Monday, January 09, 2006

Why oh why do we pay taxes? As Edina said, "why don't we just tax the stupid people?".

I don't think anyone would disagree with me when I say that the current system of taxation is a piece of garbage which nobody wants to fix because those who can fix it are too shit scared to overhaul it but instead like to fiddle while Rome burns. The fact that the government likes to play with silly rates in capital gains taxes when 80% of these taxes are paid by individuals earning under $100K a year is ludicrous.

My income is probably within the top 5% of U.S. taxpayers. I decided to look again at my taxes from last year and I paid an effective federal tax rate of a approximately 18% (because I have nice big deductions for mortgage interest and state and property taxes). Without my deductions I would be paying closer to 30% in federal taxes (over $320K the top tax rate is currenlty 35%). This is all because own a home and I pay state taxes. So I win. The guy renting a home in Texas pays the IRS almost twice as me.

So let's tax the stupid people instead. Let's tax on people's spending. I have noticed that I spend all of my disposable income on beer and cigarettes. So I would be taxed on all my earnings (except what I put away in my 401k), which is fine. The rich with their expensive homes and yachts would pay a fortune for their excesses and those stupid middle-class people who spend more than they can afford (on credit cards) would pay more taxes for being stupid and going into debt.

So why don't the government introduce a simple consumption tax and abandon the IRS as we know it? Because they pander to the idiot voters who think that somehow they will pay more and not get their nice deductions. They might want to take a leaf out of the small caribbean economies that have no income taxes, only consumption taxes, like the Caymans and the Bahamas and yet provide universal health care and education. The government should not be in the business of deciding which vested interests they should support- home ownership, dependents, charitable deductions etc. - and stop tweaking ridiculous tax rates which are nothing more than poltical maneuvering. Consumption taxes will also take away this gesturing tactic and force them to maybe, oh i dunno, limit spending, stop invading sovereign nations, reduce the deficit....But that's just my thoughts.


Blogger Miles said...

Drop income tax and replace it with just a sales tax? That would be even more patently unfair to the middle class and working class.

What should happen is the governement should restore the mid-century history policy of actually having a progressive income tax where the rich pay a higher percentage of tax on their income. This would reduce our debt, fund more programs for the disadvantaged and might actually enable universal healthcare.

If you're making over 150k a year, you're lifestyle will not change significantly if your actual tax rate goes up from an average of 18% (using your current rate) to 25% and the rest of the country would be better off.

Naturally, with the current political reality, this won't happen now...but it will happen in our lifetimes and hopefully sooner than later. Otherwise, this country will be further reduced to two main segments: super wealthy and the poor...and the decline of this country will be exacerbated.

You don't want that, do you? Do you?

12:52 PM  
Blogger Steve said...

Oh Kelly. You really don't have a clue, do you?

6:08 PM  
Blogger Miles said...

very slim on the postings; must be your busy season.

10:08 PM  

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