May 26, 2001

11:51 AM

Something else tax-related...
There is NOW a genuine effort in Congress to eliminate the income tax! House Resolution (H.J. Res. 45 -- The Liberty Amendment) sponsored by heroic congressman Ron Paul, that would repeal the 16th Amendment and free us from direct taxation, which is one thing the Constitution originally guaranteed, before it was vandalized by unscrupulous politicians early in the last century, who promised the income tax would hit only "the rich" (where have you heard that before?) and would never be more than a few percent. Politicians have such senses of humor. Anyway, YOU can help Rep. Paul's effort to repeal the income tax: join the petition to the U.S. House of Representatives and encourage everyone you know to do the same. This is a real opportunity, so if you oppose the income tax, here's your chance to do something concrete and effective (and still easy) to help the fight against it. Time is a factor, so please do it today.
Found on deuceofclubs.com, an amazingly witty site where a person can lose countless hours of their life at, reading all sorts of non-tax-related mayhem.
posted by lizardboy (13 comments total)

We've already been over this.
posted by tweebiscuit at 12:22 PM on May 26, 2001

Income tax very fine thing! Without it, everyone would be paying money based on what they bought (sales tax) or flat tax. Sales tax would be a burden to the rich and the trickle would stop trickling. With income tax, they pay almost nothing, and they get in return money from taxpayers for helping their industries and large farms.
It is important to keep taxes high for those without much money so that they will find that going into the military is a decent alternative and this will allow the well to do to avoid service and perhaps go into congress.
How could gOP run without promising to reduce taxes?
The plan as set forth smakes of ungodly communism.
posted by Postroad at 1:11 PM on May 26, 2001

I would disagree that the people who pay most of the money our government collects "pay almost nothing ", but I would agree that they pay a lower percentage. We pay hardly anything, even though it is a larger chunk of our overall income. That said, we all pay too much, and I'll sign anything I can to make the hurting stop.

How could gOP run without promising to reduce taxes?
One could suppose they could run with the promise to keep taxes from being enacted.
posted by thirteen at 1:59 PM on May 26, 2001

I think the Libertarians go a bit too far sometimes; I don't have a problem with a federal income tax, per se, and I find it hard to believe that it is expressly forbidden by the Constitution. I do believe that we all should be paying much less in taxes, as so much of what the Fed does is simply not proper (moral?) for a government to be involved with, or else it is done so inefficiently that it must be considered fraud, waste, &/or abuse. So - I am all for a major reduction in tax rates. And, BTW, people should get over the "soak the rich" mentality. It's their money, and it is very disturbing that some people consider the rich to be nothing more than "fat cats" who should be made to fork over larger chunks (percent-wise) of their income than others. Flat-tax sounds real good to me; it actually made me consider voting for Forbes at one point (shudder).
posted by davidmsc at 2:58 PM on May 26, 2001

The income tax is progressive primarily because basically all other taxes (e.g., sales, gasoline) are inherently regressive. For example, someone making $10,000 a year probably needs to spend just about all of that $10,000 to stay alive. If the only tax they were to pay would be sales tax and the local rate was 6%, roughly 6% of their worth would go to the government any given year. Simple enough.

However, someone making, say, $2 million per year probably only spends maybe $500,000 of that, with the rest going into retirement accounts, investments and the like. If the only tax paid by that person is also sales tax, then that person would wind up with only 1.5% of their worth going to the government any particular year.

So even though the tax rate is the same on the surface - 6% - it affects people with different spending habits (and therefore different incomes) at very different rates. The point of having a graduated income tax is to help offset the regressive nature of pretty much every other tax type, so that - in theory - everyone winds up losing roughly the same percentage of their worth to the government each year.

And let's not forget all the delightful loopholes that actually provide opportunities for the wealthier to pay lower than the base-rate for their bracket. The income tax reform we need isn't a flat tax, it's a simplified system so that those who can afford to pay tax experts to do their taxes don't receive a significant advantage.
posted by drywall at 4:02 PM on May 26, 2001

Wow, drywall, I have to say that you explain things wonderfully. I wonder if you're a teacher, or you simply understand the tax system very well. Either way, thanks for that explanation, and I'm glad I read your post! A quick question for you, though: Is the flat tax fair for everyone? Or was Forbes pulling a scam on us all? (in theory it sounds fair - but is it, really?)
posted by Rastafari at 5:58 PM on May 26, 2001

I belive the flat tax would infact close all those loopholes people exploit by making the tax code far more simple and therefore far more fair for people who don't have tax attorneys at their disposal.
posted by gyc at 8:05 PM on May 26, 2001

I'm not nearly an economist, but my understanding is that our economy based on the assumption that we've all paying a big chunk in taxes. If I suddenly had 0% income taxes, wouldn't salaries almost immediately shrink to reflect that?

Salary = x + t, where x is my disposable income and t is income tax. If I'm an employer, and t becomes 0, I'm pretty sure I can find someone to work for x + $1, since they are currently living off x anyway. I'm certainly not going to pay any new employees x + t out of the goodness of my heart.

Who gains from this scenario? Business (the bigger the better). Who loses? Pretty much everyone else, especially if you work for the government, or a company that does business with the government, as MANY Americans do.

Did I just make things more complicated than they had to be? Again, as is now painfully obvious, I'm no economist.
posted by jpoulos at 9:58 PM on May 26, 2001

I distinctly remember Dick Armey holding up a postcard-sized 1040 that was basically, "How much were you paid last year?" and "Send in 10% of it."

I thought that would be a really great deal for people who weren't paid a salary. Zero and zero. The rest of us? Soaked.
posted by dhartung at 10:03 PM on May 26, 2001

dhartung: you don't have to be paid a salary to have an income, no?
posted by gyc at 11:17 PM on May 26, 2001

Rastafari, you've got me blushing...

Anyway, the richer a person is, the smaller percentage of their income typically derives from salary. Look at the CEOs of the fortune 500 companies: most of the money they receive isn't salary, but stock options/bonuses and the like. And of course, if you have more than a few hundred thousand in the bank, interest alone will provide you with enough income to live the lifestyle of the median-income American.

For more on low-income expenditures and taxation, check out my MeFi comments here.

Also, feel free to regularly read my blog, stickybuffalo.
posted by drywall at 11:25 AM on May 27, 2001

I find it [an income tax] hard to believe that it is expressly forbidden by the Constitution

it's not. the 16th Amendment specifically allows it. before that, though, it was unconstitutional for the Federal government to levy an income tax.
posted by tolkhan at 10:14 AM on May 29, 2001

Dan is right--the big question about the flat tax is how it would apply to those folks who don't make their money in a 9-to-5 job. What about the wealthy whose money is making money for them? How many loopholes are there for things like non-taxable investments? The advantage to the rich would still be there under the flat tax system: They'd still have the money and means to put their money where it couldn't be touched.
posted by owen at 10:37 AM on May 29, 2001