This post is merely a warning to be wary for tax reform nutjobs that keep wanting to shovel tax con schemes down our taxpayer throat. Like regressive tax schemes like the Fair Tax, Flat Tax and Consumption Tax-all regressive tax schemes. I favor progressive tax reform provided there is a cap to limit and even reduce these ever-expanding government bureaucracies.
It is important to understand that a regressive tax is one that causes those who can least afford to pay taxes, to pay more. While the rich only pay a set amount.
For example, a Fair Tax, a Flat Tax or Consumption Taxes are all regressive tax schemes cooked up by the rich. When the Fair and Flat Tax schemes failed around 2006, the politicans slowly increased forced consumption taxes on you. Other examples of a regressive tax scheme is a cap on Social Security taxes, dividend exclusions and preferential capital gains rates.
Now Barry states he is going to increase taxes on the rich making over 250,000 from the 34 to the 39% bracket. That is a progressive tax which is what the middle and lower classes should be favoring. Although I prefer a lot higher progressive tax rate with more tax brackets with 80-90 percent at the top. But believe me, Barry is going to be raising all kinds of taxes not related to income. So, you are still going to have to pay more in federal taxes with buried tax increases hidden in lots of federal legislation. There is no free lunch to all this abomination stimulus.
Paying for the lunch is merely going to be buried within complex legislation including a scheme called "tax simplification". This is where the federal government will simplify or eliminate as many of your itemized deductions as possible. Now complaining about ever-expanding governments only raises the awareness. But no solution. So, the following progressive tax solutions are worth considering, realizing there are many more options that could be taken in no particular order:
1. Make all income including benefits and bonuses subject to Social Security taxes by eliminating the cap.
2. In regard to entitlement programs, ensure that only the needy receive entitlements by requiring a net worth statement to be submitted to eliminate the wealthy from applying for and receiving entitlements that are ruining entitlement programs for the needy. Including spendown provisions before being entitled to receive Medicare, Prescriptions (Part D) and Social Security benefits.
3. Stop earmarks to state, county and local governments. Earmarks should return to being applied to only fund federal agencies and federal mandates instead of funding state, county and local governments.
4. In part, I agree there is need to eliminate all the varied but lawful tax deductions. Tax deductions typical favor the rich. Poor people do not benefit from tax deductions. Although the poor do benefit from a few tax credits. All income including entitlements should be considered as taxable income with no preferences given.
For example, a dollar of dividends is equal to a dollar of earned income and should be taxed the same.
5. Both the rich and the poor should pay some kind of tax via a progressive tax policy. Why should anyone be excluded from contributing to the federal and state tax buckets.
6. Consolidate all federal taxes instead of having many federal taxes. Most people focus only on the federal income taxes. But, there are many various federal taxes. There are so many taxes at all levels, it's hard to compile a list of all of them. Part of the problem is there are direct and indirect taxes adding to the complexity. Ditto on other governments reducing all their varied direct and indirect taxes below the federal government.
7. Put into effect controls on the growth of all government tax receipts based on a common index like CPI. Federal clear to the municipal level. There has to be an check and balance on politicans. There is this huge tendency by politicans to keep growing governments requiring corresponding increases in various and creative tax schemes.
8. Eliminate tax deferred and tax exempt income, stock options and bonuses that result in constructive income but exclusion from federal taxes.
9. The most important point might be to stop asking and expecting the federal government to provide and fund non-federal programs by taking back personal responsibility for your own stuff like savings, health care and your retirement. And the obvious and extreme need to stop squeezing middle class America-the people of this country that work for a living.
And that is merely a short list compiled in about ten minutes. I am sure there are many other methods to ensure everyone is paying a fair and more equitable proportional share of taxes. As well as ensuring entitlements are only limited to those that have a need for federal and state assistance.
You can always tell when government is about the right size. You ignore that government as being insignificant to you, the individual. The problem is ever since FDR, the socialism of America has continued unabated. And most economic recoveries ever since have been the result of war. Most of which have been infringing on some other nation's sovereignity.
To critics, I had to keep this post pretty short. To address fully tax policies in America requires a far more detailed and elaborate writing. I am merely giving a condensed version here as what really should be an entire book.
Future Post: In regard to Prop K being considered by the Kansas legislature, I still need to ensure that Prop K only applies to residential property. I have already determined the 2% increase in value, but not taxes per year is an arbitrary figure. I am leaning to supporting Prop K. I just need to do more research on the skeptical side.