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Why our current tax system is so unfair

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Posted: Tuesday, April 2, 2013 12:00 am

We hear it all the time: "That's not fair!" It is the secular-progressive war cry. The president seems to use it in every speech. So is this just a clever, politically correct marketing slogan, or do they have a point?

For starters, what is the definition of the word "fair?" Dictionaries define "fair" as "equitable and just; free from favoritism or self-interest, bias or deception."

Lately, President Obama speaks exhaustively of "fairness," or lack thereof, in the tax rate paid by the rich. His argument is that the rich can "afford" to pay more, so they should. He even said that he, a multimillionaire, should pay more. In any case, does the president's argument hold-up against the definition of fairness and the facts?

According to the National Taxpayers Union, people earning $112,000 and up paid an accumulative total of 70 percent of all federal income taxes in 2009. Those making $32,000 to $66,000 paid 27 percent, and the bottom 50 percent paid 2.3 percent. Obviously, the "rich" (making $112,000/year or more) are paying the lion's share of the tax bill at 70 percent. But why is the bottom 50 percent, half the country, only paying 2.3 percent?

According to the Tax Policy Center, 46.4 percent paid no federal income tax at all in 2011. However, the Center on Budget and Policy Priorities believes that the number of non-taxpaying Americans is exaggerated because of the economic downturn, and that the 2007 number of 40 percent is more appropriate.

Vice President Biden defined taxation fairness, during a 2012 speech to the NAACP, as, "Where everyone, and I mean everyone, has skin in the game and no one gets played for a sucker." The data says that at least 40 percent of the population does not pay any taxes and the other 60 percent is being played as "suckers" per Mr. Biden's definition.

The president is partially correct; the system is not fair because a high percentage of folks have no "skin in the game" and the "rich" are paying 70 percent of the tax bill.

Moreover, we have a progressive tax system that burdens the most successful people with the highest tax rates. Currently, the 2013 marginal tax rate ranges from 10 percent to 39.6 percent. Is it "fair" to tax one group at 10 percent and another at 40?

When one factors in the loopholes written into 72,000 pages of tax code in 2010 (up from 17,000 in 2006), the idea of fairness becomes preposterous.

Apparently, the Obama administration must be referring to "political fairness" and the agenda of income redistribution instead of "everyday fairness."

So, is there an appropriate replacement tax system that would be "fair" and run without the political agenda element?

Two good replacement ideas are the "flat tax" and the "consumption tax." The flat tax charges everyone the same tax rate. If, for example, the tax rates were 10 percent, then someone making $100,000 would pay $10,000, $25,000 would pay $2,500, etc. If no exemptions are allowed for anyone (especially politicians), this is a very fair system.

At this point, secular-progressives are saying the rich are not paying enough. If so, the consumption tax would be more to their liking. This tax is only paid when an item or service is purchased. Therefore, logically, the rich can afford to buy more, so they would pay more. Again, without exemptions, this is a very fair system of taxation.

With either system, the federal government could reduce or virtually eliminate the IRS, reducing their overhead by at least $10 billion per year.

On the other hand, all of us would stop paying for tax accountants and attorneys and finally have a fair tax system.

Find out more by attending the Lodi Tea Party general meeting, the fourth Monday of each month at 6:30 p.m. in the United Congregational Christian Church, 701 S Hutchins St, Lodi.

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