Don't Give Up on Capitalism, Fix It

If people were thinking clearly, the idea of raising taxes during a severe recession, such as we are experiencing, would be considered ridiculous. However, because it is being presented as "sharing the wealth," everyone seems to think it is OK.

Who would not want to share the wealth? Only greedy capitalists wouldn't want to do that. What the politicians don't tell you is that the best way to actually reduce the tax burden for everyone, except the special interests represented by lobbyists, would be to have a low flat tax rate and eliminate all of the loopholes and credits.

It has been shown in many studies that you could exempt low-income wage earners from any taxes, have a flat tax rate that is far below the current higher marginal tax rates and still collect as much or more revenue due to the elimination of all loopholes and deductions.

In fact, it is the super wealthy and the big corporations that would pay a lot more taxes under this system because they are the largest beneficiaries of tax loopholes. The big losers in all of this would be accountants, tax lawyers, lobbyists and politicians who get to collect enormous fees and huge contributions from special interests in exchange for favorable tax treatment.

If there is a shortfall in revenue from a flat tax, the best way to cover that shortfall would be a sales tax. This would accomplish several very important objectives.

First, it would capture the very large percentage of the economy that doesn't file a tax return. Some estimates put this at nearly 20% of all the income generated in the country.

Second, it would encourage savings over spending, which everyone acknowledges is necessary.

Third, it is much easier and more efficient to collect than an income tax, so there would not be any need for a large bureaucracy to collect it.