As we are a country of many views and thoughts, not many people fall simply within Republican or Democrat camps.  A small portion of the electorate adhere to a hybrid version that I and others dub as conservatarian.  This is a combination of conservative and libertarian viewpoints.

Abortion – Abortion is the taking of a life.  Human rights should apply to everyone, even the unborn. 

Crime and Justice – Protect citizens through effective law enforcement.  Penalize those individuals who do not follow the rule of law with common sense sentencing and limited parole.

Self-Defense – The ability to defend yourself, your property, and your family.

Environmental Issues – The environment should be protected and preserved but not at the expense of basic human liberties. 

Taxes – Replace the federal income and payroll taxes with a fair tax.  Stop the over taxation of the producers and under taxation of non-producers.

Energy and Resources – The United States should explore its own natural resources free from over reaching environmental agencies and left-wing environmental groups.

Financial Markets – The government should get out of the way of the financial markets and allow them to function properly.  Oversight should be utilized but without a full-on intrusion from the Fed.

Compulsory Retirement System – The forced bankrupt governmental retirement system (Social Security) should be abolished in favor of a voluntary method of individual contributions.

Health Care – Health care should not be run by the government in any realm.   

National Defense – The military should be available to first protect citizens against domestic threats and then against international threats.

Domestic Security – The United States should first protect her citizens and then the rest of the world.  Threats to domestic security should be handled swiftly and with minimal bureaucracy.

Illegal Immigration – Illegal immigrants should be deported out of the United States.  Businesses that employ illegal immigrants should suffer steep and progressive fines.

Legal Immigration – Individuals should have the opportunity to continue to become citizens of the United States without exorbitant red tape and expense.

Discrimination Issues – Discrimination in any form is anti-American.  Everyone should be equally protected regardless of sex, wealth, race, color, creed, age, national origin, or sexual orientation, but no individual group should have more protection than another.

Many of these ideals have come through years of thoughtful study with assistance from various groups and organizations.

Download a pdf file of this post here.

Of course, this is just my opinion.

Rob’s Rant

For years I have argued that there needs to be a flat tax in the US….of say 10-15% with NO deductions or loopholes for the wealthy to take advantage of in the year end accounting…..well it has been a long uphill climb to say the least.  I also like a land value tax, first put forth by economist Henry George, yet another uphill stumble….that is for another day though…(if one wants more info in the LVT go to my page on the subject)

For now let us talk about the flat tax, the Conservative Party candidate for the state of New York, Hoffman has thrown it into the campaign in the state election:

The U.S. currently uses a progressive tax system, under which people who earn more money pay a greater percentage of their total income in taxes. A flat tax would have every wage earner pay the same percentage of their income in taxes – no matter how much or how little they earn. The flat tax would also eliminate deductions that are allowed under the current laws.

Supporters of a flat tax argue that such a tax is fairer to everyone and would result in many people actually paying less in taxes than they do now. Because a flat tax is simple, more people would pay their taxes and the cost of overseeing the income tax system would decrease, they claim.

Opponents argue that a flat tax places a disproportionate burden on lower- and middle-income wage earners.

Flat tax plans have been brought forth periodically in recent years, with little success. Democrat Jerry Brown included a flat tax proposal in his platform during his 1992 presidential bid. Republican Steve Forbes proposed a similar plan during his presidential bid four years later. Republican Richard Armey, who served as majority leader in the House of Representatives from 1995 to 2003, championed the idea in the House and has continued to press the proposal since leaving office.

Now there is an idea, but the is one thing that immediately turned me off the plan……and that thing is Richard Armey (Dick)…..one of the sponsors of the Tea Party theater….and a lobbyist that is too far right for the common good….

Dick Armey and I have had little consensus on the subject of governance and now that he thinks it is a good idea…makes me re-think my acceptance of the idea…..

Government is a necessary evil.  We need to provide for things such as the military which protects us all.  For that, we need to pay for it.  How?  Of course the tax.

Wether is suprises you or now, I’m not an anarchist.  I believe in a government.  But, I believe in one that keeps us playing nice with each other.  I simply believe that the extent of government should be extremely limited.

There are three ideas of taxation that we have floating around.  The Income Tax, The Flat Tax and The Fair Tax.  Let’s take a look at each one of these.

The Income Tax is what we have now.  Basically, you pay a certain percentage of your wages back to the government to fund it.  The more you make, the more you pay based on a tier system.

The Flat Tax is similar to the Income Tax, but the difference is that all people pay the same amount out of their income.

The Fair Tax removes the direct tax on individual incomes  and establishes a higher tax on traded and bought items.

Yes, I know these are broad generalizations of each tax, but I think it boils it down to something to chat about.

I do want to take a quick look some other taxes that we pay.  It’s frankly insane how taxed we are.

Capital Gains Tax

Estate Tax

Property Tax

Social Security

Medicaid/Medicare

Sales Tax

Gas Tax

I know I missed quite a few, I’m probably not even close to the giving a full list of the charges that are taken from us.

