When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Thursday, April 24, 2014

Our Broken Tax System, Here is a Fix

Everyone In America Is Even More Broke Than You Think: "....more than half of U.S. wage earners made less than $30,000 [in 2012]..... according to an analysis released by the Social Security Administration...That's not far above the $27,010 that marked the federal poverty line for a family of five in 2012...."

The Nation has a good article about our broken tax system in the US (excerpt below):

"1. We don’t have a progressive tax system. A truly progressive tax system would ask those who are the most well-off in America to contribute the largest share of their income in taxes....but when you account for state, local and sales taxes, top-line taxation rate isn’t really progressive at all...Not many companies pay the corporate tax rate—and some don’t pay any corporate taxes at all....Some of your tax dollars are given to hugely profitable companies... Meanwhile, some people are actually taxed into poverty....A childless adult earning poverty-line wages ($12,119 in 2013) would have a combined payroll and income tax liability of $1,139, but receive only a $169 EITC. This person would be below the poverty line once he or she pays taxes....Much more revenue is out there....In order to raise more tax revenue, corporations paying negative tax rates are a logical place to start, as are the very wealthy. They are the only ones seeing their income increase, rather than decrease..." source: The Nation--7 Facts About Our Broken Tax System
Suggested fix: eliminate federal income tax on the first $30,000 of annual income per person. Eliminate all personal deductions and individual tax credits. Impose a flat tax of 20% on all income (including capital gains, dividends, interest, etc.) above $30,000. Corporations would not be entitled to the $30,000 exclusion, and would pay 20% tax on all income. Remove all income caps on social security (FICA) taxes and include all employee compensation (stock option gains, etc.) as subject to the FICA tax, and include everyone in the social security program, with "means testing" for benefits. Self-employed individuals should pay only an amount equal to the employee portion of FICA as "self-employment tax." Simple, fair, equitable. And if the above were adopted and you are an employee making less than $30,000 per year, you would not even have to file a federal tax return. (That's more than half of US wage earners!)

2 final points: 
1. Congress should get out of the "tax expenditure--loophole syndrome" of giving away tax breaks to the wealthy and influential--it should be against the law!
2. Raise federal minimum wage to $10.00 per hour ASAP (currently $7.25 per hour).


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects