Webs’ Random Ideas

Well sort of…

I discussed FairTax here and I even had some new commentators that stopped by which was nice. I hope to see them again sometime.

Well, just the other day I received an e-mail from DOF about yet another tax idea. Click here to read about it on DailyKos.
A quick snippet:

Let’s say you’re one of those few lucky individuals who finds themselves with a net worth of 1/2 a trillion dollars, so that you possess 1% of the nation’s wealth. Let’s say the federal budget that year is 2 trillion dollars. Your tax bill should be 20 billion dollars.

Let’s be more realistic, cause nobody’s worth 500 billion dollars. Let’s say you were worth $1 billion. That means that you’d possess a mere .002% of the nation’s combined wealth. Federal budget stays the same as above. Then you’d have to pay $40 million to support your government that year.

Click to Read the rest of this post

Basically the author is proposing a tax system where you pay in what you get out of the system. Some things I liked and some things I didn’t:

A poor argument…

How much would you pay to ensure you could get a good education? It might be a lot, but I bet it’s worth more to McDonald’s, who has to spend gobs of money putting pictures on their cash registers so their tellers can do their jobs.

There is no incentive at all for McDonalds to hire or train an educated work force. The pictures on their cash registers and simple instructions save them time and money and are a one time cost essentially. I would say more about this but I can save that info for another post some other time.

After this the article is well written. And his focus on a wealth tax system is well made. You pay what you put into the US system. I like it. The stats presented are very interesting as well. Those of us in the middle and lower classes pay more taxes, in proportion to our earnings than the rich do. And that just doesn’t make any sense to me.

There are a couple problems though, I don’t think any candidate could successfully get away with proposing this system without losing their career. Many people, especially the rich, are going to see this as robbing the rich or taking money away from those that have earned it. Even though this isn’t true, and people are paying for what they put in, it will be a hard sell. And for some reason, when the rich complain about the government stealing their money, some of those in the lower classes listen and jump on the bandwagon, cause for whatever reason they think it will affect them the same way.

Looking at this tax system from an Economist’s perspective, wouldn’t this create an incentive for people to earn less money, or report lower earnings? Because then they would pay less in taxes and keep more money. I know the rich can afford to pay more and should, but rich people don’t get rich by spending money. Most, are very frugal and people in general will find ways to cheat the system if given the opportunity to. Meaning there will always be disparity. A kink that may need to be worked out?

There was another problem. All the author did was state why he is right. He never stated what was wrong with having a sales tax or the FairTax system and failed to have a rationale point on why a sales tax will not work as a tax system. I don’t fully support a National Sales Tax, I think the shortcomings are huge, but I at least will address the failings.

Anyways, if you want, feel free to post your solution to our Tax Hell system here. I would be happy to see what my readers think…