Out of my paycheck, I lose about 30% right off the top.  Another hundred or so for my benefits such as health insurance.  After that, I’m paying about 51 cents per gallon on gas.  If I cash out a stock, I pay for that.  If I own property, I pay for that.  I buy something at the store and I pay for that.

I estimate that about 40% of my check goes to pay for taxes.  And, if I make more money, I’m going to pay more?  Why do I want to succeed if I have to pay more?   I know Bill is going to tell me that people naturally want to succeed.  I disagree.  People are naturally lazy.  Like all animals, we look for the easy way out unless we are motivated by fear.  I fear hunger, therefore I work.  I fear poverty, therefore I succeed.  I fear being hurt, therefore I don’t do things that hurt me.  There are very few exceptions to the rule.

And what are we getting for that tax money that we shell out?  Welfare?  Social Security (Which will be bankrupt by the time I can collect)?  Medicare/Medicaid?  Hawaiian fish preserves?  I pay taxes so my government ensures that I can live my life, no more, no less.  I don’t need any of the above.  None of them.  Welfare?  What reason do people on welfare have to get off of it?  A need to succeed?  No, they simply fear the stigma of being on Welfare.

I’ve always thought it was a humorous contradiction of the Progressives when they assert the policy of equality of all men and women.  Other than being untrue, it makes the assumption that we all have a stake in this nation.  An equal stake.  The contradiction comes when I’m paying more for my share of the services provided than another American.  Why?  Because I can afford it?  Sure, a rich man can afford to be robbed weekly than a poor person, but does that make it right?

NO!  If I’m equal to the person on Welfare, then we should both be contributing the system the same amount.  We’re all equal after all.

A little secret here.  Equality is a myth.  We don’t need equality, we need respect and appreciation of our differences.  Those differences are what make America great.  We aren’t a nation of equals, we’re a nation of diverse backgrounds and diverse opinions.  Together we contribute to the idea of America.

America was founded on individuality.  Respect for the rights of each and every individual to express himself and do what he will.    They had gotten sick of England running a controlling presence.  Taxation without representation.  I also seem to remember a tea party in Boston.  If I recall correctly it was over the exorbitant tax on tea.

The income tax was first, and briefly, introduced in 1862 to pay for the Civil War.  After the war, in about 1867, it was repealled as not needed.  It remained that way until the presidency of Wodrow Wilson brought it back as a way to increase taxes with fewer complaints from the taxed.  After all, it came out directly from the tax, so most people don’t connect it with how much they got paid.  It’s a crime.  To take from me, without my consent, and spend it on items that don’t benefit me is theft.  This distribution of wealth that the current administration seems so hell-bent on pushing through.

The flat tax is a modification on the income tax.  Unlike the income tax, the flat tax charges a set, “Flat”, rate on everybody’s income.  To me, it’s the same idea, just another way of doing things.

I prefer the Fair tax.  The beauty of it is the simplicity.  No 1040-whatthehells to fill out on taxday.  No “secret” money removed from my pocket and the mouths of my family.  I buy the items I want and support things that benefit me and mine.  A fair tax would raise the tax on items that we buy.  Say, a 21% tax. 

Ok, let me scrape you off the ceiling.  Yes I said a 21 or 23% tax on your car, your groceries or rent.  Why not?  Because we don’t look at the bigger picture.  You are already paying about 40% in taxes, 90% of them you don’t even notice because it’s out of your wages before you get the check.

It’s a fair tax because EVERYBODY pays that tax.  Everybody has to buy groceries.  Even Illegal Immigrants who get paid in cache.  How about the druglords making a killing (no pun intended) on the side selling crack?  The beauty of it is that everybody has to buy something.

“But Michael, It’s regressive.”

I think that’s a tad bit of a misnomer.  Cutting an individual’s taxes from 40% to a possible 25% puts money in the hands of those who do need it.  It’s a cut in thier taxes.  Besides, who pays for the high ticket items?  A family living off of $3,000 a month?  Actually it’s your CEOs buying boats and mansions and nice cars.  Think about it.  A 25% tax on a 5 million dollar house.that’s about 125,000 dollars in taxes.

Life.

Liberty.

The Pursuit of Happiness.

These aren’t simply the rights that are granted to us by God.  They are also responsibilities.  You hear me talk about Me and mine all the time.  For some of you, that’s  a cold and callous way to look at the world.  Rather selfish, if you were to ask some.  But, I would argue it’s a fact. 

The missus and I are about $500 dollars or so away from the next tax bracket.  Why should we make more money?  $4,999 isn’t much different from $5,000.  But in the latter, I’ve just increased the taxes that I “owe” to a fish in Hawaii that I’ll never see.  Or an interstate that I’ll never drive.

If I have to chose between those “General Good” items and my family’s comfort, I know which one I’m choosing.   It’s not going to be a tough decision when I elect to put food on my table vs food on somebody else’s table.

