You really think "rich" people pay 35% of their income in taxes?
Many of them pay more than 100% in taxes when one properly takes into account the inflation tax. (generally 3% on all assets)
I propose a zero federal income tax rate.
The US has the power to coin money without borrowing. So the simplest thing is to continue the SS/Medi/ACA/UE taxes, cut defense spending and just print the remaining 25% of the government spending budget. It would come to around 1 to 1.5 trillion in new money injected into an economy valued at 80T. So inflation wouldn't change much, if any.
The upside is that "no tax" appeals to every income level above 20K (who generally get paid by the tax system). No more IRS, No more tax accountants, No more corporate games, all the money comes home, No new federal debt, no more manipulating voters based on tax plans. No more need to shield assets or play games to beat the tax man, no capitol gains tax. You earn a dollar in income (investment or wages) and you keep 85% of that dollar up to 100K. 100% over 100K
So simple a child could do it.
So yeah, the price of everything goes up 3-5% per year. No big deal because wages and asset values would rise in tandem.
Formalization of this plan would also create a run on US foreign held debt and absolutely ruin us.
The numbers themselves are suspect. If you printed money to support all spending that wasn't paid through SS/Medi/ACA/UE taxes, the amount of money you'd need to spend would amount to more than 3%-5% of the US GDP. More like 10%. Plus, like Beltim pointed out, its the ratio of new money printed to the overall money supply that really matters.
The value of U.S. currency depends upon the faith that people give it. Knowing that the U.S. was merely printing money to support over half its spending would destroy that faith, leading to further devaluing of the dollar.
Finally, any scheme that depends upon modest inflation tends to encourage even greater inflation over the long term.
Yeah, this would be a really, really disastrous plan.
Well our current "scheme" of borrowing money is sure to be a disastrous plan. Ever met someone who has borrowed their whole lives? Just how long do you think it takes to pay off 19 Trillion in debt?
There are at least 10 countries who currently have no national income tax. They are doing very well. In fact, the USA had no income tax for most of our existence. So yes it is doable.
Only about 25% of the US budget isn't military or SS/Medi/UE/ACA. Of course much of that 25% spending is dubious but that is another discussion. So yeah, it would take the foresight to cut the extremely dubious military spending to a number equal to what Europe spends. I know crazy huh?
So let's say we end up printing 1.5 T? Well we have been borrowing and pumping into the economy 1/2 T annually pretty much for the last 7 years. Where is the inflation? Sure, at the consumer level there is a little inflation. Most of it just goes into stocks and real estate.
Also, inflation is more a factor of the total value of the country, around 80T, than the annual GNP. 1T to 80T barely moves the needle.
Please note that I am saying that the social programs --- SS/Medi/ACA are pay as you go. As it is now 60% of US citizens pay no income tax but do pay a very fat chunk of 15% of income on welfare taxes. I agree we should keep that portion. Other taxes should remain, such as gas taxes, excise taxes, import taxes.
By the way, import taxes are much preferred to income taxes in an economy whose jobs are all going oversees. We won't have any income to tax at this pace.
One could easily replace the income tax with an import tax. Sure the price of some goods would go up but what percentage of your income do you actually spend on electronics, TVs, imported food and general crap? 5%? So a 100% import tax would result in a total increased cost to you of 5%. At the same time you are paying no income tax and filing no personal papers to Uncle Sam. Your papers are private again as enumerated in the constitution.
Meanwhile, with an import tax suddenly jobs return to the good old USA. People are back at work. People have dignity and pride again. The net amount going into the welfare funds increases. By the way a trade war is just fear mongering. We primarily export food and wood products (paper) and military hardware to countries where people earn 4 dollars a day. As Ross Perot said -- we aren't going to get rich selling things to people making $4 a day but they sure as hell are getting rich selling stuff to us.
Take a look at the federal budget pie chart ---- you'll be impressed by how large the welfare and military portions are and how small the so called discretionary sections are.
So tonight at the debate when they are talking taxes and cutting some program. Remember how miniscule that program is in relation to where the money is actually spent. Then call bull shit. Then try to figure out how to increase the welfare portion of the chart? The only way that is done is by having more jobs and income.
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