Fair Taxation

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Fair TaxationThe starting point for Fair Economics …

Copyright 2011, All Rights Reserved



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An Introduction

The Foundation for any economic policy begins with Tax

Policy – it is the most immediate connection betweengovernment objectives and individual impacts.

Tax policy also tends to be the most controversial area ofeconomic policy because let‟s face it – taxes are not andnever have been popular. What‟s more, they never will

be, regardless of one‟s political affiliation.

The current Right/Left debate about tax policy has not

changed over the past 40 years.

There is no reason that the debate can‟t change – thereare alternatives that haven‟t been explored yet.



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What is Fair Taxation ?

Fair Taxation begins with the premise that Income Taxes

should only be paid by those who can afford them. Itextends to encompass the idea that some taxation can beviewed as an investment rather than a burden.

When the income tax was introduced in 1913 – it was

meant only to be paid by the wealthy or large companies.Only later was it extended to all wage earners. Thatoriginal premise is referred to as “Progressive Taxation” – e.g. that only those who can afford it pay and the rate

increases as the amount of income increases.

Also, many people don‟t feel taxes are fair because they

don‟t have any say in how the revenue is spent.



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Real Wages have been stagnant for nearly 30 years – the cost of living for the American Middle Class hasbeen rising but income has not kept up. At the sametime, with large tax cuts to the wealthy, the MiddleClass has become increasingly responsible for

paying the government‟s bills. The actual tax burdenhas shifted dramatically from high income earnersand corporations to middle income earners.

That‟s Not Fair…



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Fair is Smart

One of the main principles of Fair Economics is that theFair policy is also the Smart policy. This applies to FairEconomics as well.

Let‟s ask ourselves a question; If the vast majority of the

American economy is driven by Middle Class spending

and their real income is shrinking, what sense does itmake to place the majority of the tax burden on them?

The more money the government takes from the peoplewho are actively spending in an economy, the lessspending there is. In this situation, income taxes becomean economic disincentive or “de-stimulus.” Any tax breaks

given ought to be dedicated to policies that are 100%guaranteed to stimulate the economy.



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Fair Taxation Ideas 1

Here are a couple of ideas on how to make Taxation Fair

and Smart:• Income Tax begins at the upper middle class level – the

point where folks can actually afford to pay, around$100k, (no income taxes below that income).

• Income Tax rates begin low, say 15% and then increaseby 10% for each extra 100k up to 500k & caps at 50%.

• Investment taxes such as Medicare & Social Security arestrengthened by increasing the contribution rate from15.3% to 17% and by taxing the entire salary (e.g. nocap at $106,000).

• Targeted Government Bonds are introduced as analternative pension approach. Bonds could then appliedto national Debt and / or specific areas of spending.


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Fair Taxation Ideas 2

Here are some more ideas:

• Remove most deductions or tax breaks for those stillpaying income taxes – only retain those deductionsdirectly related to creating American jobs orspending on American-made products.

• Use Taxes as a dis-incentive as well, for exampleintroduce a penalty tax for exporting jobs from theUS to other low-wage nations – say $50k per job peryear.

• Give those targeted to pay income taxes the option topurchase „Tax Bonds‟ instead for up to 50% of the tax

burden.• Tax Capital Gains based on the same premise and rates

as the income tax.



If our economic focus becomes directed once againtowards increasing jobs and increasing incomes, moreand more people will once again be making enough toafford to pay income tax – at the same they will grow theeconomy. This is both Fair and Smart



Taxes as Investments

We already have a long history of combining Taxation with

personal Investment – we‟ve been doing it for more than70 years with Social Security and more than 40 years withMedicare.

Add to that the fact that a growing % of Americans have

no other pension plan other than a 401k and the stockmarket has become increasingly volatile. There is noreason why Americans of all income brackets couldn‟t buy

government bonds targeted to pay for either current

budgets or existing debt. The bonds could guarantee adecent rate of return and would represent the safestinvestment possible for any American.

This gives Americans a choice in what they want to fund.



Summary

1. Bottom Line – shifting the tax burden from the wealthy to the

Middle Class is not Fair, it‟s not Smart and it‟s definitely notsustainable. Such a policy guarantees both permanentdeficit / debt growth and as well permanent economic

decline.

2. We can fix this immediately by shifting the tax burden backto where it has always supposed to have been.

3. We can add extra revenue to make up for shortfalls byadding tax investments such as new bonds and tax “dis-incentives” such as the Jobs Export tax.

4. This if combined with an end to the concept of the “Endless

War” can lead to balanced budgets and economic growth.

Fair Taxation

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