We’re individuals.  We live in a country that was intended to be a nation of individuals.  My gains are my gains.  My money should go to items that I need.  We have a 1998 model Nissan that still runs like a dream.  But, I know I’m going to have to buy a new car as soon as we pay the other off.  I can’t right now.  30% of my income is going to something I’ll never benefit from.  Out of a $2000 paycheck, $600 can buy me quite a few items that I need.  I buy a car, Ford gets the profits and I get what I need.  It’s a very equitable situation.

I could go on, but I’ve already exceeded the length I want to get to.  So I’ll close with one last thought.  I’m not an evil person.  I care about my fellow Americans just as much as the next person.  But, in my life, I have to set priorities.  You know where mine lay.  I’d like to say that priority, when made by the idividual, is the true sense of America.

God Bless

Flat tax has yet again been touted as the path to glory by the country’s “economic policy advisors” at the Treasury.

John Key has “ruled it out“. Kind of like he ruled out cancelling their 2009 tax cuts, and how he and Bill keep rulling out a capital gains tax.

But hang on, they did cancel their 2009 tax cuts and its looking increasingly likely that a raise in GST to 15% and some kind of capital gains tax or lands tax might well be introduced in order to fund dropping the top rate of tax to 30% (which is National’s medium term goal).

And now my brain hurts.  In politics speak, does “ruling something out” really mean that it’s ruled out or does it simply mean “we are running it up the flagpole for a bit of free focus-grouping and to start getting people used to the idea”?

Perhaps we must demand a “no ifs, no buts, no maybes” promise over this one?

Meanwhile, Labour opposes flat tax: “Labour deputy leader Annette King said her party was opposed to a flat tax because it raised questions about what other taxes would have to be raised to cover expenses.”

Is that really Labour’s key line on flat tax or is just what NZPA chose to run? 

No Right Turn’s reaction is apt: ”If you like, you can imagine me theatrically examining the statement to see whether there is anything more, but it doesn’t work very well with a computer screen”

Annette does, however, rightly ask: “Why are they wasting taxpayers’ money with Treasury officers working away on policies they don’t intend to implement and they rule out every time they are announced?”

It’s not that Treasury is working on unlikely-to-ever-be-implemented policy ideas, because that’s OK – it’s partly the job of government policy advisers to do such things.

The point that should concern us, however, is the frequency with which Treasury, the tax working group and others central to advising the government, are announcing these “ideas”.  

It’s a warning.  We are being warmed up, cajoled if you like.

Jobs. Unless things drastically change, “jobs” will become the defining word for both the 2010 and the 2012 campaign season — and it should, because we are approaching a 10% unemployment rate. It is clear that if Democrats want to stabilize the economy and hang onto their control of government, they’re going to have to create an authentic jobs stimulus plan and they’re going to have to do it quickly. The best way to do that is to cut taxes. At least, some of them.

Meanwhile, though, Speaker of the House Nancy Pelosi is flirting with the idea of a value-added tax (VAT) that basically amounts to a sales tax. It’s a tax that is imposed at each level of production, which can and will be passed from the dreaded corporation to the average Joe in one of four ways (or a combination): higher prices; employee pay and benefit cuts; unemployment; or shipping jobs — maybe even whole corporations — overseas. Obviously, none of these options are good for the working class. There can be no doubt that a value-added tax will contribute to both underemployment and unemployment, which should make it completely toxic for Democrats right now. The fact that the Speaker is flirting with the idea is worrisome, to say the least.

Not only should Democrats repudiate a value-added tax, but they should seriously consider slashing the corporate tax rate. Yes, I know, corporations are eeeeeevil — I’ve thought so and said so many times in the past. Occasions upon which corporations have behaved irresponsibly and contributed to social ills are too numerous to count. But no matter how much disdain we might harbor for corporations, we have to acknowledge one plain fact: Corporations provide jobs. Given that our economic crisis is increasingly centered on underemployment and unemployment, we need them to provide more jobs.

Cutting the corporate tax rate could give them incentive to do just that. Of course, any cut in corporate tax rates needs to be accompanied by strict regulations that will prevent the money corporations are keeping from going into wages and bonuses for CEOs and top executives. We need more jobs, not better paid administrators. But if you slash the corporate tax rate and ensure that this money does not go into the pockets of executives, that gives corporations incentive to a) stop shipping jobs overseas; and b) provide more jobs here. That’s the kind of stimulus we need right now.

Of course the revenue that would be lost has to come from somewhere, unless you’re a Republican and would like to kill the government — and by kill the government, I mean killing programs like Social Security, Medicare, Medicaid, etc. So where should the revenue lost to corporate tax cuts come from?

For starters, Congress should immediately revert capital gains tax rates to pre-Bush levels. The gradual reduction of the estate tax should also cease immediately and the rate should be increased to 55% (which is scheduled to occur in 2011 anyway). Personal income tax rates for those making more than $250,000 per year should be significantly increased.

