Professor Michael Busler, an associate professor at Richard Stockton College, has a tax plan proposal that would be fair and equitable for all including the rich. Congress should adopt a 12% income tax with no deductions. His plan is simple. “All income is treated the same, whether it comes from wages and salaries, rent, interest, dividends, business profit or capital gain. We can debate what a livable minimum would be. We could make it $10,000 for an adult and $5,000 for a child, so that a family of four can earn $30,000 without paying any tax. Every dollar earned above $30,000 would be taxed at 12 percent, no matter how many dollars are earned. Under this proposal, everyone wins.”
Corporations and individuals would pay the same 12% and both would benefit. It would elimination the current complex tax code. Businesses and people would be able to plan how they use their money. Businesses would have the uncertainty eliminated about future government taxes and enable them to grow and hire more people.
A flat tax of 12% would put more money in the hands of people of all classes and the government. The Democrats have failed in the past to encourage consumer spending because too many people are unemployed and the employment picture continues to be bleak. Add to this the predicted snail growth of the economy in 2013-4 and the advent of the ObamaCare taxes in 2014 and you have a mixture of uncertainty among consumers and corporations.
The 12% flat tax would also have the rich paying more because they earn more. Obama has repeated said he wants to tax the rich more and reform the tax code. It can be accomplished dramatically through the 12% tax. It provides him with what he has talked about along with making the tax code so simple that the average person can do their taxes on a single form. No complex code to worry about with the 12% tax solution!
Because there are no deductions, the rich cannot use the tax code deductions to reduce their share of taxes. A 12% tax on a billion dollars without deductions is vastly different than a 12% tax on an income of $50,000. The more a person or corporation earns the more money they pay in taxes; furthermore, a consistent tax rate makes planning for the future easier and would encourage businesses to expand and hire more people.
The 12% flat tax would also do away with one of the biggest bureaucracies in Washington, the Internal Revenue Service. This would say taxpayers and the government money. It would speed up tax fraud investigations because it would just be a matter of checking income.
Finally, it would bring in more revenue for the federal government because all deductions are eliminated. The only thing Congress would need to establish was a minimum income level. Anybody below that minimum income level would not have to pay taxes. This would also enable the government to stop subsidizing the poor, do away with a lot of welfare and cut down the food stamp program. It is a win-win situation.
Here is the problem with this effective solution, it eliminates a political football. Politicians would have to focus on the way the money is spent by them. History has demonstrated repeatedly that Washington politicians don’t use surplus money to pay down the debt and reduce the deficit. Instead, the government finds more ways to spend taxpayers’ money. If they would stop spending and even reduce spending, this nation would see its debt and deficit decline significantly. But it will never happen!