Sunday, November 4, 2007

What is a fair and progressive tax system?

Another attack on Hillary? Perish the thought gentle readers but I do have a question that I can't seem to get my arms around. I was listening to our great local talk station WTTT and I heard the host discussing the last week's Democrat debate. Hillary was being universally panned for her performance and I have heard the quotes and I still have no idea what the hell she is talking about and what some of her positions are but I digress. Hillary said something really interesting that I thought was worth discussing. She said in response to a question from Tim Russert on her support of a 4 % surtax (after a question on the Rangel Tax plan) the following (in part):
... I didn't say that, Tim. I said that I'm in favor of doing something about the AMT. How we do it and how we put the package together everybody knows is extremely complicated. It's not going to happen while George Bush is president. Everybody knows that. I want to get to a fair and progressive tax system.
So it is this concept of a fair and progressive tax system I would like to address because I don't understand it. A fair system I understand and in fact define it as everyone pays the same % of income to taxes or the same amount (I don't know if Donald Trump and I should pay the same dollar amount in taxes as I probably couldn't but anyway - I am just working on the definition). So that is in a sense how I read a fair tax system. But if we continue with the Hillary quote she says that she also wants a "progressive" tax system. So what is that? Well a progressive tax basically outlines the progression of the % of taxes paid as income increases. In other words someone making $50000 may pay taxes at a 20% tax rate and someone making $200000 would pay taxes at a rate of 30% or something to that effect. So basically if there is a high earner (say an ex-president who is making millions doing speeches while his wife is running for the US Presidency) a progressive tax states in principle he should pay more money (at a higher rate) to taxes than I should.

Why the hell is that fair? But what right should I be taxed at a higher rate than my neighbor who makes less than I do? Where is that in the Constitution? Why does that even appeal to people as part of a platform from one of our political parties. Yes I know Adam Smith notionally supported the rich paying more than the poor (which of course seems obvious given each group's economical means) but also note that Karl Marx also supported a progressive tax system and I am not sure anything Marx proposed deserves to be part of US law and a position that a Presidential Candidate should adopt. But this is how we misuse language and sell class envy and engage in the politics of class warfare. All those people out there who do not have the economic means of a Donald Trump can legislatively support a financial whack upside Trump's head if we move toward some sort of progressive tax system. What kills me is why so many people support paying more taxes. Can't these people donate extra money to the Government and leave me the hell alone?

Why is it OK to play the supposedly disadvantaged against the advantaged? Why are people not accessing the bounty that is this country and instead reverting to blaming and punishing the achievers in this society? It seems that all politics has become is one person promising to outspend, out gift, out tax and out supply then the other and a new wave of people sign up to become additional dependents of the Government. Shouldn't candidates instead be offering how people can help themselves instead of offering nifty little phrases like Fair and Progressive which in fact does little to help out the folks who need it. The Government does not need to grow to become more of a nanny state. It needs to shrink and encourage folks to access their God Given gifts to make their lives better. This progressive tax system actually strikes me as a disincentive to work as part of what I will do with the extra income is to have more of it confiscated by the Government so they can throw more money to cure some real or perceived social ill. That isn't fairness but rather it is servitude. That is what is being sold by policies such as the one proffered by Hillary. People need to wake up and stop looking for the free Government cheese.

Outspoken Roman

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