While aimed at individuals, these taxes actually go after those who commit the social offenses corporate taxation is directed against. The capital gains tax disincentivizes the kind of gambling with our economy that got us into the financial mess we’re in now. The estate tax provides the meritocracy that Republicans claim to have a love affair with by making it more difficult for wealthy people to simply inherit entire fortunes without doing any work. When Paris Hilton reproduces, do you want her children to work for a living or just keep inheriting the fortune she inherited from her parents? The personal income tax puts the wealthiest 10% who control half of our national wealth on notice that their greater wealth requires greater responsibility. As an added bonus, none of these taxes disincentivize employment or incentivize the outsourcing of jobs.

There is one big problem with this proposal: Our politicians are cowards. Yes, it would make more sense to increase the capital gains tax, the estate tax, and personal income taxes for the wealthiest few, while slashing corporate taxes. But corporate taxes are easy because the public doesn’t like corporations. Meanwhile, increasing personal taxes is difficult, because the general public always fears that their taxes will be increased even if such increases are only targeted at the wealthiest few. So rather than take the road less traveled and make the case for a controversial tax plan like this to the public, our leaders would rather keep corporate tax rates where they are, possibly add a value-added tax, and let the wealthiest few get away with paying little from their own personal fortunes.

German Chancellor Angela Merkel said she’ll press ahead with tax cuts and labor-market deregulation after winning re-election with enough support to govern with the pro-business Free Democrats.

With Germany struggling to recover from the deepest economic slump since World War II, voters spurned plans by Merkel’s Social Democratic challenger to raise taxes on top earners. Frank-Walter Steinmeier’s SPD had its worst postwar result in what he called a “bitter day” after sharing power with Merkel for four years and governing for the previous seven.

This moron thinks that high taxes on the wealth creators will help an economy-dumb thinking, and something our government officials need to take heed.

“There’s a clear sentiment in favor of economic changes, especially on income taxes,” Tilman Mayer, head of the Bonn- based Institute for Political Science, said in an interview. “Voters have turned their back on grand coalition-style compromise politics.”

This is a clear signal that people want decisive moves not compromises.

Merkel, 55, said on ARD television that talks on forming a coalition with the Free Democrats will proceed quickly, and her focus will be on creating jobs in Europe’s biggest economy (hello anyone in washington listening?). She dismissed the FDP’s call for a complete overhaul of the tax system, saying she wanted to be seen as the “chancellor of all Germans” and won’t let her new junior partner dictate policy.

During the campaign, she pledged to pursue deregulation, extend the life of nuclear-power plants (hello listing again???) and introduce across- the-board tax cuts (hello, tax cuts stimulate ob creation) of 15 billion euros ($22 billion).

The result of yesterday’s election will “modestly enhance the long-run growth potential of the country,” Holger Schmieding, chief European economist at Bank of America-Merrill Lynch in London, said in a phone interview. “The government has a mandate, not for dramatic change, not for a Thatcherite revolution, but it is a mandate for some supply-side reforms.”

The euro may advance and bunds fall on the election result. The currency has climbed 5 percent against the dollar this year on speculation the euro region may be emerging from recession. Uto Baader, chief executive officer of Baader Bank AG, based in Unterschleissheim, said before the election that “the market will jump” with a Merkel-FDP government.

Merkel’s Christian Democrats and their Bavarian sister party, the Christian Social Union, won 33.8 percent in the elections to the 622-seat lower house of parliament and the Free Democrats 14.6 percent, according to provisional complete results. The Social Democrats had 23 percent, a drop of 11.2 percentage points from 2005, the biggest decline for any party in postwar history. The anti-capitalist (how do these moron think that people will be able to make a living) Left Party (party of NUTS) won 11.9 percent and the Greens 10.7 percent.

Voter turnout was 72.5 percent, a record low, compare that to the USA where basically soon we will have less than half the people registered to vote actually vote.

While CDU-FDP won a 42-seat majority, Merkel also steered her party to its worst result in modern Germany’s 60-year history. Merkel and Steinmeier’s two blocs saw their support plummet to 57 percent, compared with a combined 69 percent in 2005 and 77 percent in 2002. That is correct, people want decisive moves, they want to work, and they do not want to pay hig taxes to pay for those that do not work.

Guido Westerwelle’s FDP recorded its best-ever result, putting it in position to push its agenda.

Merkel pledged to cut the lowest tax rate to 12 percent from 14 percent and raise the threshold for the top rate to 60,000 euros from 52,000 euros. The Free Democrats want to replace the progressive income-tax system and its exemptions with just three brackets: 10 percent, 25 percent and 35 percent. That makes sense but it is still progressive, why not a FLAT tax at 20%?????

“Merkel can’t expect her coalition partner to slot into its historic role as the junior mascot,” Hans-Juergen Hoffmann, managing director of Berlin-based polling company Psephos, said in an interview. “The FDP made brash promises to voters to push economic growth, above all to cut taxes, and knows it will be measured by its resolve to see them through. Merkel could be in for a bumpy ride.”

Germany, the world’s biggest exporter, was worse hit than other Group of Seven economies as the global recession hurt foreign sales of Munich-based Siemens AG machinery and Wolfsburg-based Volkswagen AG cars.

