Institute tax with no exemptions | TheGazette

By Ron Moore

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Let?s eliminate income taxes for individuals and businesses. Will this increase our nation?s budget deficit? Not if we switch to sales and net worth taxes.

The income tax is full of exemptions, loopholes, deductions. Special deals Congress has approved for certain businesses and individuals but not others. Some of our biggest enterprises pay no income tax.

Businesses that pay big time for their executives but don?t show a profit. Giant but legally non-profit institutions pay no income tax. Many adult citizens pay no income tax. Many of the most wealthy pay lower rates than middle income earners because of deductions they can use.

One of our very largest and most profitable businesses, GE, paid almost no income tax last year legally using the tax laws. One of our richest individuals, Warren Buffett, paid a lower percentage on his income than did his secretary. Big oil companies, which in time of low prices needed to be stimulated to extract domestic oil, now continue to receive reduced tax rates on their huge profits.

A sales tax would hit every business and individual in the United States. The poor, the rich, the drug dealers, undocumented immigrants, the non-profit companies ? all of them receiving national defense and government benefits such as roads, parks, food protection, financial regulation, flight safety and much more that no one would want to be without. The challenge is to enact a sales tax with no exemptions so the rate is as low as possible. If the poor pay a little more for medicines and food, Medicaid and food stamps can compensate for this. Let the rest of us pay for everything we buy ? maybe we will be a little more prudent and buy what we need rather than what we want.

Because the sales tax does collect an increasingly lower portion of total income as a person?s or entity?s income increases, it should not be the only replacement source for income tax.

Half of what income taxes now collect should be replaced by a net worth tax. It might require a 1 percent tax on assets with a $10 million exemption for each business, non-profit and individual limited to that one exemption for all the entities that they control. The Wall Street traders and fund managers, those living on inherited wealth, and the biggest businesses and non-profits would pay this tax regardless of how they obtained their assets.

No chance for these changes? It should not be a liberal or conservative issue. Those opposed would be those who unfairly get special deals. This tax switch would help bring more fairness to taxes ? an unpleasant but necessary cost of living in America.

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Ron Moore is a risk management consultant from Cedar Rapids. Comments: reugenemoore@gmail.com

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Source: http://thegazette.com/2013/05/30/institute-tax-with-no-exemptions/

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