Fair Taxation


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Fair Economics begins with Fair Taxation. This presentation breaks the stranglehold of the current Right/Left debate on taxation and offers a new perspective. The presentation is brought to you by the Fairness Coalition.

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Fair Taxation

  1. 2. An Introduction The Foundation for any economic policy begins with Tax Policy – it is the most immediate connection between government objectives and individual impacts. Tax policy also tends to be the most controversial area of economic policy because let’s face it – taxes are not and never have been popular. What’s more, they never will be, regardless of one’s political affiliation. The current Right/Left debate about tax policy has not changed over the past 40 years. There is no reason that the debate can’t change – there are alternatives that haven’t been explored yet.
  2. 3. What is Fair Taxation ? Fair Taxation begins with the premise that Income Taxes should only be paid by those who can afford them. It extends to encompass the idea that some taxation can be viewed as an investment rather than a burden. When the income tax was introduced in 1913 – it was meant only to be paid by the wealthy or large companies. Only later was it extended to all wage earners. That original premise is referred to as “Progressive Taxation” – e.g. that only those who can afford it pay and the rate increases as the amount of income increases. Also, many people don’t feel taxes are fair because they don’t have any say in how the revenue is spent.
  3. 4. Real Wages have been stagnant for nearly 30 years – the cost of living for the American Middle Class has been rising but income has not kept up. At the same time, with large tax cuts to the wealthy, the Middle Class has become increasingly responsible for paying the government’s bills. The actual tax burden has shifted dramatically from high income earners and corporations to middle income earners. That’s Not Fair…
  4. 5. Fair is Smart One of the main principles of Fair Economics is that the Fair policy is also the Smart policy. This applies to Fair Economics as well. Let’s ask ourselves a question; If the vast majority of the American economy is driven by Middle Class spending and their real income is shrinking, what sense does it make to place the majority of the tax burden on them? The more money the government takes from the people who are actively spending in an economy, the less spending there is. In this situation, income taxes become an economic disincentive or “de-stimulus.” Any tax breaks given ought to be dedicated to policies that are 100% guaranteed to stimulate the economy.
  5. 6. Fair Taxation Ideas 1 <ul><li>Here are a couple of ideas on how to make Taxation Fair and Smart: </li></ul><ul><ul><li>Income Tax begins at the upper middle class level – the point where folks can actually afford to pay, around $100k, (no income taxes below that income). </li></ul></ul><ul><ul><li>Income Tax rates begin low, say 15% and then increase by 10% for each extra 100k up to 500k & caps at 50%. </li></ul></ul><ul><ul><li>Investment taxes such as Medicare & Social Security are strengthened by increasing the contribution rate from 15.3% to 17% and by taxing the entire salary (e.g. no cap at $106,000). </li></ul></ul><ul><ul><li>Targeted Government Bonds are introduced as an alternative pension approach. Bonds could then applied to national Debt and / or specific areas of spending. </li></ul></ul>
  6. 7. Fair Taxation Ideas 2 <ul><li>Here are some more ideas: </li></ul><ul><ul><li>Remove most deductions or tax breaks for those still paying income taxes – only retain those deductions directly related to creating American jobs or spending on American-made products. </li></ul></ul><ul><ul><li>Use Taxes as a dis-incentive as well, for example introduce a penalty tax for exporting jobs from the US to other low-wage nations – say $50k per job per year. </li></ul></ul><ul><ul><li>Give those targeted to pay income taxes the option to purchase ‘Tax Bonds’ instead for up to 50% of the tax burden. </li></ul></ul><ul><ul><li>Tax Capital Gains based on the same premise and rates as the income tax. </li></ul></ul>
  7. 8. If our economic focus becomes directed once again towards increasing jobs and increasing incomes, more and more people will once again be making enough to afford to pay income tax – at the same they will grow the economy. This is both Fair and Smart
  8. 9. Taxes as Investments We already have a long history of combining Taxation with personal Investment – we’ve been doing it for more than 70 years with Social Security and more than 40 years with Medicare. Add to that the fact that a growing % of Americans have no other pension plan other than a 401k and the stock market has become increasingly volatile. There is no reason why Americans of all income brackets couldn’t buy government bonds targeted to pay for either current budgets or existing debt. The bonds could guarantee a decent rate of return and would represent the safest investment possible for any American. This gives Americans a choice in what they want to fund.
  9. 10. Summary <ul><li>Bottom Line – shifting the tax burden from the wealthy to the Middle Class is not Fair, it’s not Smart and it’s definitely not sustainable . Such a policy guarantees both permanent deficit / debt growth and as well permanent economic decline. </li></ul><ul><li>We can fix this immediately by shifting the tax burden back to where it has always supposed to have been. </li></ul><ul><li>We can add extra revenue to make up for shortfalls by adding tax investments such as new bonds and tax “dis-incentives” such as the Jobs Export tax. </li></ul><ul><li>This if combined with an end to the concept of the “Endless War” can lead to balanced budgets and economic growth. </li></ul>