Net new borrowing is forecast to almost double next year to 86.1 billion euros from a record 47.6 billion euros this year ( compare that to 1.4 billion euros borrowing equivalent by the USA), the government budget shows, prompting Finance Minister Peer Steinbrueck, a deputy leader of the Social Democrats, to reject tax cuts as “smoke and mirrors.” The Free Democrats may now control the Finance Ministry after the Social Democrats’ defeat.

“I feel very confident that a tax reform will be coming,” Fred Irwin, president of the American Chamber of Commerce in Germany, said in an interview. “With lower taxes and less bureaucracy, the economy will go up.” Hello, message to Washington…!!!!!!

Westerwelle, 47, who may replace Steinmeier as vice chancellor and foreign minister, said on ARD that the Free Democrats “now expect to deliver, step by step, on what we promised voters.”

Foreign policy is not expected to change significantly, analysts say. Westerwelle, an attorney, supports strong trans- Atlantic relations and advocates nuclear disarmament. He backs NATO’s military engagement in Afghanistan, where Germany has 4,200 troops. The FDP wants to abolish the draft and shift to an all-professional military.

Merkel and Westerwelle favor extending the lifespan of nuclear plants by as many as 15 years, overturning a law negotiated during former Chancellor Gerhard Schroeder’s SPD-led government with the Greens that will shut them by about 2021. Can they get any more stupid…how will they generate power otherwise? Suggested is gerbils running in a cage in everyone’s homes!

At stake are stations run by Dusseldorf-based E.ON AG, Karlsruhe-based EnBW Energie Baden-Wuerttemberg AG, RWE AG of Essen and Sweden’s Vattenfall AB that generated 23 percent of Germany’s electricity last year. Polls consistently show Germans opposed to an extension of nuclear power.

“The new coalition will almost certainly now seek to extend the life-cycle of the younger atomic plants,” said Claudia Kemfert, an analyst at the Berlin-based DIW economic institute. “The nuclear bogey plainly didn’t help the SPD, for it played no role in this election.”

This thing we call health care and the need to redefine is just plain hooey! All we need to do is just redefine ONE ENTITY in the health care business.

The hospital!

That’s right! The hospital. If we define that one place and how it bills etc. We can fix this thing we call health care.

Right now we have the “haves” and the “have nots”.

The “haves” has insurance and pay for it. The “haves” have their doctors etc.

The “have nots” has no insurance. Nor pay for it.

All we need to do is change the definition of the hospital. All hospitals become “non profit” kinda. All “have nots” go to the hospital clinics for health care. They signup as not having insurance. All haves and have nots pay the same rates for things… NO $9.00 aspirins or $15.00 glass of water. We pay real prices. All “haves” has insurance. Nothing changes. The insurance pays the bills.

The difference! Hospitals works on a standard percentage upcharge of each item. At the end of the year the hospitals total up their expense vs. their income. The hospitals would be guaranteed a percentage of income at the end of the year. The House of Representatives would pay the bill through taxation. Everyone is happy. The House/Senate gets to set the overall profit for health care. The haves get their insurance. The have nots get their hospitalization. Health Care gets their profit for research.

It can’t be any more simple!

Temos ouvido, nos últimos tempos, muitas vozes a defenderem a simplificação fiscal. O nosso sistema fiscal é complexo, o que incentiva uma maior fuga aos impostos ao mesmo tempo que dificulta a sua fiscalização. Os nossos impostos, mas particularmente o IRS, estão repletos de regras, isenções, benefícios, excepções, e tudo em dose elevada. Os nossos códigos fiscais são, muitas vezes, ininterpretáveis e contêm artigos que quase se contrariam uns aos outros.

Da parte dos políticos aspirantes à governação já se ouviu um pouco de tudo: redução do número de escalões; eliminação de alguns benefícios fiscais e das deduções à colecta existentes; aumento do número de escalões de IRS, principalmente para as classes mais ricas ou ainda a introdução de um modelo de imposto assente nas flat tax, isto pronunciando apenas algumas das propostas relacionadas com o IRS.

Em qualquer uma das propostas acima referidas o objectivo é claro: simplificação fiscal. A simplificação fiscal produz mais justiça social. Um sistema fiscal que não permita a fiscalização e examinação é injusto e acrescenta ainda mais desigualdades às já existentes.  

Quando se pretende uma maior simplificação fiscal, será impossível não falar nas flat tax. Um sistema baseado numa taxa única poderia simplificar o sistema fiscal, melhorando a competitividade fiscal e atraindo maior investimento. As empresas que conhecem o nosso sistema fiscal, demasiado burocrático e com muitas excepções, não se mostram muito receptivas a investirem em Portugal. Pelo contrário, países em franco crescimento como a Eslováquia ou a República Checa utilizam as flat tax como forma de criar uma maior competitividade fiscal. Apesar de não ser possível atribuir os resultados apenas às flat tax, a verdade é que os números falam por si.

