Fair Tax

It amazes me how very little the folks we elect to run our great country seem to understand economics. They have apparently all been suckered into accepting the "supply side" or "trickle down" theory. This theory says that if the upper class, ultra-rich job creators are given more money (in the form of extremely generous tax cuts) they will "trickle down" some of those extra dollars to folks less fortunate than themselves.

This theory might actually work, with greed taken out of the picture. Unfortunately, given greed, nothing seems to actually "trickle down."

The rich actually are the job creators; they just haven't been doing any of it for the last ten years. They aren't going to magically start just because we extend the tax breaks that W and the Republican controlled congress started handing out as soon as they took over.

The USA lost over 600,000 jobs under Bush before the crash and bailouts in 2008. That was when the hemorrhaging started in earnest. And now the Republicans want to extend the tax cuts, claiming that this time it will help.

The only way tax cuts can boost the economy is if the money retained via those cuts is put into the economy. Putting it into a bank account in the Cayman Islands doesn't help our economy one little bit.

Poor and middle class folks spend any extra money they get, thereby stimulating the economy. When you give extra money to the ultra rich, who already have everything they need and everything they want, they aren't going to spend it. They already spend all the money they need to on bills and entertainment. The extra will either be socked away or spent on vacation—usually somewhere outside the USA. How does ensuring that a resort waitress in Cancun or a valet parking attendant in Paris gets a good tip stimulate our economy?

Given that the top two percent of our population (and if you earn over $250,000.00 yearly, you are one of these elite) controls almost all of the wealth in this country, I think it is somewhat disingenuous of them to proudly proclaim that they pay nearly half of the taxes. I think a group that controls ninety percent of the wealth should damn well pay ninety percent of the taxes.

You hear people (usually rich people) advocate for the so-called "fair tax," but what most people do not understand is that the fair tax, while it sounds like a good deal, would be anything but fair. The fair tax is a consumption tax, whereby people would pay taxes on the dollars that they spend.

Follow this example:

Joe Blow, a lower middle class warehouse worker, makes $400.00 a week. He spends it all on rent, utilities, gas, insurance, groceries, etc. Under the fair tax rule you pay taxes when you spend money, therefore, Joe pays taxes on the entirety of his paycheck.

John CEO makes $5000.00 a week. He spends $1000.00 on his mortgage, utilities, gas, insurance, groceries, etc., and banks the rest. He would pay taxes on the $1000.00 that he spends, but would not pay taxes on the $4000.00 that he saves or invests.

Now, some people will say, "John CEO is paying more taxes than Joe Blow, what is the problem?" Even some in Joe Blow’s shoes will not see a problem with John banking $4000.00 a week tax free while Joe has nothing to save, and pays taxes on every cent he makes.

Perhaps there is a better way to do it. I am by no means a mathematical genius, so the details will have to be hashed out by those with a better understanding than I, but I think we should change our tax code so that it taxes folks on the percentage of the nation’s wealth that they actually control.

I think standard expense deductions are the wrong way to go about it. Perhaps a better way would be to document expenses. We could say that, after you pay your rent/mortgage and utilities on your primary residence (not on your six other homes that you can’t remember, Senator McCain), and after your groceries, gas, insurance and car payments (again, one car per adult per household), child care, medical expenses and documentable education expenses, then you pay taxes on what you have left. This would give those extremely rich people incentive to send their money trickling down through the economy. How stimulating that would be!
And, once all of those pesky loopholes and frivolous deductions are taken away, imagine how much we could lower tax rates once everyone is actually paying what they owe.

I am certain that folks in that upper two percent will not like this plan, but since when does two percent of the population get to dictate to the other ninety-eight percent?