Thursday, February 14, 2013

My Favored Tax Plan is Bad

If we must have an income tax, then I think it should be a flat tax.  If all people were created equal, then they should all be treated the same way, and taxed at the same rate.

Of course the so-called “flat tax” is not really a flat tax at all because it extracts a much higher dollar amount from those earning higher incomes than from those who earn low incomes. For example, if everyone is taxed at the same flat rate of, say, 10 percent, then the individual earning $1 million per year must pay taxes of $100,000 whereas the individual earning an annual income of $50,000 pays only $5,000. The former is thus forced to pay a price twenty times higher than the latter has to pay for the same rotten government services. How is this not a punitive tax?

-Joesph Salerno
I agree. He is right.  Since we are all equal, we should all pay the same amount, its only fair.
This phony flat tax contrasts sharply with the situation on the market where all individuals, regardless of income, pay exactly the same price for bread, tablet computers, Cadillacs, movie tickets and all of the other privately produced goods and services they buy. Now imagine if everyone were forced to pay a price in proportion to his income for everything he purchased on the market? A higher money income would no longer mean command over more goods and services. Hence, no one would have any incentive to earn a higher income by excelling at producing things consumers desired, and, as a result, productivity and the economy would come crashing down. If people truly wanted to avoid the discriminatory and punitive aspects of taxation then they would favor a “flat, flat” tax, that is an old-fashioned “capitation” or “head” tax in which everyone paid the exact same dollar amount to the government. Not only would this not penalize more productive people but, much more important, it would have to be very, very low in order to ensure that even the lowest-income people are able to afford it. I think 200 bucks a person per year sounds about right. To the bleeding hearts out there worried about the poor, I am more than willing to entertain proposals of 100 bucks, or better yet, zero. 
If you are going to insist on an income tax, then it is only fair that we all pay the same amount.  And that amount should be small so that everyone can afford to pay it.

Of course this will mean cutting government spending on the things that we can't afford...


  1. In a way, you are correct. The most fair of all taxe schemes would be for everyone to pay an equal share. Thus, a one trillion dollar government budget, divided by a population of four hundred million, would require every man, woman and child to pay two thousand, five hundred dollars. Most cannot afford to pay such a tax bill. Indeed, such a tax would be regressive, because the working poor would be paying a much higher percentage of their income in taxes. Your analogy to purchasing bread or another commodity is false. We all have a choice as to whether we are going to purchase hamburger or steak, and if we can't afford steak, we go cheaper. We do not have a choice as to how much government we buy. The flat tax is the least unfair of all the tax schemes.

    1. If we are equal we should pay equal taxes.

      The US population is around 318 million, not 400 million.

      The US federal government spends around 3.6 trillion each year, not one trillion.

      "We do not have a choice as to how much government we buy.'

      Why not?