Não se pode afirmar que a elementar introdução de flat tax venha, por si só, a simplificar o sistema fiscal. O que complica qualquer sistema fiscal são as burocracias (que são improdutivas e demasiado onerosas), as deduções e as excepções de circunstância. Mesmo um sistema fiscal assente na progressividade, como é caso no nosso IRS, caso se defenda que é mais justo, poder-se-á transformar num bom sistema fiscal, desde que se elimine a complexidade.

One of the biggest problems with federal taxes is that not everyone pays them. Radical statement I know, but follow me on this. According to www.taxfoundation.org …… 32% of all people filing a tax return pay no federal taxes at all. And this percentage is growing quickly. This means that roughly 1/3rd of all people who file, which is pretty close to 1/3rd of all people eligible to vote have no stake in what Washington is doing with our money, unless you count wanting some of that money spent on them.

It is no wonder that our politicians are increasingly able to get away with spending tax money in un-constitutional ways that do not make sense.  They have morphed the tax code such that it almost guarentees a voting bloc.

I would like to see our tax code radically reformed such that every single adult earning money paid taxes. Either through a flat tax or the Fair tax. This would remove this deep divide in our country between those who actually pay some taxes and those who don’t. More people would watch how the money was spent. Everyone would notice if the tax rate went up.

Now before you think I’m nuts, remember that I am also in favor of much lower taxes and smaller, constitutional government. So combine that with my tax thoughts.

I really like the Fair Tax…. except that to implement it properly would mean that you would have to repeal the 16th amendment and implement the Fair Tax all at the same time. I don’t trust Washinton enough to get a large plan implemented in full. If they only implemented part of it we’d end up with a National sales tax AND personal federal income tax.

If they did the Fair tax right, not only would we have a much fairer tax that everyone participated in, but, because it is a sales tax we would have a great increase in our privacy, because you would no longer have to file lots of personal info with the IRS.

A couple of weeks ago I came across an op-ed piece from Charles Krauthammer in the Washington Post entitled “Health Care Reform – A Better Plan.” The article began with this amazing paragraph:

In 1986, Ronald Reagan and Bill Bradley created a legislative miracle. They fashioned a tax reform that stripped loopholes, political favors, payoffs, patronage and other corruptions out of the tax system. With the resulting savings, they lowered tax rates across the board. Those reductions, combined with the elimination of the enormous inefficiencies and perverse incentives that go into tax sheltering, helped propel a 20-year economic boom.

While this super-hyperbolic statement is of course only part of the story, the Tax Reform Act of 1986 was a bipartisan bill that did a couple of important things.

First, it completed the gigantic slashing of the top marginal tax rate on individual income that Reagan began in 1981. In less than ten years, the richest of Americans saved an extra 37 – 42% of the most excessive of their wealth.

Second, it simplified the tax code, reducing the number of tax brackets and eliminating loopholes.

Third, it reduced the top marginal corporate tax rate while applying the Alternative Minimum Tax to corporations in general.

It did a lot more than that, but those are the most important. Making the tax code more fair and simple is great, but it did more than that. It attempted to make up for the huge reduction in taxes for the wealthy by grabbing a buck here and a buck there across the board. It also brought the tax rates of the rich and everyone else closer together. Needless to say, Krauthammer’s observation omits the huge deficit explosion that followed the passage of this bill. (Remember when Conservatives were okay with deficit explosions?) In fact, rather than crediting the reform for a huge economic boom, the Reagan administration itself claimed that the bill was designed to be revenue neutral and rushed for excuses when they later projected a 90 billion dollar loss over the first five years (that’s in late 80’s dollars).

In fact, the deficit explosion eventually caused Bush the first, in an act of desperation, to break a major campaign promise and hike that top marginal tax rate up again. Clinton had to hike it up once again to balance the budget. So it’s quite a stretch to credit an act for helping to bring about 20 years of economic Utopia when one of its major provisions barely lasted five years and the “savings” he referred to actually vanished into the pockets of the rich, but what is the real point of Krauthammer bringing this Act up?  And how does this relate to health care reform?

Reagan’s 1986 Act brought us one step closer to the Holy Grail for some conservatives: a flat tax. We have taken several steps back from that since, but for some conservatives the dream is still alive. The philosophy that taxes should be exactly the same for every single person is one of the causes of the vast chasm that currently exists between the left and the right in America. Conservatives cannot even consider the argument that the wealthy have benefitted most from the “American way of life” and therefore should contribute more (not just in dollars but in a higher percentage of their dollars) to the betterment of society as a whole. They don’t believe that society as a whole benefits when the least of us are pulled up. That also explains the deep cuts in social programs that many fiscal conservatives support.

I think many conservatives want to take the flat tax philosophy and apply it to all aspects of life. Treat everyone exactly equally starting with today as day 1 and forgetting everything that has happened in the past that may have brought us to where we are now. Forget the intrinsic advantages society affords to some based on class, wealth, or race. Forget the extra opportunities some have had to become wealthy. Forget the tough breaks and injustices that caused some to become not so wealthy. Forget the past, look to the future. It’s a commonly heard political rallying cry employed by both Democrats and Republicans. But it ignores history which a wise man once said destines us to repeat it. Well, the dirty little secret is that that’s not treating everyone equally at all. Money buys rights in this society, and if you have more money, in many cases you have more rights. You can get a better lawyer, you can make friends with powerful people, you can even get your own first class health care.

