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 Looking for Fair Taxes

Colt Roan
Contributing Writer

 
"Where there is an income tax, the just man will pay more, and the unjust less on the same amount of income."
  Plato, "The Republic"


  The current tax system gets a lot of criticism. People rail against it and deem it too long, complicated and strenuous. Though I'd agree with all these summaries, the real problem lies with the very idea of taxation on income.

   The Constitution says in Article I Section 9: "No capitation, or other direct, tax shall be laid unless Proportion to the Census or Enumeration herein before directed to be taken." Now if this were the Founding Fathers original intent, why have we strayed so? I guess it is easier to show how right they were, by giving examples of how detrimental the income tax and the likes are than it would be to show how it ended up the way it is today. It will be, likewise, very easy to give an alternative.

   The 16th Amendment to the Constitution: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

   From this amendment stems the Social Security tax, the Medicare tax, corporate income taxes, the death tax, the self-employment tax, the alternative minimum tax, the gift tax, the value added tax and the capital gains tax. What are we not taxed on? The framers thought is was important enough not to tax the people to death, that they put in the very charter of our nation, a mandate strictly prohibiting such exhaustive taxation.

   Karl Marx wrote in "The Communist Manifesto" 10 points about a perfect communistic society; No. 2 on that list was "a heavy progressive or graduated income tax." I'd love to go into to the history of the income tax and how by fallacy it is now a permanent part of our society. However, I must limit myself to expressing how uneconomical and draining it is to our country. Let it suffice the historian to say this, the pre-16th Amendment income tax policies were only implemented during times of war, class-hatred and were quickly disseminated by the people.

   Why the income tax, and others, is detrimental:

   1. The Tax Foundation has estimated the high costs of complying with our sophisticated tax code. In 2002, complying with the code cost Americans $5.8 billion.

   2. It is so complicated. According to "The Cost of Compliance" by Scott Moody, who is a senior economist of the Tax Foundation, in 1955 there were around 400,000 words in our tax code. In 2002 that number skyrocketed to just over 1.5 million.

   3. The shadow economy: Economists have deemed this the system of business that avoids paying taxes. Servers in restaurants not being honest with tips, paying cash for home repairs, venders on the side of the rode, etc. All this adds to around 10 percent of America's GDP.

   4. The underground economy: Economists deem this as all the illegal activity for profit that goes untaxed. Drugs, prostitution, child pornography and many other illegal activities that skip our economy. The former commissioner of the IRS, Charles Rossotti, estimated 1.5 trillion tax dollars were avoided in 1998. This does NOT including undeclared earnings or drug trafficking. This was estimated by Eric Schlosser in his book "Reefer Madness" to exceed $1 trillion dollars. (Interesting fact: the government calls what you are not taxed, a tax expenditure.) How do you like that?

   5. Legally avoiding taxes: In 2000, the Merrill Lynch and Gemini Consulting study "World Wealth Report" notes a third of the world's high-net-worth individual's money is held offshore, safely away from the United States economy. Know how much this is? 11 TRILLION DOLLARS.

   So, why is it that these offshore financial centers, or OFCs, go to other countries? To avoid the high cost of staying here. See, there is a myth that taxing big business is beneficial to the economy and therefore the average Joe. This is not so.

   Let's say that some students from the University of Arkansas at Monticello got together and started a college service organization that became extremely successful. Let's imagine making $20 million (hey, we think big OK). Out of that $20 million, $17 million is what we owe for material, wages, shipments and so on. So we are now left with around $3 million. We know that this income is going to be taxed, so, how do we insure we keep the profit next year? We either up the prices of our service, cut back benefits of employees, lay off workers, down the price of our shares or go to another country to escape this dreadful taxation. All of these scenarios hurt the average American.

   The average citizen will end up paying more for the service, because we want to keep what we earned. This also, obviously hurts the economy, which in turn effects social welfare, Medicare and Medicaid.

   These are just a few examples of the drainage the current tax system has on our economy and society.

   So, what can we do? There are many tax plans circulating around Washington. One that is gaining more and more attention is the FairTax plan. This would completely replace, not add to, the federal income tax, along with the many other mentioned at the beginning of this article. The FairTax plan, supported by Congressman John Linder and others, would place a 20-23 percent national sales tax on retail goods. I've not the space to describe in detail the benefits of this plan, the purpose of this article is to inform the readers of how disgusting the income tax is, and how terrible it is for our nation's people. I'd love to write on the FairTax Plan and will at the beckoning of any readers.

   By replacing the income tax with the F.T.P., all of the people who have been escaping payment will be taxed. How, you might ask? We Americans like to buy things. The rich who avoid paying will go and buy yachts, the drug dealers will have to pay for their Gucci and Prada, the pimps still have to by their suits and feather hats. All these goods will be taxed. Another main point is this, the FairTax plan is what it says it is, fair. No matter how rich or poor you are, you will be taxed the same amount. A person who has made something of themselves, got an education, and worked hard will not be punished for all his efforts by being taxed to death.

   Other advantages of FairTax plan:

  • Savings accounts are not taxed.
  • Offshore companies will come back to America, putting trillions of dollars into the economy.
  • Complying to the tax code will be extinct, bringing back billions of dollars.
  • The I.R.S. will no longer be needed.
   Here is the one of the biggest advantages for some who think this plan is not fair. Instead of a yearly tax return, every family will get a monthly "prebate" based on the national poverty rate. Whatever the cost is of having the bare necessities provided will be given to every family, regardless of income. A family of two would receive somewhere around $400. No one will have to buy toothpaste, toilet paper, shampoo and whatever else is needed for living above poverty.

   Summary of benefits

   You get 100 percent of your hard earned money. You get to decide when you want to pay your taxes. The prebate. Complying costs gone. Savings accounts such as I.R.A.s will be tax free. Education is not taxed. Illegal business will finally be forced to pay.

  
   Now, let me end by stating I am a middle American. I am by no means among the wealthy of this nation. I work, go to school and pay for my own living. So, in no way should an argument be made that this is unfair to the low or middle class families. Who else would I want to help or inform or look out for? There is so much more information on this that I would continue on if the readers see fit. It is something worthy of discussion, especially during tax season.

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ŠThe Voice 2006
Revised
09/17/2007 02:10:11 PM— http://www.uamont.edu/Organizations/TheVoice/3_20/taxes.htm