- Posted June 18, 2012 by
This iReport is part of an assignment:
Should the rich pay more taxes?
Taxes Up & Benefits Down
- zdan, CNN iReport producer
Fair Taxation, Taxation and the Poor, Rich pay too much!!
I think that "Fair" is in the eye of the beholder. Remember that our tax system is designed to raise revenue for government functions (good or bad); but it also is used to accomplish social policy. Think in terms of the mortgage interest deduction, charitable deduction or even medical. Think in terms of being "married" versus single, versus single with children living with you, etc. Think in terms of running your own business versus getting a paycheck every week or two weeks or so from the mean boss, etc. What about living off of interest, dividends, rentals and social security versus laboring in the hot sun. All of these activities affect your tax situation. By the way, I am referencing only the federal income tax process and no other - no estate tax, no real estate tax, no social security tax, no gasoline tax, etc, etc.
The system encourages us to overspend on housing - did you know that in Canada that there is no mortgage interest deduction. Why should government subsidize your charitable contributions. What would happen if these were limited or eliminated entirely. Why do we encourage people to have more children than they can afford - after all, having 3 kids and working at Mcdonalds will let her get 1) the child tax credit, 2) the earned income tax credit, (both refundable); 3) a day care credit; 4) Food Stamps, 5) Section 8 subsidized housing, 6) legally enforced child support (non-taxable) from the dead beat dad - income that is not factored into the above government allotments. By the time, she adds everything up - she's probably making easily into the high 40's in total "income". Why do some 47-50% of the population not pay any income taxes. Very simple - by the time, you take into account the standard deductions, exemptions and most importantly, the child tax credit and the earned income tax credit - you've wiped out their federal income tax liability. Just look at this example - married couple with 3 kids (under the age of 17), with an income of $55,760 would have a federal income tax liability of $1.00 for 2011. The same couple without any children (or the kids came back home after college and no longer qualify as dependents) would have a federal income tax liability of $4,666. Now, what's fair???
As FullThrottle64 has quite clearly pointed out in earlier comments - the federal government is spending some 25% of GNP (that's total output from everyone including corporations and government); but is collecting only some 20%. The bottom line, we are spending some 8% of our GNP and putting us into debtor's prison. This cannot go on much longer or we will look like Greece. This is $5,000 for every man, woman, and child in the United States in increased taxes or reduced benefits (think in terms of Social Security, Medicare, Medicaide, Mortgage interest deduction, charitable deduction, child tax credit, earned income tax credit, adoption credits, Chevy Volt Tax credits, energy tax credits (nothing for the new wood fired heating system or storm windows), ethanol subsidies, agriculture crop subsidies, federal flood insurance, Coast Guard rescue missions of stupid people who don't know what they are doing, Predator drone strikes on Al-Queida leaders in Yeman, Pakistan, and Afganistan, etc, etc, etc. That's $416 every month for every person in your family in increased taxes or reduced benefits. We need to start somewhere: 1) Freeze for six years all Social Security increases, 2) increase the monthly Medicare deduction by $25 every year for six years - if total, including nontaxable, income exceeds $50,000 (for single) - increase by an additional $100 per month. 3) Increase medicare Co-pays by $25 - $50 per event. 4) Freeze all Federal, military, and retirement pay schedules for 6 years, 5) Add an additional 18 months between scheduled federal, and military pay increases and promotions; 6) Order an immediate 10% reduction in federal payroll costs (cut headcount and salaries);