RMC: This is a real simple one for me. Zero percent for personal income tax, 0% corporate tax, 0% capital gains and dividend taxes. Yes, we should get rid of the estate tax or the death tax. Mortgage interest deductions. And, finally, no we should not extend the 2% payroll tax holiday.
Let’s start with the tax system. I favor the fair tax that has been around for awhile and seems to gain a little bit more traction each and every election. It’s simple and brilliant—the more you consume, the more you pay in taxes. Food and housing are excluded, of course, as well as some necessities. If I go buy a $100,000 car, I’m paying a lot more in taxes than someone buying a $20,000 car. Can it be any more fair than that?
As an alternative to the fair tax, I do like Herman Cain’s 9-9-9 plan where you’ve got a 9% personal tax rate, a 9% corporate tax rate, and a 9% national sales tax. It’s a great plan. How can there be any objection to being able to prepare your personal income tax return on a five by seven inch postcard? It makes it real simple, and we’re in favor of plans that simplify our tax code.
A lot of people say that everyone should pay their fair share. I agree. Sadly, fifty percent of the people in this country don’t pay any taxes (outside of sales tax or Social Security or Medicare). A consumption tax is a fair way of ensuring that everyone pays their fair share. The illegals who don’t pay taxes now will have to pay taxes under the fair tax plan or any national sales tax. The problem is the 50% who don’t pay taxes don’t want this plan because then they can’t freeload off the system.
With regards to the payroll tax holiday, it was an ill conceived idea from the start. Yes, it puts a small amount in the paychecks of workers each week but it has a much more pronounced effect on the Social Security Trust. So, they haven’t actually accomplished much in the long-term. It’s not like the payroll tax holiday kickstarted the economy. I know there are a lot of people living paycheck to paycheck that this tax holiday put a few more dollars in their pockets for gas or food, but I don’t think it was an economically responsible thing to do.
Michigan: I would like to see a flat tax. This would level the playing field and reduce the size of the IRS by about 90%. Some of these displaced IRS employees could be diverted into audit of Medicare, Medicaid, and welfare fraud. Yes, we need to abolish the death tax. Yes, the 2% tax holiday should be over. This amount is not going to make or break anyone but is a great deal of money going back into the Treasury. With the unemployment we face now, I don’t see how we can lower taxes.
Sydney: I’m no expert on tax but all tax policies need to achieve a couple of main goals. First, more money for Treasury. Second, small business owners need to be encouraged by the taxation system. With regards to the first point personal taxes for the most wealthy should be higher. Even if they are higher these are the people who can afford to hire accountants to find loopholes in the tax system so they pay as little as possible anyway. Corporate tax rates could perhaps be lowered or restructured to benefit small business owners in particular. The payroll tax idea seems like a good idea as the money people save in tax will be spent on goods and therefore boost the economy.
I would keep the death tax. The problem is that some of the States impose death tax as well. This tax, like many others should be imposed by either the relevant State, or the Federal Government, not both. It seems to me that all this duplication is an unnecessary complication and burden on people who are doing it tough already because they have lost a loved one.
Cartwright: I too support the fair tax, so that would make the rate for personal income taxes, capital gains, etc. all 0%. That eliminates the complex tax code with loopholes, deductions, and credits. Certainly, we should do away with the estate tax. That has caused massive problems for more than one or two families. The estate tax is one of the most inequitable taxes around. It amounts to perhaps double or triple taxation in some cases. We don’t need to take even more from the dead than when they were alive.
I heard mention of Herman Cain’s 9-9-9 plan. It’s a nice idea, but I think the main problem is that now we’ve got both a consumption tax and an income tax. Ultimately, successive administration or Congresses will find a way to increase all those rates, and then the taxpayer gets shafted. I guess if we couldn’t get the fair tax through I would support some sort of flat tax. I think that’s fairly simple. If you made $50,000 and the flat tax is 10%, you owe $5,000. It doesn’t get much more simple than that.
What was the third part of the question? The 2% payroll tax holiday?…It’s an absolute travesty. The dollar amount isn’t that big and won’t have that much of an impact on the economy. But what it does do is rob the Social Security trust of funds, so we’re getting into an even bigger hole there. I think a reduction in personal income taxes would have a bigger impact. Change the withholding rates and you put money in the pockets of the workers but get it back at tax time. It’s, in essence, a zero sum game. So, no, I don’t support the proposal to extend the payroll tax holiday.