To Obama’s credit, we know now what he wants to do: take the money earned by hard-working Americans and give it to someone who hasn’t earned it. All that does is incite more class warfare and give even more power to an already too-powerful federal government.
A much simpler idea that would generate much more wealth across America and actually provide more income to the US Treasury than is already provided through the bloated US Tax Code would be to institute a flat tax. Everyone, regardless of income, would pay a fixed percentage on their gross annual income. If you really want to reform the system, that’s the way to go. For example, at a 10% rate, everyone would pay SOMETHING to the US Treasury. The guy making a million dollars would pay $100,000 to the US Treasury and the guy making $40,000 would pay $4,000. The flat tax would come with no tax credits, no deductions, breaks, etc. If you made the money, you pay the tax.
The benefits to the US Treasury would be tremendous. For starters you could burn the entire US Tax Code since you wouldn’t need it; you could reduce payroll and staff because you wouldn’t need those people to write and interpret the US Tax Code anymore, and you could abolish the IRS and eliminate several additional layers of bureacracy.
In the process, people would keep more of their money up front rather than wait to file their tax returns and hope for a refund (which is nothing more than an interest-free loan to the US Government); it would eliminate class warfare politics that gives breaks to certain classes of people who donate to the politicians; and, it would provide more money to the treasury than is already collected.
Russia instituted a flat tax of 13% in 2001 and greatly increased its tax revenues to the national treasury. Not only that, President Putin lowered the corporate tax rate in Russia from 35% to 24% and further increased revenues to the treasury. According to the Heritage Foundation, Russia’s old tax structure was replaced with a system that gave companies a choice: pay a 6% tax on their gross revenue, or 15% on their profits. Elsewhere around the world, Hong Kong has had a flat tax for some 50 years and has been the fastest growing economy in the world. Meanwhile the United States still has a 35% corporate tax rate and a convoluted federal tax code that is anything but fair and equitable. Talk about putting ourselves at a competitive disadvantage in global markets!
If Mr. Obama and the rest of our elected officials want to truly help our ailing economy and give everyone an equal and fair chance at success (promote the general welfare, as the U.S. Constitution states) they’ll implement a flat tax without preconditions, exceptions or deductions and follow Putin’s example by considerably reducing the corporate tax rate in America.