The Problem With Taxes And How To Solve Them

          I wrote previously about my thoughts on death, so now it’s time for me to write about life’s other inevitability… taxes. We all should pay them, but do they really need to be that complicated? And whose view on taxes makes more sense, the Democrats or the Republicans?

Liberal take on taxes

          First let’s look at the liberal view of taxes. Most Democrats talk about the redistribution of wealth, and that “the rich” should pay their fair share… which of course is more than that of the middle or lower class. But wait a minute, if America is the land of opportunity and the home of the free, why are we then ignoring the rights of the upper class and forcing them to give their hard earned wealth to those “less fortunate”. Also, since taxes go by percentages, shouldn't higher incomes already pay more than lesser incomes based purely on math without raising said percentage? Therein lies the problem with the liberal tax system, it creates a class warfare that rallies the voting majority to support these views, but offers no real solutions for the problem at hand.

Conservative take on taxes

          The Republican take is not much better. Conservatives claim that the richest Americans are the business owners and job creators, which is generally, but not totally, correct. They preach a “trickle down” method of taxes, which basically states that by granting the wealthy tax breaks they can then reinvest their saved money back into their businesses which will create more jobs and raise salaries for everyone underneath. Unlike the Democrats, this system has a clearly defined solution and looks great on paper; the problem is in the execution. There is no guarantee that money saved will be put back into those businesses, or that those businesses are based in America or even hire American workers. If recent history has taught anything, it’s that corporate greed is at an all-time high and those wealthiest Americans would rather see an increase in their profits than invest in their own business (see Enron, Tyco, or any of the automobile or banking industry government bailouts).

The current system failures

          My main gripe with our current tax system is that it is overly pessimistic. Creating a tiered tax system where the more you make the higher percentage you pay in taxes prevents average citizens in the lower or middle class from truly generating any wealth and climbing the social ladder, because any time you make a modest increase in income you are hit with a higher tax rate and actually have less take home money than before. We also hear how the richest Americans pay no taxes… but how is that possible? They have the highest tax percentage, but they still don’t pay? That’s because of the tax exemptions and deductions they earn. You get a deduction for being married, having kids, owning a business, etcetera. The wealthy simply qualify for more of the elaborate deductions and exemptions.

A simple solution

          So what’s the solution? Get rid of the tiered tax system, and offer absolutely no deductions or tax exemptions. Replacing the income tax with a national sales tax, like Canada uses, would also ensure that everyone pays their fair share. The more money you spend, not matter what it is on, the more taxes you pay. If you are poor, you don’t have the money to spend in the first place, so you are not taxed as much. If you are wealthy, you are more likely to buy more luxurious and costly items, meaning you will pay more in taxes. And the only way to spend your money without being taxed on it? Invest directly into a business and never draw it out as personal finances. Trickle-down economics take effect, and wealth is properly distributed based on earnings rather than handouts or freebies.

Why it's almost impossible

          The closest we are as a nation to achieving this is the proposed Fair Tax, which both Democrats and Republicans fight tooth and nail. Why? Again, it solves the problem. Not only that, it solves the problem by removing government interference, not by increasing it one way or another. Of course no respectable politician would vote something that takes away their power and makes them irrelevant, no matter how much better that solution is. So as long as they can cloud the issue, draw voter rage, point fingers, and make sure a majority of the voting public is either unable or unwilling to do the basic math and low level deductive reasoning to figure this out for themselves.