Top Economist – Current Tax System Is Unfair, To Everyone!

September 11, 2012 3:42 pmViews: 106

One of the current biggest debates in political circles these days is about taxes, namely how much more the rich should be taxed. We all hear the cry coming from the left and President Obama that the rich aren't paying their fair share, that they need to contribute just a little more and share the responsibility so we can more fairly redistribute the wealth around.

Of course that argument is based on the false premise that a percentage of a person's income is somehow equal to the actual tax in real dollars that they pays. If a person making $50k a year owes 20% in income tax, they would pay $10,000 per year. If a person making $1 million per year pays the same rate of income tax as the $50k earner, they would have a tax burden of $200,000 per year. One user of basic government services such a roads, bridges and protection from terrorists by the US military pays $10,000 for such benefits and another citizen pays $200,000 for those exact same benefits. Where is the fairness in that? Am i missing something here?

While the debate continues to rages between the right and the left in this country, one economist is standing up and saying, "Wait a minute, the current tax system really isn't fair to anyone!" Peter Schiff of Euro Pacific Capital says the tax system we have now needs to be completely abolished.

Before you liberals go apoplectic and wonder how government gets funded, Schiff proposes that taxing consumption instead of income is really the most fair way for the fed to raise revenue. Taxing income will actually demotivate workers because the harder a person works, the more money they make and then end up in a higher tax bracket. And then the more government takes out of their paycheck every week. With a consumption tax, you pay based on what you buy instead of how hard you work.

And to go even further beyond the simple unfairness of the current tax code, with the intricate complexities in the current voluminous system, Americans waste some 6 billion hours and $430 billion each year just trying to comply with this monstrosity.

Plus, beyond all the time and money involved, just think about how much the IRS knows about you. They know how many kids you have, your income, what charities you give to and even more specific, personal information if you claim any other deductions. Is it really fair to anyone for a government agency to know much more about your personal life than maybe even your next door neighbor does?

With a consumption based tax, all that would end and the government would no longer need all the personal information you voluntarily give them every year when you fill out your tax return. In fact, you wouldn't even need to fill out a tax return at all. Not only would it reduce the wasted time Americans spend sorting through saved receipts and preforming other tedious duties around April 15th every year, the government could reduce the tax compliance army of the IRS by about 90%.

And even liberals could be happy about a consumption based tax because when folks with high net worth and high incomes buy all their high priced bling, a much higher tax bill comes with that conspicuous consumption.

What do you think? Would a consumption based tax work? Leave your comments and thoughts below.

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pk says:

sounds good to me…

Bob says:

Same thing I have been saying for years. Another benefit is we collect taxes from all the drug dealers, prostitues, pimps, Organized Crime members and all the others who do most of their business in cash.

azjen says:

Bob, How do you propose that we collect taxes from the people that you mentioned? Normally people who get cash for their services do not list it on their tax returns. Did I miss sometihng in the above message?

The tax I was talking about above is a consumption based tax so everyone who purchases something pays the tax. There isn’t any way to shield your income from it whether you are a Wall Street banker or a local drug dealer, when you buy, you pay the tax.