Want to revitalize economy and make Americans richer? Kill the income tax

Detroit News ^ | 11/17/02 | Nolan Finley

[jimkress]

Intriguing, idea and Washington aren't words that often appear together in a credible sentence. But an intriguing idea is floating around Washington for reforming the way Americans pay for government.

Treasury Secretary Paul O'Neill is quietly exploring a plan to do away with the income tax, that punitive system of taxation adopted in 1913 that spawned an un-American strain of collectivism. The income tax promotes the notion that the first fruits of hard work and enterprise belong to the government, not the individual.

[jimkress]

Amazing! This in a mainstream newspaper!

[PatrickHenry]

Bump.

[steve50]

Sounds like they are figuring out a better way of shearing us.

[RLK]

Want to revitalize economy and make Americans richer? Kill the income tax

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The economy will not be revitalized as long as industries are being shipped out of the country hand over fist.

[Anotherpundit]

this is a scare story, I think. "looky the radical republicans!" Flat tax long before this, and even that not for a decade.

[caltrop]

The regressive nature of a Fixed Rate National Sales Tax can be addressed by a Graduated National Sales Tax. Exempt, for example, the first $10,000 of an automobile purchase. After the first $10,000 the tax kicks in at 10% for the next $10,000 of the cost, 20% for the next $10,000, 30% for the next $10,000 and so on.

I can't get excited about a flat tax as it'll keep the IRS in place at its current size and could be easily increased at a later date.

I completely agree, if a National Sales Tax of any sort were adopted, that it would have to be contingent on a permanent end to any form of income tax.

[TopQuark]

A national sales tax will now cause these people to pay tax. All the bleeding hearts will swamp the airwaves with how unfair it is, that the poorest among us have to pay the largest share (tax versus income) and the rich get a huge tax break (so they can use their undeserved reward to keep the masses poor).

This does not appear to be necessarily true: a provision could be negotiated whereby the poorest continue to receive a tax credit.

P.S. It is damaging for credibility when you claim that people are rewarded for not paying a tax: they are not rewarded but assisted, and not because of the nonpayment of tax but because of relative poverty.

[kennyboy509]

"The economy will not be revitalized as long as industries are being shipped out of the country hand over fist."


A flat tax would stop them from leaving. Taxes and regulation is what they are escaping from.

[Age of Reason]

It places a high price on success, hard work and risk-taking, and seeks to force equalization by confiscating a greater share as incomes rise.

Certainly I agree that someone who works twice as hard as another should be allowed to take home twice as much money.

Likewise, someone who works twice as smart or twice as long should also take home twice as much.

And someone who works twice as long AND twice as smart AND twice as hard should take home eight times as much.

But how does that explain billionaires?

It doesn't.

People become billionaires not because they work any combination of that much smarter or longer or harder.

They become billionaires because they accumulated enough wealth and power to place themselves in a world governed by economic laws different from the majority of people--economic laws that reward the rich with more riches--not in proportion to how hard they work, but in proportion to how much money and power and influence they have.

Next, why should risk-taking be rewarded?

The bigger the risk, the bigger the fool is the person who takes it (unless it only seems a risk to the outsider).

And since such adventures are risky, the majority of people foolish enough to take such a risk will be hurt or destroyed for it; how is it good for a society to urge people to destroy themselves?

And how does rewarding foolishness fit in with rewarding merit? It doesn't.

Further, what's so great about being rich?

Do not most people dream of being rich so that they can live like leeches, without working hard?

I repeat: I've nothing against making more money than the next guy when such competition is in a level playing field.

[Age of Reason]

And how is it fair that the poor, who live from hand to mouth and must spend all they earn, will have all their earnings taxed, while wealthier people will have the luxury of saving and investing.

And will there also be a sales tax when you buy stocks instead of food?

[zeugma]

I'd only suppoort a consumption tax of this kind if a constitutional amendment were passed to implement it in such a way that 1). The income tax would be repealed from the constitution. 2)the rate set in the 'consumption tax' were included in the amendment, which would require a new amendment (and all the associated difficulties) to raise.

[TopQuark]

The system is set up to reward those who do the least. As I said, you are attributing motives incorrectly. The stated reason is the one I mentioned in the previous post.

The earned incomes tax credit is nothing more than redistribution of wealth. It is.

It is also misnamed for the public to swallow it. No it is not: those who do not earn income, do not receive credit.

[mrs9x]

You ask why risk taking should be rewarded? Because risk taking results in products beneficial to everyone. While there will be many risks that flop, those risks that produce the new miracle drug, the new medical device, or countless other products that make our lives better are worth it. Without an inducement to take risks, there would be none of these products. Therefore, we should reward risk to enable new inventions to be made.

In regards to your second question about why millionaires should be paid so much more than everyone else, even though they might not work "harder" than some manual labor, you have to think of the responsibilities of these people. First, there are not that many billionaires, so we will stick with millionaires. These people run the businesses that make this country work, and unlike the manual laborer, are personally liable as directors of corporations for things that go wrong. Without some additional financial inducement, no one would be willing to take the immense legal and financial responsibility to run these firms. And besides, there are not all that many people with the skills to do such jobs. Thus, with high demand and low supply, the wages will be high.

[TopQuark]

I do have a problem with them being rewarded for failure. There is no incentive for them to get beyond the poverty line,

The question of incentives is not a trivial one, and you cannot make it by merely pointing on the existence of the tax credit.

But, I respect your views and opinions. I merely wanted to point out some inaccuracies, that's all.

[RLK]

A flat tax would stop them from leaving. Taxes and regulation is what they are escaping from.

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Something such as a flat national sales tax would be desirable.

However, let's be honest here. What is being pursued, not escaped from, is a source of cheap or slave labor. Wha is wanted is a series of plantations like the old South where the plantation owners can profit and the incrementally few remaing people with employment can get things cheap while the plantations are moved 10,000 miles away.