Archive for September, 2015

Flat Tax American Style

September 16, 2015

Over the past week I’ve heard two fun things regarding the American income tax system. One, that tax preparers have been lobbying congress to make taxes more complicated, because it drives business to them. Two, and I don’t have a link because I just heard it a discussion involving it in On Point with Tom Ashbrook, that calls for a flat tax is alive and well and apparently championed this time around by Ben Carson, the Republican GOP candidate.

The first one doesn’t surprise me. Tax software is big business (I use it), and those companies wanting to make more money shouldn’t be surprising. I’m actually surprised our congress hasn’t bent over backward by now appeasing them and unleashing a forty page “simple” form for next year. That said, something like 79% of tax returns done by tax preparers short change the people they are preparing them for. We actually lose money by having “professionals” do it. Not that they care because I think they are likely more focused on preparing your taxes in the quickest way possible rather than in the best way possible, especially at large companies who not only want to do as many as possible, but also want to do them as safely as possible to guard against possible audits and what not. Remember how all of those boxes offer audit guarantees and promises of support, etc.? Know how they do it? By being as conservative as possible.

The second one just seems like another scam to keep more money in the hands of fewer people. On the face of it, yeah, it’s equal and it (should) simplify the process. But ten percent of my salary isn’t the same as ten percent of a CEO’s salary. Yeah, the percentage is the same, but the CEO can afford to pay more. Considering they also get more, paying it forward and supporting the government and the system that allows them to be as successful as they are isn’t a bad thing, imo. Also, it’s a backdoor towards defunding the government, shrinking programs/benefits, and screwing poor people.  The middle class is shrinking, though. And as more people drop out of the middle class and into the poorer income brackets, there are going to be more people needing some sort of assistance to get by. Shrinking the revenue used by our government will force a drawback on programs to help this growing class of people.

Or we could find a way to force the distribution of wealth back to something more equitable for the population as a whole. If you want the very rich to pay less in taxes, then you need to dramatically increase the middle class to make up for it. And, no, business owners aren’t going to magically hire more people just because they pay fewer taxes. They’re going to pocket more of their money, it’s going to sit in hedge funds, stocks, bonds, etc., “grow” and do little to help/stimulate the economy.

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