LETTER TO THE EDITOR: Income tax prevents economic growth, global competitiveness

Tuesday, November 20, 2012 | 6:00 a.m. CST

The Income Tax prevents the U.S. economy from being competitive in world markets, penalizes wealth production and is easily manipulated to suit current political power.

Our tax structure  — 72,536 pages increased by almost 1,000 pages from 2010 to 2011 —  is growing at an annual rate of 3.28 percent.

Changing levels of taxation doesn’t address global competitiveness.

The Government Accountability Office estimates compliance costs equal 1 percent  of Gross Domestic Product each year. In 2010, compliance costs plus efficiency costs (costs incurred when investments, work and savings are changed in an effort to meet compliance costs) amounted to about $1.165 trillion of the tax bill to our citizens and that did not include the taxes due.

Our tax structure is a violation of the purpose of law:

“It will be of little avail to the people that the laws are made by men of their own choice if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow.” — James Madison in Federalist 62.

A flat tax still taxes payrolls and exports but not foreign imports. Migration of jobs and industry overseas continues since income earned overseas isn’t taxed. Class warfare continues as middle-class tax cuts and tax hikes on the wealthiest are presented as answers. They are not. Closing loopholes is ineffective. As one loophole closes, cronyism opens another.

Fair Tax HR 25 is the only bill before Congress that stimulates the economy without increasing government spending and lowers the unemployment rate. Ask Dave Camp, chairman of the House Ways and Means Committee (202-225-3625) to include the Fair Tax in tax restructure discussions.

Beverly Martin is a Fulton resident. 

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Christopher Foote November 20, 2012 | 10:39 a.m.

Although their ideas have been soundly defeated at the polls, the pro-regressive taxation (the wealthy should pay a lower tax rate than the middle class) crowd is undeterred...

HR25 would eliminate the IRS and impose a 23% (30% for those in the reality based community) sales tax on goods. However, it is estimated that in order to be revenue neutral the federal sales tax needs to be approximately 45%-53%. In addition, those making more than approximately $200,000/yr will see their tax bill go down while those making less than that will see their bill go up. In sum, HR25 would add significantly to the deficit, increase taxes on the working class and lower taxes for the wealthy. Data from here:

A much more progressive alternative would be to continue taxing income at a progressive rate and eliminate all itemized deductions. A table with six different tax rates is not that complicated. This plan would address many of Mrs. Martin's concerns, while increasing revenue. And it has the added benefit of not shifting the tax burden from those at the top of the income distribution to those in the middle. Though perhaps the regressive tax crowd sees this as a bug, not a feature.

(Report Comment)
Jimmy Bearfield November 20, 2012 | 10:58 a.m.

Foote, you're not taking mortgage deduction in order to do your part for the debt and deficit, right?

(Report Comment)
frank christian November 20, 2012 | 1:59 p.m.

Chris's information comes from Institute on Taxation and Economic Policy.
"ITEP and CTJ reports, such as Inequality & the Federal Budget Deficit (1991), helped inspire new thinking about tax policy that later lead to the federal tax reforms adopted in 1993." Was this the Clinton "inspired" series of tax increases that were to "reduce the deficit"? I liked the Gingrich inspired policy, that eliminated the deficit, balanced the budget and reduced the debt!

"New York Times columnist Paul Krugman recently said that ITEP does "very good, careful work." OH! WOW!

(Report Comment)
Jimmy Bearfield November 20, 2012 | 2:33 p.m.

In 1993, Congress and Clinton raised taxes on people making as little as $30K. Why? Because increasing taxes on just the rich doesn't raise enough money. That's also why Congress never has and never will peg the AMT to inflation.

You can tell when someone is serious about reducing the debt and deficit because he'll give up his deductions for the mortgage, kid(s) and other things. He also pays more than just what he owes, instead of posturing like Warren Buffett.

(Report Comment)
frank christian November 20, 2012 | 4:10 p.m.

A Clinton campaign promise, stated over and over was "tax cuts for the middle class!" He kept telling them after election, he hadn't forgotten, just hang on. He never gave them squat! The Republican legislation of 1997 allowed growth that enabled them to balance the budget and Eliminate a deficit.

I have a clipping stating Clinton "is exploring buying back a portion of the 3.6T$ debt held by the public". Treasury Sec. Lawrence Summers, called it a "new environment". It was 1999 and we had first surplus since 1969. CBO expected a larger surplus next year and to have our debt paid by 2015! Back to back surpluses had last happened with Eisenhower 1956-57. Our Debt was 5.5T$. "3.6T$ held in public hands, the rest in gov't trust funds, the largest being Social Security." Liberals should have been yelling at Democrats to keep their hands off of "my Social Security", rather than Republicans!

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