Tax Debate

Federal taxes are suppose to be designed to fund the federal government. They are not suppose to be punishments (sin taxes, etc.), they are not suppose to be designed to redistribute wealth, and they are not suppose to be designed for politicians to play with in order to get some kick back from a lobbyist or a vote from the taxpayer.

Taxes should be designed to finance the Constitutional requirements of our federal government without hamstringing the economy. But the last two or three weeks have been filled with constant discussion and argument on extending the tax cuts for some and not for others. Many liberal politicians and voters as well as non-liberal but economic illiterate American citizens want these tax cuts to be kept for the working and middle class but not for the "rich". This "rich" could range from $250,000 plus to $1 million plus income/year.

The unfortunate thing is that most people do not understand how over taxed our corporations and rich already are today. U.S. Corporations pay the second highest tax rate among all other industrial nations behind Japan. The Rich in America (those making say $300,000/yr and higher) are just 1% of the population but they pay over 30% of all taxes. The top 5% of income earners in America pay over 50% of taxes in our nation. This includes rich individuals but also Small businesses that make enough to be in this tax bracket.

Most probably do not know that. These numbers come from the IRS not some conservative think tank that tries to play with the statistics in order to support a political ideology. These are facts. Lets shortly look at some economic facts:

At higher prices people buy less whether that is goods/services, or if that is a business that hires workers. The more you pay in taxes on investment the less investment you will do because the risk that is offset from the big payout is now less due to the taxation of Dividends and Capital Gains of individual investors. Understand that it is rich people who hire other people. If you work for a "poor" person please write me and let me know. Most employers are "rich" or at least well off. Their taxes being low is what will help employment and help raise the GDP in our nation. Lets remember that.

For you wondering what tax structure I favor. Well I favor either a Flat tax or the "Fair Tax". I favor no taxes on investment and no taxes on corporations or businesses. The reason is that those entities do not pay taxes anyways, they just transfer that onto their customers with higher prices. Either way it is still a cost to that business and those businesses wood invest more without taxes.

Have a great Christmas everyone and lets hope that politicians start thinking with their heads and stop thinking with their hearts. The latter causes them to make terrible decisions that are well intended but have terrible consequences.