Midterms, new House leadership, swirling talk of candidates for next general elections. Along with political posturing and usual bs from virtually every politician in Washington, it is also time for the perennial discussion of income tax in America.
Liberals will join in with usual tactics of class warfare, claiming that the rich avoid their “fair share” while middle and lower class share the burden of the US tax burden.
Reality is that the top 50% of earners pay around 97% of all income and payroll taxes collected. The “1 per centers?” They pay around 40% of all income taxes.
Often those same complaining of tax inequality will tout a flat tax, usually 10% being the typical figure thrown around. Most ignorant of the facts, others coy and sneaky, reality is that 10% would be a dramatic increase in income tax rate for lower earners and a MASSIVE tax reduction for top earners. Fact is, with an average income tax collected of around 13% - 14%, with current budgets, this would blow up the deficit even wider, ballooning an already out of control national debt.
There is a answer. One that matches national consumption and therefore manufacturing and general employment with tax revenue. One that is fair for all and doesn’t punish anyone for success while still collecting more from those who have the resources to spend more.
Call it a fair tax, national sales tax, or whatever you like. I prefer consumption tax. Maybe an acronym like ACT, American Consumption Tax.
You’ve probably heard of it before. Recently there was chatter from GOP of a sales tax, something like 30%. Obviously that was posturing and political show. 30% is ridiculous.
The Federal government will collect around $5.5 trillion this year in income and payroll taxes. GDP is somewhere in neighborhood of $23 trillion. Strip out housing services which include things like rent and utilities and it is around $20 trillion.
A 15% consumption tax alone would bring somewhere around $3 trillion.
Here are some added features of the ACT plan to achieve the needed revenue:
- Strip all corporate tax on all net revenue. Manufacturers would pay same consumption tax on raw goods. Again, production matches consumption. Like consumers, corporations would pay no income tax.
- Add a 1% tax to all new and existing home sales. Don’t panic. On a $250k house at today’s rates, would amount to about $17 a month on payments.
- Same with new cars. Again, no need to panic. On a $30k new car with $5k down on a 60 month note, it’s about $5 bucks a month.
Plenty of revenue and citizens have all of their income. More of your earned income to deposit in retirement accounts. If you choose. More to spend on luxury items. If you choose.
Need to cut back? Do it. Keep your earned income. If you choose.
There are some caveats that have to be exercised for the ACT plan to work.
First and foremost, the 16th amendment must be abolished. This is the amendment that provides ability of Feds to collect income tax. We can’t trust Congress to simply stop collecting with a new law. Must be abolished.
Consumption tax wouldn’t apply to any food (groceries) or necessary utilities.
Finally, we absolutely must past a Federal balanced budget amendment.
There ya go. We’ll collect the needed revenue, and have a system that is truly fair for everyone. No need to be envious of super rich spending millions on a new yacht. In fact, should encourage it.
Lower earners have more of their money when they need it.
You’ll hear politicians argue against consumption tax plans. Make no mistake, there is always a selfish motive to not allow US citizens to control more of their own money.
It’s time to stand up and demand a restructured, fair tax plan.
You know, ACT.
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