10 Problems With the Income Tax
With each and every Tax Day, April 15 is the time of year when the anti-tax brigade starts the chant: Kill the tax code. Leading the rally is Ken Hoagland, who is chairman of the Online Tax Revolt and who just authored The FairTax Solution: Financial Justice for All Americans.
His idea is to trade income taxes for consumption taxes.
Fix taxes, he tells us, "or rip it out by the roots and replace it." Here's his 10 biggest complaints with the income tax:
1. It's too complicated.
Even a degree in rocket science won't save you from 67,500 pages of all but indecipherable tax code regulations. It confuses the
2. It's too expensive.
The complexity of the code costs a lot of money--more than
3. It's unfair.
Income is commonly double and triple taxed, married people pay higher rates than singles living together and
4. It damages the economy.
Income taxes are levied on work, savings, and investments. In essence, the government grows by taking money from what makes the economy grow. Such a system retards capital formation, job growth, and a higher savings rate and, as such, stymies economic growth or recovery.
5. It's been corrupted.
More than a billion dollars a year is spent lobbying the tax code.
6. It undermines American companies.
Foreign governments often forgo domestic taxes on products for sale overseas. American companies don't get that break and carry the second highest corporate tax rate in the world, employee FICA taxes, and significant tax compliance costs as the cost of doing business here. It puts the "Made in America" label at a significant producer price disadvantage and drives jobs overseas.
7. It hides the cost of government.
Taxes are withheld from paychecks, hiding from plain sight the cost of federal spending and its relationship to our own earnings. For many Americans, federal spending mistakenly seems like "free money." The resulting tenuous connection between personal wealth and government profligacy allows politicians to promise more and more from the Treasury to win elections and satisfy their own political ambitions. That's destructive.
8. It's intrusive. Once upon a time it was no one's business how much money we made or how we spent it. Today it is the right and duty of the federal government to track every penny we earn, save, or spend. It has created a system where every business decision is weighed against tax consequences and where pastors are told what they can and can't say from the pulpit to keep their non-profit status.
9. It hurts consumers and workers.
Business taxes don't come out of CEO's personal accounts but are paid for by consumers when taxes are "embedded" in wholesale and retail prices. When competition with foreign producers won't allow a higher price point to cover taxes, employee's wages and benefits take the hit.
10. It makes us into modern day serfs.
We get what's left over in our paychecks after the federal government has taken its share. That means the fruits of our labors belong first to our government. That's backwards and not at all what the Founding Father's had in mind.
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Personal Finance - 10 Problems With the Income Tax
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