The subject of federal taxes is frequently discussed in Washington, but for the moment what is being said falls into two categories: 1) With the deal that ended the fiscal cliff, the subject of taxes is off the table for now; or 2) There is a need to further raise taxes if there are to be any more spending cuts. The subject of tax reform has been reduced to a point where it is almost no longer there. This is a major mistake. America needs to overhaul its tax code in a way that will help produce economic growth and fairness. How can that be?
Consider someone who works at a job but pays no tax of any sort. That's right no income tax, no payroll tax for social security, and no medicare tax gets deducted from that person's wages. Is that fair? After all, nearly everyone who works pays at least the payroll tax and the medicare tax. Why should some people be exempt? Or how about someone who operates an enterprise that brings in huge amounts of money but who pays no taxes on the profits? The people of whom I write are those who work "off the books" or who run criminal enterprises. The latest estimates are that there is about $1.4 trillion of this sort of income in America each year. If that income were taxed at just 20%, the treasury would get an additional $2.8 trillion over the next decade. Since the last "deal" on the fiscal cliff raised $660 billion over that same period, we are talking about raising four times the amount from people who are currently cheating on their taxes.
So it is possible to change the law to get these taxes? The first area to consider is the folks who work off the books. Many of these people are illegal aliens who do not have the necessary social security numbers or other papers required to work legally. Were the IRS to focus on such workers and employers who hire these folks, one has to believe that the revenue results would be substantial. The second area to consider are the people who operate criminal activities. Again, if the IRS were to focus on trying to recover back taxes from criminal activities, there should also be a revenue benefit.
There are also a number of tax plans that would necessarily raise taxes from those who now avoid payment. The imposition of a value added tax is perhaps the most well known of these. A shift of the tax burden from corporate profits to value added amounts would spread that tax burden onto imported products and would require those who are avoiding income taxes to pay part of the value added tax. It is a topic that requires a full explanation, which is beyond this post. The point, however, is that it ought to be discussed. The issue of taxation should not be simplified into one where each side just shouts "yes" or "no". Too much is at stake.
Consider someone who works at a job but pays no tax of any sort. That's right no income tax, no payroll tax for social security, and no medicare tax gets deducted from that person's wages. Is that fair? After all, nearly everyone who works pays at least the payroll tax and the medicare tax. Why should some people be exempt? Or how about someone who operates an enterprise that brings in huge amounts of money but who pays no taxes on the profits? The people of whom I write are those who work "off the books" or who run criminal enterprises. The latest estimates are that there is about $1.4 trillion of this sort of income in America each year. If that income were taxed at just 20%, the treasury would get an additional $2.8 trillion over the next decade. Since the last "deal" on the fiscal cliff raised $660 billion over that same period, we are talking about raising four times the amount from people who are currently cheating on their taxes.
So it is possible to change the law to get these taxes? The first area to consider is the folks who work off the books. Many of these people are illegal aliens who do not have the necessary social security numbers or other papers required to work legally. Were the IRS to focus on such workers and employers who hire these folks, one has to believe that the revenue results would be substantial. The second area to consider are the people who operate criminal activities. Again, if the IRS were to focus on trying to recover back taxes from criminal activities, there should also be a revenue benefit.
There are also a number of tax plans that would necessarily raise taxes from those who now avoid payment. The imposition of a value added tax is perhaps the most well known of these. A shift of the tax burden from corporate profits to value added amounts would spread that tax burden onto imported products and would require those who are avoiding income taxes to pay part of the value added tax. It is a topic that requires a full explanation, which is beyond this post. The point, however, is that it ought to be discussed. The issue of taxation should not be simplified into one where each side just shouts "yes" or "no". Too much is at stake.
No comments:
Post a Comment