Many Republicans continue to advocate a national sales tax a/k/a "The Fair Tax" which would place a greater tax burden on the middle class while having a minimal impact on the wealthy and big corporations getting a free ride. There is no question that our tax code has grown absurdly complex but the "Fair Tax" simply isn't a viable solution for a number of reasons. [http://fairtaxfraud.com]
A much better idea is a middle class flat tax with progressive taxation retained for upper income groups. This pro-middle class tax reform proposal was suggested a couple of years ago by Former Congressman and Democratic Leadership Council Chairman Harold Ford.
Harold Ford made the case for a middle class flat tax in a Washington Times column http://www.washingtontimes.com/ published on November 29,2007.
Ford wrote:
"This is simple and fair: no middle-class family with an income of under $150,000 should ever pay an effective tax rate of more than 10 percent. If what they owe after calculating their taxes is more than 10 percent of their income, they won't have to pay a dime above 10 percent. If they owe less than 10 percent, they pay the lesser amount.
We ended the last century with America's economic might at its zenith, with Americans at their most optimistic, and with nearly all who endeavored to make the most of their opportunities and talents getting ahead in life. John F. Kennedy's declaration that a rising tide will lift all boats was alive and well.
Middle-class Americans generate little or no national savings. We've had four straight years of rising productivity and falling incomes. Many Americans are earning less, while the costs of a middle-class life have soared: In the last five years, college costs are up 50 percent, health care up 73 percent, and gasoline more than 100 percent. Rising housing costs have driven people farther and farther from their work.
These trends undermine our way of life because middle-class strength and growth represent the backbone of American life.
Our national political discussion about how to grow the middle class often becomes just that, a political discussion punctuated by harsh talk of "class warfare." In fact, class warfare is under way — as billionaire Warren Buffet is fond of saying — and the middle is not winning.
To address the challenges of the middle class, Democrats should advance an agenda that aims to do something loftier than just repeal the Bush tax cuts on millionaires. It should boost incentives for average Americans to increase savings and investments, and help them participate more fully in the upside of economic growth.
http://www.washingtontimes.com/article/20071129/COMMENTARY/111290014/1012/
We need tax policies that will help working families instead of more tax cuts for the rich. Harold Ford has given Democrats a winning issue with the middle class flat tax. Some Democratic members of Congress need to take this idea and run with it.
3 comments:
So this plan gives no incentive to earn more than $75,000 per adult.
Why not have a flat tax?
A 10% tax on income, period.
No distinction by income bracket.
That would be a fair tax, and it would be equal for all.
You pay 10% no matter how little
or how much you make.
Indeed so.
But in fact, both in the United States and in the United Kingdom, all income below national median earnings for full-time work should be tax-free, with a flat rate of income tax thereafter, with no exemptions whatever beyond that poersonal alloance of national medain earnings, and with a unified system called and delivering Social Security in the form of a universal income of half national median earnings.
"...'The Fair Tax' which would place a greater tax burden on the middle class while having a minimal impact on the wealthy and big corporations getting a free ride."
Under the FairTax there is no greater burden on any one class of taxpayer versus another. All pay the same rate (that by definition is both a fair and a flat tax, by the way).
The impact on the wealthy depends on how much they spend, and they spend quite a bit compared to the poor and middle-class. And what they don't spend outright they tend to invest, which is another benefit of the FairTax, because it does not tax savings and investment thus inducing better-off people to invest and reinvest in our economy.
Big corporations? They get a free ride anyway. Every dime they spend on taxes becomes part of what you pay when you buy their products or services, because they pass on that cost to their customers.
It appears to me that you're more concerned with tax impacts -- making sure the classes of taxpayer you feel should be impacted more are in fact so impacted -- than you are with a tax system that is simple enough even for Geithner to understand, efficient, and not easily manipulated by the special interests and power elite in Washington, DC.
The ink wouldn't be dry on your flat tax proposal before attempts would already be underway to change it to make it "fairer" (an internally contradictory term) for some group or another with enough clout (and money) to influence Congress.
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