(Another Modest Proposal for your consideration)
Tax cut. Tax hike. Tax break. Tax loophole.
The sad piece of it is that those of us who do pay income taxes have become numb to the baseline. The money is ours to begin with, and then the government confiscates it (under threat of imprisonment) for some nobler public purpose. Some might have you think it’s the other way around.
Which brings us to the people for which there is no income tax. There are two types: those that earn on capital gains (and are taxed appropriately), and those who don’t earn enough income.
The first we won’t really bother with at the moment. They’re not listening anyway, as they are trying to lock up their assets or move them overseas as we speak.
The second group – those with low incomes – have through no fault of their own become divorced from the real relationship they ought to enjoy with their proceeds and their government. When Uncle Sam only gives you things and never asks for anything in return, then you tend to see him as Santa Claus. (Both wear ridiculous suits, and enough trips to the pork-barrel will equip Sam with the requisite figure for Nick.)
My plan is to reconcile the poor with their patriotic duty to pay taxes.
I’m an Ogre.
Here’s how the All-tax works. Every household making less than $45,000 in a year will receive a $5,000 check from the Federal Government. However, by accepting the check they immediately enter into a minimum 10% tax bracket.
Yep. Ten percent. And the check from the government is taxable.
If you make $45,000 your five-grand All-tax bonus would take you up to $50,000 – and the 10% tax sets you right back where you were. If you make less than $45,000 you end up to the good, and of course those making more than $45,000 are unaffected. This has the net effect of making every American household a tax-paying household without increasing the burden on anyone.
When everyone has the same conscious recognition of the role they play in supporting the government, it changes perspectives quickly.
Your thoughts? What am I missing? Am I evil?
This type of approach is the only way to approach fairness, and to get all citizens invested in the country’s fiscal direction. Creating a permanent and growing class of non-taxpayers instantiates class envy and political pandering. Very dangerous.
It would be a lot more paperwork, and would probably result in a lot of under-the-counter stuff.
Things like this make me favor the nation-wide sales tax option– not because I think it’s a good thing, but because the 50% of folks who currently pay net zero taxes are never going to accept a tax raise on them, as a group.
Two questions:
1. Where does the $5K that goes to all these families come from?
2. Ditto Foxfier (kind of) – how do you get this group that has never paid taxes to not riot?
I think it’s a good idea. No, you’re not evil. If my grad school stipend gets taxes taken out (and it does), then I can’t understand how other people can get away with not paying.
In the grand scheme of things, that $5K per low-income family is a bargain-basement price to pay for the sense of ownership those voters will develop.
How do you get them not to riot? Easy. They are paying taxes out of a larger sum of money they never would have seen anyway. In every single case, the math works out to their net benefit. What’s to complain? A little bit of hassle? Having to actually calculate and file?
Maybe this is an impetus for simplifying the code anyway…
I think God’s way is fair — in the Bible He requires a 10% tithe from all people. It’s equal, it’s fair. If you make $50,000/year, you pay 10% of that. And if you make $1 million, you pay 10% of that. Seems to me like if you’re going to have an income tax, this is fair. Of course, I still agree with Ron Paul, that it’s our money to begin with, & since we pay property taxes, sales tax, gas tax, etc., then income tax should be abolished.
I like your idea. I’ve seen studies or commentary over the last few years—probably in the Wall Street Journal, maybe elsewhere—that lament this, offer similar ideas. The question is, how do we move this from Quixotic quest to something people take seriously? Especially in this environment? I have no idea! I see inflation in the future, as the gov’t prints money as the only possible way out. For a short while.
Ideas?
There’s a review out there of William Greider’s book on David Stockman (the Reagan apostate) that begins with these two quotes that I still like to pull out from time to time:
The most important function of the federal government is mailing checks to citizens–Social Security checks to the elderly, pension checks to retired soldiers and civil servants, reimbursement checks for hospitals and doctors who provide medical care for the aged and the poor, welfare checks for the dependent, veterans checks to pensioners.
-William Greider, The Education of David Stockman
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
-Sir Alex Fraser Tytler (1742-1813)
Maybe I’m missing something, but how does it give them a sense of ownership if they receive a check that pays all the taxes they’d owe and leaves them with a bit left over? Seems like that would *increase* their sense of entitlement, because instead of not owing tax in the first place, now they receive a bill and actively see someone else pay it each and every time. Then they’ll want their electric bill paid, too.
I like the idea (a lot), but Marina’s question is key: How does this give them a sense of ownership if it’s a “break-even at worst” scenario?
@marina and @mike – great question.
This isn’t a matter of raising revenues. It’s a matter of re-establishing a mindset.
Just knowing that you are now in a tax bracket is a reminder that it’s YOUR money to begin with, money the government subsequently takes away.
It would be easier to compute the net effect of the exchange in advance and apply that. Instead, the money is given to the individual, thereby assuring that everyone is in a 10% tax bracket.
The premise is that with more people feeling like they are paying a tax (which they are), you’d have a little more scrutiny on the spending side, and less groundswell to “soak” taxpayers.
If everyone pays taxes, then everyone “owns” Leviathan instead of being “owned” by it.
That makes sense — that it’s more a matter of communicating (reminding of) the appropriate mindset. But if the point is to give people a sense of ownership and responsibility, rather than entitlement, isn’t this more like lying to them than it is shaping their perception?
After all, this only creates the illusion of “skin in the game.” They’re given money — other people’s money — and agree to give most or all of it back. That’s not ownership. That’s a game.
Receiving and then simply handing back someone else’s money is not “paying taxes,” nor do I belive it would create that sense of ownership. What would? Perhaps coupling this All Tax idea with some potential consequences or rewards, some “threat” of expense. I’m not sure exactly how that would work out, but that makes it a lot more than a game.
I’ve been thinking about this post a lot. What if we stopped all government withholding and everyone to had to responsibly set aside the correct amount and send a check in on April 15th? (Even the poorest people have 7.5% Social Security/Medicaid paid by their employer that they likely never consider.)
I bet a ton of people would find themselves at risk of bouncing a check to the IRS, and maybe that would stir up some animosity. (Although, I can totally see some people arguing that it’s not fair the government left it up to them to save money.)
This post has been keeping me up at night. (Well, since I’m up all night anyway, maybe I should say it’s been keeping me up during the day!)
I hear so many people talk *excitedly* about getting tax refunds. They look FORWARD to tax day, because their perception is they GET money — somehow totally missing that it’s their money that they loaned to the government at 0% interest.
If we stop withholding, then everyone would have to pay, and no one would get a refund, so no one would be so damn happy about April 15th.