22 April 2017

All income should be taxed at the same rate.


President Trump is preparing to embark on new tax policy for America and I will naively pretend that it is something more than a tax cut for the rich. If he truly wants to fix the tax system then the only truly fair process would be a flat tax based on net worth. (Expect that to happen when our sun turns into a white dwarf.) However, the best change we can make today is to tax all income, including capital gains, inheritance, prize winnings and whatever else - at the same rate. The super rich get all of their income from capital gains. I know this is depressing to hear but the 1% do not “labor” and get all of their income from investments, having already inherited or collected their core income for their investments. Their work choosing investments is their "labor". Some investments happen without being initially taxed. Yes, there are regulations in place that allow individuals to invest (with various rules/limits attached, of course) without paying any taxes. So if you have enough money to invest then you actually can “earn” money and only pay taxes when divesting. (Or maybe not even then, depending ... A tax lesson for another day.) There is no rule that a dollar is only taxed once. Everyone, no matter how you earn income, is taxed multiple times on every greenback. Just take a look at the fine print on your cell phone bill and start counting the number of taxes. The more you spend on goods or services, the more taxes you pay. Those with less income pay a higher percentage of taxes. Round one is social security and federal income tax. Round two is state taxes on income and/or sales. Round three is local taxes and/or individual departments of government. Then, depending on what you purchase (used automobile, for example) you can be taxed on it multiple times by the state. Half or more of these tax sources hit when you purchase something, which those with less money need to do with a higher percentage of their income. If you have enough money to invest then you can avoid most of these taxes. Our tax system should be equitable to all Americans. The only way to make a fair tax system is for all income to be taxed at the same rate. If you inherit it, if you get it from capital gains, if you labored for it, if you won it on the Price Is Right —- it simply does not matter. It should be taxed at whatever rate you pay. Exceptions to tax rules only benefit the rich because they are the only ones that can afford CPA’s working full time so they pay as little (or nothing) as possible. Those on "main street" have no choice but to just pay and the poorest are always hit the hardest.