Increasingly, members of both political parties in the America support a major revision of the Tax Code. While it is possible that we will complete such revisions before the 2012 election, it seems more likely they will be enacted soon afterward or by early 2013 at the latest. In the near depression-like economy, the world and, in particular, the Western economies have experienced since 2008, revenue has been diminished significantly. There is major pressure felt by many to leave as much cash as possible in the private sector to spur growth through innovation and investment.
Incentives to do something immediately about the Tax Code are mixed. Both political parties believe that revision of the Tax Code is timely and would be supported by the public if revisions lowered overall rates and simplified submissions. Revision of the Tax Code together with elimination of most, if not all, of the complex deductions would address both the fairness of the overall Tax Code as well as its mind-boggling complexity.
Those who have very low incomes would pay no income taxes at all, while the remainder would pay either 15% or some similar percentage all the way up the income latter. Ideally, there would be no deductions other than for the number of dependents who earn insufficient income to file a tax return. The new income tax system would not be a flat tax, but would be close to it. Dividends and capital gains taken as income in any given year would be taxed as such. Tax subsidies and “loopholes” would be eliminated.
State and local taxation schemes would, as they do now, follow the federal tax scheme and assess an nominal percentage of federal taxes actually paid. Everyone who filed Federal Tax Forms would file both state and federal tax forms as well.
The Congress will also likely make changes in taxes collected from corporations, inheritances and from the sale of various commodities in such a way as to make those added taxes as simple and fair as the modified income tax code.
Total taxes collected by the government should be balanced against expenditures such that the government spends no more than it collects in taxation. Initially, however, taxes may need to be slightly higher than expenditures in order to pay down over time the interest on the existing debt and then to retire the accumulated debt from prior years.
Three issues are important to the long term growth and welfare of the nation, and will also need to be considered soon. We will need a serious plan for the improvement and/or renewal of the nation’s infrastructure, for the improvement of basic education of the population at all levels, and for energy conservation and development to meet the need for national energy self-sufficiency and for gradual or rapid transition from fossil to renewable fuels. In the longer term we will also need to harvest and distribute potable water from the sea to all areas of the country. Collectively these are critical needs of the country. They will require a well thought out multiple-year program laying out reasonable goals with reasonably accurate cost assessments. We’ll need to plan that all out and pay for it as we go.
As a nation we are, in fact, reasonably good at doing things on a grand scale, e.g., Marshall Plan, Manhattan Project, or “Putting a Man on the Moon.” There is absolutely no reason we cannot do all of the above with an appropriate combination of very modest surcharges added to some or all forms of taxation and/or by selective cuts made in outmoded expenditures that no longer serve our purpose.
Please Follow Richard on Twitter: https://twitter.com/pebblerick
Richard A. Hudson is a writer, reader and blogger committed to exercise, proper nutrition and health. He’s interested in politics, economics, alternative energy, gardening and sustainability and has written brief essays on many of these topics on his bloghttp://richlynne.wordpress.com. Despite his generally positive and optimistic views about globalization, he wonders whether we will survive current destructive forces that increasingly promote warfare among political and social classes. He is also beginning to think about the declining influence of the know-it-all baby boomer generation just as the next generation born in the 60s begins to slowly stumble into a dominant position in the U.S.
He received a Ph.D. in organic chemistry from the University of Chicago (1966) and subsequently spent 42 years in academics, gradually developing all sorts of interests well beyond his basic training. He ended his academic career in 2008, having published about 100 scientific papers, reviews and commentaries. In his last several years in the academy, his role as Dean of the Graduate School afforded him many opportunities to interact with students from all over the world seeking graduate degrees.