Wednesday, September 2, 2009

What about this idea for a flat tax?

I just had an epiphany about taxation.

It has long been said that high marginal tax rates on the richest members of society will incentivise (sic) them to either leave the country, hide their income, or disencentivise them from earning that marginal next dollar.

So what would happen if we taxed the poorest of the country?

What about a $20,000 flat tax on everyone? What would that do? I can tell you that if you were earning $20,000 a year, you would be very highly incentivised to work a little more because it would all go to you, not the government!

Plus, if we were to let everyone know just where that $20,000 in taxes were going, what it was being spent on... wouldn't that create pressure among the masses for whom $20,000 is a lot of money, to try to economize? I honestly believe that those who consume a lot of taxpayer services rarely worry about the efficiency and value of those services. But if you foot the bill... then you start looking for bargains!

And what about the idea of taxation causing someone to "leave the country"? Is that true? If we taxed the poorest people, would they go somewhere else? Would they take their families to look for areas where taxation is lower? Maybe. I don't know. Would that be a bad thing? It is a free country, right? And I don't really hear too much complaining when wealthy people say they might move if the taxes are too high... its almost like those who are not wealthy are happy to hear that the wealthy among us are suffering.

Lastly... I hear frequently that the best way to reduce a behavior is to tax it. Makes sense. Want someone to stop driving an SUV? Tax the gasoline. Want them to stop smoking? Tax their cigs. So why do we tax the wealthy and the top earners? Are we trying to get them to stop? No.... because we need those people. Maybe we should tax poverty out of existance. If we start this year with a 50% tax on everything you earn below $40,000... that would be awesome incentive for people to earn more. How do you earn more? Well, to start with you could finish school. Go to college. Become a professional.

Would the poor have a lot of incentive to hide their money if the tax rate was so high as 50%? Yes, they would. But in this age of technology it should be impossible to hide money.

Besides, I've already posted about how to make more money, get free healthcare, and a free education... Join the army!