January 10, 2023
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Our Federal Income Tax
• People with more should pay more.
• People should get a tax break because of circumstances.
These are silly and wrong notions for two reasons:
• The fewer taxes paid by anyone – including the rich – allows more consumer spending that, in turn, leads to more jobs and a healthier economy as the wheels of commerce just turn and turn and turn. • One person’s tax break is another person’s tax burden.
The growth of the shadow economy can set off a destructive cycle. Transactions in the shadow economy escape taxation, thus keeping tax revenues lower than they otherwise would be. If the tax base or tax compliance is eroded, governments may respond by raising tax rates—encouraging a further flight into the shadow economy that further worsens the budget constraints on the public sector. (On the other hand, at least two-thirds of the income earned in the shadow economy is immediately spent on the official economy, resulting in a considerable positive stimulus effect on the official economy.)
• The 80,000 IRS employees whose wages are paid by taxpayers. • The many private-sector tax preparers including CPAs, attorneys, and neighborhood tax offices. • Those who evade paying income tax by participating in the underground economy. • People are exempt from paying income taxes. • The income tax will not go away once implemented no matter the language of the legislation. We will be stuck with both. • It will grow just as state sales tax rates increase when the government wants more money for any reason. •We cannot expect corresponding income tax reductions with increasing sales tax rates as a way to phase out the income tax no matter what politicians – our “esteemed” proven liars – tell us. • The government will still have our personal information as long as the “honor-based” income tax system exists. • All taxpayers pay each tax deduction and each tax credit given to another taxpayer. • Every dollar a person gains by evading taxes falls on someone else to pay. • Every dollar a person saves by utilizing an income tax “loophole” falls on someone else to pay. • If you are the person “benefiting”, then somebody else pays what you do not pay. • You pay a share of what another person does not pay whether by taking deductions, getting credits, evading taxes, or utilizing loopholes.