A Conservative View of Taxes
Taxes are the nuisance with which millions of Americans must contend each spring. For many hardworking American citizens, taxes can be financially damaging. We are likely all aware of the fact that 49.5% of Americans paid no federal income tax in 2009, up from 34.1% in 2000. This contradicts claims that the rich aren’t paying a proper share of their income in taxes. Actually, I would be inclined to believe those who make this claim. The rich pay far more than what should reasonably be considered fair.
It is perfectly reasonable to suggest that all Americans pay some share of their income in taxes. However, a reformed tax system does not require that the upper 1% contribute 36.7% of all federal income tax revenues. Unfortunately, a 35% upper bracket tax rate limits the ability of the affluent to invest and spend their money in a manner that creates jobs. Tax increases almost always have an undesired effect, as demonstrated by the 1990 yacht tax effort. In certain states, such as New York, the upper income earners may pay more than half of their income in taxes, including federal and state income taxes, as well as property and excise taxes. This severely limits their ability to spend money on goods and services in such a way that helps those who would receive the revenues.
Consider the aforementioned yacht tax. If an excise tax is levied, as did occur, those whom it would affect merely change their behavior; in this case, they cease purchasing yachts. Does this penalize the rich potential yacht-owners? No, because they can simply wait for the tax to be repealed before making any purchases. However, this is damaging to the companies that design and construct the yachts. As their revenue decreases, they are forced to lay off workers, harming the very ones whom the Democrats want to protect by utilizing a form of class warfare (more on that later).
So then, what might a truly conservative tax system resemble?
If the United States maintains an income tax, a flat system would be the best option. I would argue for a low figure such as 10%, because that significantly reduces taxes for the higher brackets. This would lower taxes on the higher income brackets, relieving them of a higher tax burden and providing income-earners with more money to spend or invest as they see fit. This ten percent tax is also sufficiently small to avoid placing a large burden upon those with lower incomes.
Some may argue that a 10% tax is more of a burden for those with smaller incomes that for those who can afford to sacrifice more in favor of the “common good.” In response, I would ask why it is the responsibility of the affluent to subsidize the lifestyles of others. In a free society, personal responsibility is key. Our citizens must not depend on their neighbors for handouts. If we are to begin a true, permanent economic recovery, every citizen must be a responsible contributor to the system.
Using these statistics, we can envision a hypothetical family of five, including three children, with the combined income of $215,000. Most Americans would consider such an income to be quite large. Now, let’s say that two of these children are college age, with the third not far away from entering college. In addition to these educational expenses, we should assume that this family lives in a house, with it likely that they are making mortgage payments on it. We can also assume that they purchase electronics and at least on additional car for shared use among their children.
Looking at this expenses, it can easily be seen that this family has several large financial burdens. The point behind this exercise is to demonstrate that while liberals would say that this family should pay its fair share to the government, the fact is that paying 28% or more presents an added burden that harms this family, rather than benefiting anyone. Why should this hardworking family provide be financing someone else’s lifestyle? Reducing their tax rate to a much smaller ten percent would substantially increase the family’s ability to cope with their spending.
The liberals may argue that reducing taxes decreases revenues, leading to larger deficits. This point assumes that we must continue spending at levels comparable to current ones. The response is simple: stop spending! Reducing federal and state expenditures is one of the most important aspects of any responsible economic policy.