Magic Bullet to Fix Income Taxes and the Economy
Last night on ABC World News Tonight with Peter Jennings (April 12, 2005) there was a segment exposing the small amount of income taxes paid by corporations. By 2003 Corporations were only paying about 16 percent of all income taxes taken in by the U.S. federal government.
Specifically mentioned was Wachovia which saved 3 billion dollars by purchasing a sewer system (or something like that) in Germany then immediately leasing back the sewer system to Germany. The only purpose of the transaction was to reduce Wachovia's income tax burden.
What we have here is a complicated, unfair system in which corporations waste enormous time, money and resources just to reduce their income tax burden. At the same time, the naked truth is individual people pay most of the income tax to the government and corporations pay very little. All the effort corporations put into reducing their income tax burden is simply national productivity down the drain. It does nothing healthy or good for our country.
There is a simple magic bullet that can fix this problem: change the system to tax ONLY individuals and ONLY on gross income with no deductions and no loopholes. For example, change the system to tax individuals at a rate of 25% of their gross income over $40,000. No deductions for home ownership. No deductions for dependents. No loopholes for rich people. No unfairness at all anywhere in the system. And corporations can forget about income taxes and get back to the business of making better products leading to an improved economy and higher wages for all Americans.
The Economist reports that Russia discovered making income tax simple and fair increases both productivity and compliance, a win for both government and the people.
I've written about this idea for fair, simple income taxes here in this blog:
Magic Bullet to Fix Income Taxes and the Economy 1
Magic Bullet to Fix Income Taxes and the Economy 2
Magic Bullet to Fix Income Taxes and the Economy 3