Our Tax Folly

The United States is not taking advantage of many trillions of dollars that it could benefit from...and no, I am not talking about any Government Bailouts, or Foreign Bailouts...in fact, I am suggesting the United States could become a tax haven for most of the world's money by simply dispensing with "income tax".

Some time ago, I thought a different tax system would better represent the people and their interests in the Government. The only problem is, there is really no way to appease all the people and squarely deal with everyone.
I am all for equal treatment...i.e. if you have money, you pay your fair share...if you don't have money, then you still need to pay your share, but "how" becomes an issue...
Our American Entitlement Mentality has lead us into troubled waters along this front.
Currently, things aren't fair at all...
Another Blogger, Dan S., uses an analogy that I have heard before to describe how our current tax system works... the link to his site
Now, I want to illustrate something quickly here...
The Federal Government has a budget. Currently, that Budget is approx. $3.1 TRILLION...
There are 301,139,947 people in the United States, (men, women, and children) which means that our FAIR SHARE is $10,140.76 EACH. (PER YEAR)...now, why it isn't fair for us to simply charge everyone $10,140.76 to pay the budget, I am not sure...
Even if we subtract the unemployed, the total bill per individual is $10,596.40, or less than $1000 a month.

Now, when we look at our tax system, the graduated income tax, we see that we are paying between 10% and 35%. I wish there was an easy way to break this down, but there isn't. We have 4 different filing categories, and they all incorporate different minimum tax amounts, etc...not to mention that the Government also collects all kinds of other taxes; gas tax, death tax, sales tax, investment tax, business tax...and then there are the fees for everything (supposedly for paying for those services - except, they are already included in the budget)...
So, since there is no easy way to calculate our total effect on the budget and tax structure, we will leave it at the analogy mentioned above (which illustrates why people got all up in arms over the Bush tax credit ...)

So, how is it fair that 20% of the population pays for 80% of the budget? Is this why we have so many companies moving their manufacturing and investments OUT of the USA?
Our system was originally supposed to fund the Federal Government by imposing tariffs, not an income tax. According to Federal Law, and the IRS's own Rules and Regulations (IRSC) an Income Tax is illegal. Income is a representation of your labor - put in 8 hours of work for $100...$100 = 8 hours labor. The Code/Law states that tax is to be collected on monies BEYOND "income"...i.e. foreign investments, etc. (if you don't believe me, the internet is full of resources with this information)...
So, what Free Trade (etc) has done is forced you to pay an income tax (the difference is, letting foreign companies, individuals, businesses pay a greater share of our Government's expenses, not the United States' People)

So, what can we do to make it fair? Well, as I mentioned above...the only way to make it fair (or even close) is to charge everyone directly for their "fair share" of the budget. Now the socialists will say that we cannot expect the poor to pay as much as the rich, because they don't have as much money...
Well, this is where "fair" takes a left turn, and goes out the window. SO we search for other solutions, like a Flat Tax.
Well, a Flat Tax doesn't work either. Sad but true. If we reduce the burden to a percentage of our "fair share" then we have to take a look at (more simplified data) the average income of the average person in the United States...
Since there is just too much math and other factors involved here, we will just "run with it" which will still give us an idea of what we are looking at...
The average Income for a US Household is $46,326
Anyway, this means that every household must pay (in my estimation) about 25% to be "fair"...
This means that those paying 10% will pay more, and those paying 35% will pay less.
However, this still isn't "fair" because now, even more people are unable to pay the tax, not just the unemployed...so, how do we compensate for them?

A new org has come out with an Idea that I believe deserves further study...basically a national "sales tax",
This puts the tax burden on those that purchase...purchase more, pay more...
People that have little money are usually only buying the necessities, so their burden will be light...while those that have money buy more and have a bigger burden of the tax (similar to the current system, except no one is exempt...)
Unfortunately, there isn't a real way to measure who spends how much, and where...but FairTax.org has done a great job and spent the money and done the legwork to devise a method of collecting only 23% in sales tax...while this sounds high...but it is still smaller than the 25% in the flat rate, and only on goods purchased. SO those receiving types of benefits (food and clothing) aren't spending, and aren't paying the tax.

Just the ability to save $280 BILLION in government spending makes me want to try this system...

This basically outlines the world of hurt we are in...we tax labor (illegal) instead of taxing purchases (legal) and in so doing, have the opportunity to give people more money to spend, and collect more in taxes...

And for all you bleeding heart liberals, you can still credit back the "poor" by making this tax 24% (or whatever) and returning the total tax collected to those that can prove they spent the money...bank account statements, receipts, etc.

Now, my original statement was, "we are not taking advantage of trillions of dollars..." and this is true...
If we didn't charge an income tax, then we would have more people investing and storing their money in US Banks, to gain the greater investment (tax free)...THIS is the biggest reason people move their money offshore, and THIS is why we must change the way we do things...
Smart people know how to use their money, WISE people know how to use other people's money...