W
WinterBorn
Guest
The problem is the definition of "income".
For example, capital gains. In the jurisdiction where I live 50% of capital gains is tax exempt. A wealthy person could buy a number of buildings with a minimum down payment and periodically sell one and pay 1/2 the tax on that "income" that a person working at a regular job earning the same amount of money would pay. (Although the housing market busted real estate was a winner for many, many years.)
Another thing is selling ones home. That's tax free. Why? Why should the person who can afford to buy their own home be allowed to take the profits tax-free when the poor renter gets the shaft? If all money coming in was classified as income it would be a different story.
People look for run down houses, move in, renovate them and then sell them at a profit. No tax. So, we have two carpenters. One goes to work every day for a company and pays payroll taxes. The other, because they have money, buy a run down house, fix it up, then sell. The house buyer pays no tax. Nothing. Even though he worked renovating his house and is being paid for his work through selling his house all his money is tax free. What is fair about that?
Then some people propose a consumption tax but no tax on income. Again, let's take two examples. Bill and John. Both work at the same company earning the same salary. Bill is single and saves $20,000. John has a family and spends that money supporting his family. Every time John buys something he is paying twice the amount of tax because Bill never paid any tax on his income and the government requires a certain amount of money to operate. The roads have to be fixed but Bill hasn't paid any money towards road maintenance so the consumption tax John pays has to cover his share and Bill's share.
Years pass and Bill's $20,000 has grown due to receiving interest plus the other money he has saved and the interest on that. There will come a point where Bill's nest egg will produce a decent enough return to retire on. Then he starts to pay taxes as he uses that money. John can't retire because he paid taxes all those years while Bill's money collected interest. In other words John loaned Bill the equivalent of the taxes every year, at no interest, while Bill's money grew. Is that fair?
The only fair way is to tax all monies received at the time they're received. That way everyone pays their fair share of government costs.
///////////////////////////////////////////////////////////////////////////////////////////
The fair way would be to tax the money when people spend it. Let the rich guy pay 23% tax on his new mercedes. Let the middle class guy pay 25% on his new Tahoe. And let the poor people pay no tax on the used VW they buy.
Plus you would get tax dollars from drug dealers, hookers, and people who work for cash under the table.