Monday, October 31, 2011

Real Tax Reform

Lately it has become, once again, popular to discuss tax reform. Even to talk about real tax change.

The plans offered thus far appear to make the attempt of establishing a fair(er) system than the current one.

Gov. Perry's plan of leaving the current tax structure intact as an alternative to his proposed flat tax with limited exemptions is both an improvement and inferior to the classic flat tax that gained notoriety when Steve Forbes made it a centerpiece of his Presidential campaign in 1988.

Gov. Romney has a plan that can only be described as nearly complex as the current tax code itself.

Then there is the plan advanced by the indomitable Herman Cain. Or rather plans. First there was the 9-9-9; his attempt at dragging the Country, kicking and screaming, into "The Fair Tax". When it was repeatedly pointed out that he was eliminating the majority of Americans from his voting bloc he adjusted it to become a 9-0-9 plan. By removing the personal income tax from his combo platter of corporate-personal income-national sales taxes he must have figured he got those voters back.
What he has still got very wrong, along with ALL of "The Fair Tax" backers is simply this: A National Sales Tax requires two things: A National Taxing Authority and the imposition of the National Government into all transactions whether they are interstate or intrastate.
Put plainly, there will be no end to the IRS and they will be in every part of every interaction in every State, County and Parish. There will be the final nail in the coffin as we bury our Federal Government. States will be as meaningless as sex without love. A National Government will come to the fore as brutal as Mary Shelley's nightmare.

What the backers of "The Fair Tax" do have right, very right, is the need to end for all time a tax on personal income.

So, I propose, and wonder who else sees this as a viable option, a 12/20-0-0 plan, if you will.

NO personal income tax. NO national sales tax. A tax on consumption is still there because as all right-minded persons know corporations pay no taxes. Corporations pass taxes onto their consumers.

Corporations making $50,000 or less in income are liable for a 12% tax, above $50,000 a 20% tax.
Both rates are below the current levels and are below the levels of many other nations as well. A situation which has the potential to bring manufacturing to these United States.

A new tax structure is part 2 of the needed fiscal plan. Part 1 is a vast reduction in spending on the Federal level. Which can be done by eliminating several Federal agencies including some Cabinet Departments. In other words restore The Constitution. From there I propose a modest 20% cut in Defense Department spending and a 30% cut in all other remaining Federal expenditures.