It scares me when the government starts to make judgment calls like that about what’s poor and that’s essential, etc. It should just be simple and basic percentage if you want to be a law abiding tax payer living in the US. In a practical sense you make a good point as well that if people have to choose between food or paying the tax, they will choose food and become law breakers. But that’s fine and is basically how it works now too…if you don’t pay taxes but are so poor as to not be worth auditing by the IRS then you just fly under the radar. This is fine…but ultimately people have an incentive to become real taxpayers if they ever want to get loans or buy a house, etc. So the system still works.

The cigarette tax is a “sin tax”…equally ridiculous for the government to try and legislate morality. They don’t have any business telling you how to spend your own money, as long as you aren’t hurting anyone else.

Anyway, I’m certainly not suggesting we eliminate taxation. We need a government. But really only for about 3 things: protect the border from invasion (military), keep the peace (police), protect property rights (courts). By the way, environmental issues would fall under property rights. There are a few others which I think we could make a case for, but probably about 80% of the government is unnecessary. By eliminating the rest of the government we could get away with probably a 10% tax rate or less.

Glenn, regarding the “flow of money in the system slows and the functioning of the economy is impaired”, I’d challenge you to find a single piece of evidence to back that up (done by an economist).

It’s actually the exact opposite. Successful entrepreneurs are one of the most important drivers of the economy. They are highly compensated because they took huge risks (where 99% of people failed) to create new products and services which offer value to the world.

With a consumption or transaction tax Warren Buffet would pay a tax on everything that he spends. And sooner or later he (or his heirs) will spend every dime he has made. With a flat tax or a progressive tax the money is not collected until it is considered income. As long as Buffet keeps moving it around in the stock market and keeps it from being declared income there is no tax. With a transaction tax there would be money collected on every trade, unlike today where you can declare a loss and not pay any tax.

If I’m not mistaken, I think they call the current tax system a “Progressive Tax System” where those that make more money are taxed more. However, like you said, a simple flat percentage works the same way. Therefore, I think the same “Progressive Tax” should apply for a fixed percentage. It actually might, I’m not sure.

As per your argument on having a fixed percentage tax…I do see the merit in the argument, however I feel like the extremely wealthy (like Warren Buffet, as Kevin pointed out) can afford to pay a higher tax bracket. A professor of mine told me a story about a hedge fund manager who had made $300 million dollars and was taxed $100 million of it. My professor was against it, but I felt as if, well if he still has $200 million, he can certainly afford a $100 million tax.

So I can’t say I entirely disagree with your idea of a flat percentage, but I believe that in at least some extreme circumstances, certain individuals with a LOT of money can afford the high tax bracket anyway, and it certainly wont seem that punitive. After all, the $100 million in tax wont seem to be nearly as much to the individual netting $200m in take-home pay as $10k in tax would be to someone netting $20k.

In the case of cigarettes, maybe they want us to quit smoking but I have a different spin:

The government sees taxes on cigarettes as an unlimited source of revenue just as they do with gasoline, alcohol, phone usage (they are kind enough to label the tax a ‘surcharge’ or ‘usage fee’)and sales tax on cars, etc. They seem to have forgotten that a 10% additional tax placed on luxury boats valued at over $100,000 killed that industry.

Sales on new cars are down 25% or more. We are consuming less gasoline. Oops…where’s that revenue going to come from?

All of us. Even if income tax for low wage earners goes to zero they will pay more taxes elsewhere. They just won’t realize it.

If I was Cesar this would be my tax plan:

a) Corporate tax rate of zero. This would make the U.S. the tax haven of the world for business. No more unemployment since there would be more jobs than you can count.

b) A 2% transaction tax. A transaction is any time money exchanges hands for any reason. This would be payed by both the buyer and the seller for a total of 4% on all transactions, no exceptions. The feds get 1%, the state gets 2%, the city and county split the remaining 1%. All other taxes except the tax on gasoline are eliminated. The gas tax would be capped at 1% for a total tax of 5%. The gas tax can only be spent on highways (Concrete, asphalt, and steal. If the state wants to landscape the road they can pay for it out of their 2%.)

c) The U.S. congress can only fund and authorize money to be spent on items authorized by the constitution. All appropriations bills MUST state the section of the constitution that give the government the authority to fund that program (want to fund public radio, show me the section of the constitution that authorizes the government to be in the entertainment business and to use taxpayer money to compete against private businesses that are doing the same thing).

d) If you are receiving government assistance (not retirement or social security) or if you have received government assistance in the past 12 months you forfeit your right to vote (if you don’t feed the horses you don’t get to guide the wagon). If it has been over 12 months since you’ve received government assistance you are eligible to vote. Rome fell because the people found out they could vote themselves “bread and circuses”. I believe we are close to doing the same thing since the taxpayers are barely above the 50% level of the population.

The rich don’t “keep” their (and yes it is THEIR money). Take Bill Gates. Thousands of people have jobs designing, building, shipping, selling, and repairing computers and computer systems because of what he did. He has done more to help raise the standard of living and to cotribute to the economic system than Ted Kennedy (or any career politician) has. If anyone owes more to society it is the leaches who have lived on the public tit all their life (carrier politicians are at the head of that line).