The progressive federal income tax was an good idea... about ninety years ago.
The progressive federal income tax was an good idea about ninety years ago, but is it still serving us well in a global economy? Right now, all taxes on wage earners and investors in America must be passed on to consumers of American goods and services. That is where the money comes from to run our country. Where the money comes from might just be more important than who pays the taxes.
If a job is outsourced to a worker in another country, our government does not benefit with income taxes or with funds going into Social Security. Imported items have the taxes of the truck drivers and store clerks built into their prices, but no American taxes from the workers that produced the items.
There is enough money out there to save Social Security, Medicare and provide a multitude of social services, but it is in the wrong places. Businesses that are not labor intensive generate little tax revenue. Yet they create huge profits and can pay enormous salaries. Movies, TV, sports, software, CD's and drugs are all in this category. Consider Bill Gates. He has much of his software written in India and has a machine put it on a disk and so far little has gone into American taxes or Social Security.
American businesses would be much more competitive worldwide if they did not have to include the expenses of their workers' taxes, Social Security and corporate income taxes in their prices.
There is a bill, (the FairTax Act of 2007) currently cosponsored by over sixty congressmen, that contains ideas that should interest both liberals and conservatives. These ideas could remedy many of our nation's problems. The bill is touted as a progressive sales tax and would eliminate the income tax and other taxes including Social Security taxes. It is progressive in that every person or family unit receives a monthly check to cover all taxes up to the poverty level. So only non-essentials are taxed. These ideas deserve serious consideration.
A 30% sales tax would force sellers to lower their prices to attract buyers. This would be somewhat offset by lower labor costs and taxes. Imported goods would be taxed as well as our own and revenues would be derived from products produced by outsourced jobs. All industries would then start contributing their share of the costs of our infrastructure, from which they benefit and owe their existence. Even thieves, prostitutes and undocumented workers and visitors to the US would now contribute.
Our government would get its funds off the top. Social Security and Medicare would be saved and maybe even health care could be funded.
An added benefit would be the elimination of the IRS. Imagine, no more tax forms. The tens of thousands of regulations and IRS audits would be no more. Think about the hours and dollars that are now wasted. Our lives would be so much simpler.
Early in our nations history states were not allowed to put tariffs on goods produced in another state so all could enjoy the benefits of free trade. Most states then wisely resorted to sales taxes to receive benefit from the sale of goods purchased in their state. Perhaps it is time, in a global economy, for our nation to do the same.
In our present economic circumstances we should consider these ideas that increase funding from imported items, outsourced jobs and non-labor intensive industries. They may enable us to fund our entitlement programs and needed infrastructure improvements, while enjoying life without the IRS. Does it make any sense at all to tax our own products and not tax things produced elsewhere?
Ralph R. Layman, Sr.