So Krauthammer can talk about Tort Reform and Employer Based System Reform all day, he might even save the health care system some money (not from insurance company profits, mind you, but from victims of malpractice) and give everyone with a job (the really poor are just too lazy to deserve health care, right?) an exactly equal opportunity to buy private, individual insurance. But history tells us that private insurance, unregulated and unchallenged, doesn’t treat everyone exactly equally. It drops or refuses to cover risky investments (sorry, I meant human beings), it denies some procedures for questionable reasons, it worships profit margins and stock options rather than the needs of people. Often the odd ones out in this equation are the ones who can’t afford a loud enough voice to do anything about it.

A properly formulated non profit system of providing health care (or in this case health care insurance) can accomplish everything Krauthammer aspires to in his two part plan while also doing something that the Tax Reform of 1986 didn’t: it can level the playing field.

Originally posted February 4, 2009

I am a strong conservative who believes that we should have simpler, fairer, flatter taxes. When you have a tax code with more than a million words and more than 500 changes a year, anything would be better.

However, when it comes to the so-called Fairtax, it’s important to be able to cut through the hype and understand exactly what we are talking about. Therefore, I would like to address some of the myths of the Fairtax. This post is for people familiar with with the Fairtax. They are as follows:

1. The Fairtax will get rid of tax filing. This isn’t really true. Taxes will still need to be collected. Instead of every individual and business filing an annual income tax return, the entire reporting and paying burden will be shifted to the retail and service industry. These industries will have to file most likely once a month. In addition, if embedded taxes are all removed, then the Fairtax will only be charged on the end users. Businesses will have to deal with the complexity of resale versus wholesale, exempt sales, mixed contracts, and other such things.

2. The Fairtax will get the government out of our personal lives. The most likely version of the Fairtax involves a monthly “pre-bate” per family, but you know that Bill Gates and his wife are not going to get the same pre-bate as Joe Sixpack and his wife and 10 kids in their mobile home. How will the government know who has a bigger family, or perhaps an income more deserving of a larger pre-bate? Maybe they can file that information with the government once a year.

3. The Fairtax will get rid of the IRS. This is of course the most appealing myth about the Fairtax. If you don’t have to file taxes annually, the IRS will no longer be needed. But now companies are filing once a month. Unfortunately as long as you have a system where you are taking money from one group or segment of society to fund the needs or wants of another, you will have to have enforcement. You will have to have some sort of regulatory group making sure that businesses are filing their monthly returns, including all of their income, not taking cash payments under the table, etc. I suppose we could name that agency something else, but in the end it’s still the IRS.

4. The Fairtax will make sure that illegal aliens and other underground economies pay taxes. Not if you pay with cash. The Fairtax won’t sink a single underground operation, just change the way they do business and avoid taxes.

5. The Fairtax will not increase consumer prices because embedded taxes are taken out. That’s true that it will decrease prices when you take out embedded taxes, but the Fairtax is revenue neutral. So unless you get a pay cut, your share of the federal taxes are not going to be taken out of the price of goods. Not even considering death taxes, your income tax and your portion of payroll taxes account for 63% of government tax revenues. So in the end prices will go up, but only by about 15%. Now, we will all have our whole paycheck and won’t have to pay our portion of income and payroll taxes. That’s real good for anyone who is paying a huge portion of those taxes right now, but for those with minimal or no income, this is a hefty tax increase.

6. With the Fairtax, you are only taxed on what you spend. Again, it’s true. But the myth is that you aren’t taxed on what you save. What do you do with your savings? Eventually, you spend them. And when you do, you are taxed on them. In fact, you are taxed on your savings and what you have earned on the savings. This is effectively an 8% increase in the maximum capital gain’s rate. So the idea that you can decrease your taxes by not spending your money is incorrect, you can only defer your taxes. Knowing our government, when you finally spend your savings the rate will probably be higher than 23%.

7. Retirees get to keep their entire paycheck. Here’s the problem, many people have begun saving with Roth IRAs and Roth 401k plans. These plans are not tax deferred, but are contributed to after tax. The promise of the Roth retirement plan is that when you take the money out, it and it’s earnings are tax-free. If we switch to a Fairtax then when you take the already taxed money out and spend it, that money will be taxed twice.

8. Consumption will increase by 2.4% in the first year and even more in later years. This is based on you getting your entire paycheck, but as noted in point 5 it does not take into account that the Fairtax is revenue neutral and prices will increase by 15%.

Right now, today, you pay 7.65% tax on your income as a payroll tax. That is a straight tax taken from your check.

Your company pays an additional 7.65% tax. This is a hidden tax to everyone as it drives the cost of business. And products up. It is also an obstacle to employment, an extra cost and additional reason not to hire someone.

