Response: Flat Tax is Just Flat Wrong

This is a response to the article “In the debate over tax reform: Why not a flat tax?” by Deputy Editor in Chief Tony Bara in the October 5 issue of The Xavierite.

While I admire the ideology behind your article advocating a flat tax on all incomes, I cannot say that I agree with it. Liberals like me enjoy shouting, “Flat taxes are regressive by nature,” meaning that they place an undue burden on the poor, which they do by many standards.

“But wait, Jake. How does everyone paying the same percentage of their income put more pressure on some groups?” Well, that is because once you get down into smaller numbers of income, that percent becomes a much more vital part of their income.

In other words, a person who makes $12 million a year (an average salary for corporate CEO’s) paying 17 percent of income is parting with $2,040,000. Sure, it is very large chunk of income. Maybe the entrepreneur making this amount will no longer be able to purchase a yacht or a second summerhouse.

On the other hand, a person making $40,000 (an average salary for a middle class American), parts with $6,800. This stops them from being able to make payments on their house (if the bank has not already foreclosed on them) or from paying their child’s health insurance. When pay gets lower than this, the choices begin to come down to food, medical coverage, or a house.

I advocate that the scaled tax system we have in place right now is the one that is the most just and most effective. The highest tax bracket is 35 percent. There are two changes that need to be made, though: one is that a higher tax bracket must be made for those who make over $5 million yearly. These people should be charged at 45 percent because they reap the benefits of the system in the form of various government stimulus packages, but they do not do much to stimulate the economy anymore.

These people are the ones you hear about flying around the country in their own private jets as you sit at your job struggling and laborously working just to make $8 per hour. However, if they would raise your pay to $13 dollars an hour, your paycheck might not all go to school or gas and you might have enough money to buy something and therefore create a job for someone else.

In turn this consumerism could create a snowball effect of job creation. The other suggestion I have is that the capital gains tax moved upward from 15 percent. “Jake, I thought you were talking about income tax? What are capital gains?” Capital gains encompass all of the money people make from stocks and trading.

Capital gains are a loophole through which huge earners squeeze through. Since company stock is often a form of payment for heads of corporations, and that is made on long-term stock, which is taxed at 15 percent instead of the usual 35 percent. This loophole saves billionaires billions and billions of dollars and keeps the money from being reinvested by the government through taxes.

These are the sources of income that allow multi-billionaires, such as Warren Buffett, to pay a lower amount of money than his secretary. Let me repeat that: Warren Buffett, a multibillionaire, actually paid less in taxes than his secretary last year, and he is now asking the government TO TAX HIM MORE! I guess my point is, that while the tax code is incredibly complicated, it cannot truly be simplified to the point of a flat tax.

A flat tax would bring in an incredibly low amount of revenue, and the government is already low on funds for reasons that cannot fit in this article. Single-minded individuals, such as Grover Norquist, may trick some politicians into signing his “No Raising of Taxes Pledge,” but the truth is that the money that is supposed to be circulating through the economy is not there.

The government has tried helping the rich to get richer, hoping that they will invest in more jobs for the poor. The rich have indeed invested in jobs but because most labor is going overseas, the lower class loses out. Therefore, that is why it is time that the government gets the funds needed to create jobs for the AMERICAN people, and an intensely scaled income tax code is the only way to do that. Billionaires are not going to give out jobs anymore.

So, the government needs to create the pay for jobs for the poor through higher taxes on the rich. I guess it is a regular old Robin Hood approach; however, I believe it will work. Yet, that is just me. Maybe I do not know what I am talking about.

But what I do know is that I need a job like many other unemployed Americans… and fast.

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