If an economy is to function well, people need incentives to work hard and innovate. The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy. We are near or have already reached that tipping point.
This Essay is for students of the plan, who have an hour to spend. The current system of multiple taxes, when considered as a whole, is grossly unfair.
It is weakening our economy and underfunding our governments. It has repeatedly led to financial meltdowns by distorting market forces and encouraging the formation of financial bubbles. It is underfunding current government obligations creating a large national debt for future generations. It is so complex that each year billions of dollars are spent to administer, comply with, and evade it.
Few would dispute that under an equitable tax system, the contribution we each make toward funding the services that our governments provide for us should be roughly commensurate with the extent to which we profited from the services governments provide, that is, our financial means.
Who is better off: Yet, in the United States, accumulated wealth net worth is all but ignored in the determining the size of our tax bills. As the country emerges from its latest financial crisis, it will need to increase revenues to pay for the various financial bailouts; our two wars; and investment in the long-neglected and interrelated priorities of education, accessible health care for all, medical research, energy independence, environmental protection, economic infrastructure, financial industry regulation, domestic security, and international aid.
The private sector has no incentive to fund these priorities because the return profit on such investments takes many, many years to be realized and is spread diffusely throughout society.
Therefore, these priorities require funding from government, that is from all taxpayers. Even with the elimination of wasteful government expenditures, failure to increase government revenues would underfund these priorities, leave the United States a debtor nation, further enrich competing, often hostile nations that are servicing our debt, increase inflation, reduce credit available to the private sector, and burden future generations with our debt.
Our nation would decline further as a force to advance human rights and foster prosperity here and throughout the world.
In short, billions of people would suffer.
Americans For Fair Taxation® (AFFT) was founded in , by three Houston entrepreneurs. It is a nonpartisan (c)(4) grassroots organization solely dedicated to replacing the current income tax code with a national retail-level consumption tax. Learn about attending a National College Fair. National College Fairs Giving College-Bound Students the Opportunity to Interact with Admission Representatives from a . AEI experts offer insightful analysis and commentary with op-eds from the nation's top newspapers and magazines, covering a variety of policy areas.
However, we need to take care in how we go about increasing taxes. Increasing taxes on the middle class would likely decrease consumption and so trigger a slide back into recession. Continuing current tax policy that favors investment income and gains over income from work and savings and promotes wealth concentration in the top few percent will result in a continuing string of investment bubbles and the recessions they cause.
As demonstrated in the remainder of this essay, increasing the taxes of the wealthy, while decreasing taxes of the working-poor and middle-class, would move us toward and equitable tax system, improve the economy and strengthen the nation.
Consider the financial circumstances and tax liabilities of two hypothetical families. Smith are each 45 years old and have two young children. He has worked in construction for over twenty years and is now a construction crew supervisor.
Smith has made during his off hours. Rich are each 45 years old, have no children, and live in the same Long Island town as the Smiths.
Rich stopped working when he married three years ago and brought no assets or debts to the marriage. How the Richs legally avoid paying their fair share in taxes.
These investment gains are not reportable to any tax authority and are not taxed.Nov 07, · Where "cut cut cut" could mean an increased tax bill of over $10, for every year in graduate school. When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantánamo and Abu Ghraib, the erosion of.
AEI experts offer insightful analysis and commentary with op-eds from the nation's top newspapers and magazines, covering a variety of policy areas. Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies.
The National Center for Fair & Open Testing (FairTest) works to end the misuses and flaws of standardized testing and to ensure that evaluation of students, teachers and schools is fair, open, valid and educationally beneficial.. Learn more about us and our mission. Learn about attending a National College Fair.
National College Fairs Giving College-Bound Students the Opportunity to Interact with Admission Representatives from a .