YOUR SHARE INCLUDES WORK AND SAVING FOR YOUR FUTURE

Your Fair Share

http://townhall.com/columnists/johncgoodman/2012/09/22/your_fair_share/page/full/
Townhall – John C. Goodman – 9/22/2012

This is a long article, well documented with solutions to America’s current tax burden

Perhaps you have an answer. The median household income in the United States is $50,054, according to the latest Census Bureau report. People earning up to this amount are contributing almost nothing to the operations of the federal government, even though the government is spending one out of every four dollars in our economy.

When you couple that with the fact that nearly half the population is receiving at least one entitlement benefit, we have a dangerous political situation on our hand. If roughly half the population is receiving and not paying, they have an obvious self interest in seeing taxes and spending go higher and higher. This could be a ticket to national bankruptcy.

So back to the original question. What portion of the federal burden should each of us pay? Actually, I have an answer. It's called the Biblical tithe.

One of the reasons why tax rates are so high is that about half of all the income earned in our economy is not taxed at all. This income escapes taxation, courtesy of the standard deduction and tons of other deductions, credits and loopholes in the tax code. What if we wiped out all of these escape routes and taxed all income at one low rate? Then we would all be paying a tax rate of about 10%.

If we want to replace the corporate income tax as part of reform, our rate would have to rise to 11%. But with these low rates the economy would be more efficient. It would grow faster. More income would be reported. Taking that into consideration, it looks like an across-the-board rate of 10 percent is all we would need to replace the personal and corporate income taxes we are now paying. As Dick Armey used to say, most of us could fill out our tax returns on a post card!

Ah, but we're not done yet. There is the not so small issue of the payroll tax, which currently stands at 15.3 percent. Although we are told that workers who pay this tax are contributing to their Social Security and Medicare benefits, in fact all the money is spent the very minute it comes in the door. If each of us were saving for our own retirement, we would need to put aside only half that much. Instead workers are paying 15.3 percent of every paycheck — not for themselves, but for someone else's benefits.

Moreover, unlike the income tax, the payroll tax is actually very regressive. That's because we only pay it on the first $110,000 of income. All income above that level gets off scot free. If we integrate the income and payroll tax, we're now looking at about a 20 percent tax on all income. That's a double tithe. And we're not done yet.

So where does that leave us? With a flat tax rate of about 28%. Interestingly this is the rate Ronald Reagan left us with as part of tax reform in 1988.

Northwoods Patriots - Standing up for Faith, Family, Country - northwoodspatriotscomm@gmail.com