Payroll taxes are capped 90,000 a year . Which means someone earning $180,000 a year is only paying 3.8%. A guy earning $50,000 a year pays 7.65%, Brad Pitt pays less than 1%. This is called a regressive tax, the more money you earn, the lower the percent you have to pay.

Illegal immigrants working in restaurants don’t pay any payroll taxes, and neither do their employers. Meaning they can work cheaper, and bring home more cash.

Criminals don’t pay this tax. Any money earned “under the table” is hidden from the current tax, meaning law abiding citizens have to pay more.

Neither do millionare tycoons paid in dividends not pay checks.

If we get rid of the regressive payroll tax and replace it with a flat sales tax, we’ll be able to replace it with a much lower tax rate, remove an obstacle to employment, remove a tax incentive to hire illegals, and add people who are currently evading paying this tax.

The story is here from the Times of India, sent to me by Shalini.

Changes to tax rates

Here are the current tax rates:

Now 10 per cent is levied on incomes of Rs 1.6-3 lakh, 20 per cent on Rs 3-5 lakh and 30 per cent above Rs 5 lakh.

Here are the new rates:

The government on Wednesday initiated radical tax reforms through a draft code that aims at moderating income tax rates, abolishing Securities Transaction Tax and increasing deduction for savings up to Rs three lakh. The new Direct Taxes Code has suggested a significant expansion of personal income-tax slabs, with levels of relief going up with incomes.

Releasing the Direct Taxes Code that will ultimately replace the over four-decades old Income Tax Act and bring all other direct taxes like wealth tax under its purview, Finance Minister Pranab Mukherjee today said if reasonable level of discussion happens on the code, a bill could be placed in the winter session of Parliament.

The Code said that the 10 per cent tax rate should apply to an annual income of Rs 1.6-10 lakh per annum and the 20 per cent rate to Rs 10-25 lakh.

The maximum rate of 30 per cent, it added, should apply to income above Rs 25 lakh per annum.

The new rates, it said, “are expected to yield the existing level of revenues with the revised comprehensive tax base proposed in this code”.

Indian tax brackets

Here are my calculations… are they wrong?

First bracket (10%): 1.6 to 10 lakh = 10 x 100,000 rupees = 1,000,000 rupees = up to 20,000 USD.

Second bracket (20%): 10 to  25 lakh = 10 x 100,000 rupees = 1,000,000 rupees = up to 50,000 USD.

Third bracket (30%): over 25 lakh = 10 x 100,000 rupees = 1,000,000 rupees = over 50,000 USD.

Changes to encourage more saving

Not only are they slashing income tax rates but they are increasing the deductions for savings.

I can’t believe this. India is doing everything RIGHT and we are doing everything WRONG. Even Canada is signing free trade deals, while Inspector Clouseau is trying to make us into North Korea. India is buying arms, we’re cutting the F-22 and missile defense.

I really wonder who does actually represent the mass majority in congress?  I know that we elect congressmen and senators which are suppose to represent the people from which they were elected.  But I really wonder since they cannot be recalled by the state which elected them and they only have to answer for their conduct to the people they serve with.  It appears that  with more and more representatives and senators getting caught with their hands in the cookie jar that what they really represent is themselves and big business or the people with the deepest lined pockets.

Many times we have heard about election reform but have never seen any real change at all and the amount of money wasted on elections is sick.  I still have not seen anything on tax reform either even though everyone admits that it is so complicated that the IRS themselves can’t even understand it and still we continue with the same old system.  Maybe we should have had the tax system revamped first and then look at the other programs.  A flat tax just seems like it would be the simplest and the most fair and I always like the saying of just keep it simple stupid since it usually has a lot less things to go wrong and the need for tax lawyers should be eliminated since there wouldn’t  be any loopholes to manipulate.

I guess that might not work though since we may find a lot of lawyers out of work, but I bet that they will be able to find a lot of other things to put their greedy hand on.  I’m not sure but I always thought that a great place to start with health care reform would be the legal system and put a stop or at least a cap on the amount of lawsuits.  I also think that if a doctor takes off the wrong arm or something in that line that maybe they shouldn’t be a doctor or maybe there should be a limit on the amount of surgeries he preforms in a given amount of time.  I know that when you visit a dentist office it really feels like you have entered into a very high production facility.  I also think that there should be some type of warranty on the work that is preformed, such as a filling should stay in or be covered by the dentist for a certain amount of time after the work is done.  As it stands now it is just re-billed to you again.

All of these things could really make a difference and yet nothing is done.  We also have heard about a line item veto but still we have seen nothing on this matter.  Many of the things that are hidden or attached to other bills is very silly.  If these things really had any merit should they not be voted on by themselves and then the public could really see many of the ridiculous unneeded things that are passed in the name of self interest.  Maybe a certain amount of money should be given to each state to spend how they see fit instead of going from our pockets up to the federal government and then back down to the state again.  This just becomes a loss of money in the process.  Again if we would just look for simple solutions we could find simple answers and it seems like simple things just last longer and are more effective also.  But then politicians would have to have common sense.