- Personal Finance»
- Understanding Finance
A Flat Tax? Yes, But on Net Worth
Flat Tax Proponent Steve Forbes
Offered Novel Tax Advice
Poor folk don't give the rich and powerful their due.
We just kind o' keep making excuses for 'em, always thinking they must o' meant well, but they just can't get the square pegs in the round holes.
I'm only guessing, but it seems to me we all felt that very same way back when Congress first passed the income tax. It didn't hurt all that much! Then, that first itty-bitty income tax didn't seem so onerous.
But, now, today, we want to scream from the rooftops, "My taxes are too high! My taxes are too high!" We know we ought to get rid of 'em; we don't know how.
Political Groundswell for Flat Tax
Such high emotions among the country's middle class have evoked a groundswell among politicians on both sides of the political aisle in favor of a so-called flat tax. Some want a "pure" flat tax with no deductions while others offer modified versions that would retain some of the popular deductions, primarily home mortgage interest, local and state taxes, and charitable contributions.
The existing income tax is so full of holes, so unfair to so many people that it has few defenders. The question is not, "Should we deep-six the income tax? " Rather, the question is, "What kind of flat tax should we impose, and how can we change the system without causing havoc?"
Unfortunately, switching to a flat tax is akin to going on a diet and giving up chocolate ice cream only to replace it with vanilla ice cream. It may be a big change, but to no avail.
When the government decided the country needed an inexhaustible supply of money, it had any number of options. Few poor folk could be found among the gentry in Congress, where the big decisions are made. Most were men of wealth, whether Democrat or Republican, and relied not on wages and salaries, but on dividends, interest and capital gains.
The Wealthy had a Great Idea!
So, they came up with a great idea. Tax ordinary income!
It certainly seemed reasonable to them at the time.
There was one tax, however, that no one ever discussed. In fact, no one even wanted to think about it. It would be preposterous, un-American, heresy!
That tax is a flat tax, but a flat tax, not on income, but on net worth!
The Cat's Out of the Bag!
There, I said it. The cat's out of the bag! Please don't report me to the Whitewater ... er, I mean, House Un-American Activities Committee.
Think of it, though. If Jane Doe punches holes in donuts for $15,000-a-year but hasn't got a dime in the bank, should she pay the same taxes as John Doe, who also punches holes in donuts, but has $6 million in various investments around the world?
Oh, of course, we couldn't tax net worth because it would be too hard to figure out how much everyone has stashed away -- and besides, people would cheat.
But just think of all the jobs it would create. You could keep the entire Internal Revenue Gestapo, er, Service, that is, in business, and keep the economy booming!
But us poor folk know better. We're not so dumb. Whatever the politicians decide to do, we know we're the ones who will be paying the bills.
Shorty the Barber's Wisdom
It's like Shorty the Barber of the old Amos and Andy Show once said when asked how he figures his taxes:
"I just send them everything I make."
I wrote this column as a "My View" for The Hour newspaper of Norwalk, Conn., on Feb. 3, 1996. My opinion on taxes remains unchanged. I now write my on a wide variety of topics on HubPages. To view my HubPages Profile Click Here