,500 14.9%
This table shows that as income increases, the tax rate increases. Therefore it is a progressive tax with the top tax rate approaching 15%.
This plan means that all income earners will pay their fair share. Every American is treated exactly the same regardless of how their income is earned or how that income is spent. Labor’s wage and investors’ capital gains are taxed exactly the same.
Additionally this plan causes no market distortions, creates large amounts of new capital, is very easy to determine tax liability for each income earner and is (arguably) equitable.
Wouldn’t every taxpayer pay their fair share under this plan?
Like it better if the corporate tax is dumped completely and stop the double taxation.
I think the 50,000 and below should at least pay 1 percent. I think everyone should pay something. The 49 percent at the bottom and 10 percent at the top pay nothing. Both groups should pay.
This cannot be nationwide or can it? Argument against would be that be there are higher costs of living in different areas and 50k is a joke in NY or NJ. The argument for this 50k would be to put pressure on the tyrants running these areas to lower taxes.
I think tax rates should be based on how much guberment help you get. Base rate 10% cause you use roads, etc. 30% more for each guberment service you use. Medicare 30%, Medicaid, 30%, guberment housing 30%, welfare 30%.
These should be calculated on your income IF you did work. If you are not working and want to eat an additional 30% would be charged for the work programs that will be mandated for you.
The rich can avoid income tax by limiting their taxable incomes.
If the left were really serious about sticking it to the rich, they’d enact a confiscatory wealth tax.
But they’re not doing that, are they...
And actions speak louder that words.
“If the left were really serious about sticking it to the rich, they’d enact a confiscatory wealth tax”
It’s not for lack of trying. Warren, sanders, and Sandy. Ortez are doing their best.
With the spending habits of Congress, it is clear they do not rely on taxation for funding. Tax policy is for controlling the citizens behavior.
Your average lefty either doesn’t understand all that or claims it’s “racist.”
AOC certainly doesn’t.
The rich vote for the left. Why should we care? We’re like battered women-keep coming back for more.
Tax everyone beginning at zero. My income in 1968 was 2k! Seems pvts made 100 per month. Other inc was about 800. After subtracting exemption and standard ded my TAXES were due. NO bs earned (sic) income credits or any other give away.
They aren't going to screw the 1% because they ARE the 1%.
They are going to screw their own voters, the ones who spend most of their income on food, fuel and rent.
(Why their own voters keep voting for them is more curious. I blame the failure of the school system to teach analytical thought.)
They would never do that. Too many freeloaders would lose their jobs. IRS, Accountants, CPA firms, tax lawyers. This is a good idea that will never happen.
Individuals shouldn’t be taxed by fedgov. States should buy services from fedgov as needed.
Why are we so focused on taxing INCOME? It makes not one whit of sense.
The FairTax does more to right this revenue ship than any other plan out there.
Tax consumption, only at NEW RETAIL, FINAL USE SALE.
Scrap the IRS.
Everyone pays (even the crooks and criminals).
Don’t want ot pay taxes? Don’t buy new; which may be tough with consumables, of course.
> I think the 50,000 and below should at least pay 1 percent. I think everyone should pay something. <
I agree completely. Everyone should have skin in the game. And your idea would also build a measure of civic pride, as in looking at a government building or at a Navy ship and saying, “I helped pay for that.”
If Deep State wanted a confiscatory wealth tax, they’d just ram it through.
We don’t have one because Deep State wants to impoverish us, NOT themselves or their cronies.
It makes perfect sense.
It's easier to control people who lack money of their own.
15% isn’t a high enough rate to convince the rich to bribe thier congressmen to carve out exemptions. The money must flow to K Street and campaign coffers or there will be no way for congressmen to become multimillionaires after a couple of years on a $174,000 salary.< /I wish it was sarcasm>
1. Eliminate ALL corporate tax.
1a. Eliminate ALL depletion allowances and depreciation allowances.
2. Eliminate ALL current IRS regulations.
3. Set the individual tax rate at 10% regardless of income.
3a. Perquisites at taxed at 10% of cost.
3b. Withhold at the rate of 11%, to get a refund you have to file taxes, but there is no legal imperative to file.
4. Tax ALL money coming into the country at 0% (yes, ZERO%).
5. Tax ALL money leaving the country at 10%.
“Capital”
There is too much capital floating about.
In 1982 the stock market was worth about $700 billion.
My guess is the US stock market is now valued at around $30 trillion, ten times larger than 1982.
Instead of buying shares in companies people might buy shares of factory machines and solar farms.
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