The Fair Tax
The Fair Tax
The Fair Tax
Does anyone really enjoy paying taxes? Or better yet, does anyone enjoy paying taxes that they have no control over how much they pay? The United States current tax system includes a graduated income tax. The graduated income tax basically means the more money an individual make, the higher percentage of their income they will surrender to Uncle Sam. Also, people of lower incomes pay little to no income tax. A national consumption tax is one proposed solution to this problem. The Fair Tax, as advocates call it, would basically be a national sales tax and it would completely do away with a national income tax. This means that people will be taxed solely on money spent instead of money earned. It would also ensure that all people pay taxes, even illegal immigrants. This system would also include a method of refunding some money to those who live in poverty. Syndicated talk show host Neal Boortz claims that the Fair Tax would completely get rid of the Income Tax and the IRS, along with “the Social Security tax, the Medicare tax, corporate income taxes, the death tax, the self-employment tax, the alternative minimum tax, the gift tax, capital gains taxes, tax audits, and some major headaches every April 15” (Boorts and Linder). It has also been said that it would solve the U.S. national deficit. Due to Americas current economic dilemma, solutions such as The Fair Tax Act are worth exploring.
When Karl Marx wrote his well-known book, The Communist Manifesto, he included ten planks or main points. He believed that in order for his communist society to be effective, the proletariat, or the laboring class, must rise to power. According to Marx, after they rose to power, they must follow the ten planks. Ironically, the second main point on this list is a “heavy progressive or graduated income tax” similar to the United States current system (Marx). Many years later, Marxs idea became a reality. However, it was in the United States. The income tax was fought in the United States for years until it eventually came into affect. In the early days of America, the country relied on taxes of just a few items such as alcohol and tobacco. The first instances of an income tax was seen during the Civil War. A temporary three percent income tax was place on citizens making between six hundred and ten thousand dollars a year. Americans making over ten thousand dollars a year were subject to a five percent income tax. This tax was put into place only to raise money for the war and was later removed. Over the next few decades, there were many attempts by politicians to reinstate a federal income tax before arriving at the sixteenth amendment. This is what officially gave the right to the government to tax individuals lawful incomes (“The Income Tax”). The United States current income tax is a result of many years of political debate, and has turned into a system that punishes achievement. The top money earners pay the majority of the taxes. Likewise, some of the lower income citizens pay hardly any income tax. In fact, the top five percent of earners in the United States pay over 60 percent of the total revenue generated from income tax (“Who Pays”). Also, forty-seven percent of households in America pay no income tax at all (Leonhardt). A progressive income tax, however, is not necessarily a communist theory. In fact, John Maynard Keynes recommended an income tax during the Great Depression in order to boost the economy. Keynesian economics basically is a way of increasing the circulation of money in an attempt to bring a country out of an economic downturn. However, the United States already currently has a heavy, progressive income tax and it is still in a major economic downturn (Dobbs).
Another flaw in Americas current income tax system is the federal withholding. “Politicians love withholding because it gives them a chance to grab their ‘share of your earnings before you even see your paycheck” (Boortz and Linder 19). This is the governments way of camouflaging what people actually pay in taxes. If Americans do not realize how much they are actually paying then they are not likely to complain. When the income tax first started, citizens paid all of their income tax for the year at one time. This enabled them to know exactly how much they were paying when they paid a large sum of money at one time. For many people, this was a significant portion of their earnings for that particular year. By taking small amounts of money (or large amounts depending on individual interpretation) out of each paycheck, people rarely realize how much they actually pay. Another disadvantage to withholding is the fact that people cannot earn interest on the money that the government takes out of their paycheck. Even if they do receive a refund for everything the government