THE FLAT INCOME TAX

The US income tax is broken. One answer to the revenue problems of the US government is so simple, that it defies the imagination. And so fair, it would make the Equal Employment Opportunity Commission blush. The problem is that the answer leaves the highly paid Washington lobbyists totally out of the equation, and as well reduces the size and scope of the IRS. It also makes everyone pay their fair share of operating our federal government. Therefore, until you, Mr. and Mrs. John Q. Public arise, and demand to be heard, our Congress will only hear from them. And people like me, who try to pose a reasonable solution, may find themselves ushered to a mental hospital to keep our voices silent.
According to the US census, the population of the United States in 2010 was some 308 million people. There were just under 140 million income tax returns made. According to the US Government Superintendant of Documents, the top half of those taxpayers paid 97.3 per cent of all the income taxes collected, and the bottom half paid only 2.7 per cent of the income taxes collected. The average rate of their income paid by the top 50 per cent of payers after deductions was 13.65 %. The average rate of their income paid by the bottom 50 per cent of payers after deductions was 2.59 per cent. So, you see the published progressive income tax rates of 10% through 35% are a farce, and just provide work for the lobbyists.
It does not take a genius to see that every able, adult working person in this country is not paying their fair share to operate the Federal government, and those who do pay are largely paying more of their income to make up what is collected. In fact, the top earning 1 per cent of the nation pays a 37% share of all the tax. The top earning 10 per cent of the nation pays a 68 % share of all the tax. The bottom earning 50 per cent of the nation pays only a 2.59% share of the tax. There are 43 per cent of working Americans who pay in little income tax, and some still receive Federal refunds, called Earned Income Tax Credits, for much more than they pay. A low income couple with three qualifying children may get an annual check as large as $5,666 from the IRS, without paying anything in first. This is wealth transfer at its finest.
The total federal income taxes collected last year was $1.031 trillion. If we were to charge every person who earned any income, no matter how small or how large, a flat 15% income tax while keeping all present deductions, the US Government personal income tax collections would have been about 25% higher, or $1.263 trillion, again leaving all deductions intact. If we disallowed all deductions, the total collected would be much higher. This would probably double the personal income taxes collected to $2 trillion plus, and be eminently more fair to every taxpayer. And it should please the socialistic thinkers among you, because the rich would suffer the loss of all their tax shelters.
Altogether, we spent about $3.721 billion last fiscal year. According to the Associated Press, therefore, forty cents of every dollar spent in the 2010 budget was borrowed. Federal debt last year totaled over $13 trillion. The debt is now crawling close to the $14.3 trillion debt limit, which Congress must soon raise, or we will be in default.
Alexander Tytler, 18th century Scottish lawyer and historian, is reported to have said words to this effect, abut the time our nation was born: “A democracy will last only until a majority of the electorate determines they can vote themselves money from the Federal treasury, by electing the people who will promise to give it to them.” History records the average lifetime of previous great nations as 200 years. This is today called by some the “Tytler cycle.” Tytler did not even mention borrowed money, which for us has made it all possible, thus far. But now comes the day of reckoning.
If we instituted the 15% flat income tax with no exemptions or deductions, we would probably double our income tax collections, and more important, everyone would be paying their fair share, even though the bottom half would still pay in much less of the taxes. And if everyone was paying taxes, there would be much less demand for free public services. Anyone interested?