Rethinking Our Tax System
Despite his great wisdom on the matter, the Tired Donkey swore off writing about taxes long ago because (1) of the thousands of visitors his blog gets every month, about two of them look at his tax-related posts, and (2) writing about our tax system became so depressing that the Tired Donkey nearly expired. Unfortunately, the recent brouhaha over the debt ceiling and a run of staggering stupidity at the New York Times is forcing the Tired Donkey to come out of tax retirement. So here we go. The Tired Donkey will try to make it brief.
On the day after the announcement of the debt ceiling deal, the New York Times’ editorial page, under the headline “To Escape Chaos, a Terrible Deal,” opined that the Democrats “held out for a few basic principles.” Among these, the paper observed, was the principle that there “must be new tax revenues in the mix so that the wealthy bear a share of the burden . . .” Hmmm. A share of the burden? Let’s check that out.
In 2007, the top 20% of earners paid 86% of all federal income taxes while the bottom 40% paid -3.3%. That’s right, it’s a negative number. Look at the stats from the CBO yourself. If that’s not bearing a share of the burden, the Tired Donkey doesn’t know what is.
The Tired Donkey has said it before, and he will now say it again: the simple fact is that the budget cannot be balanced on the backs of the top 20%. What we need is a new tax system that balances the responsibility for paying for the federal government fairly; when 40% of the taxpayers are nothing but leaches on the system, the results in the long term are predictable: we all get bled dry and then we die.
For those of you who have not read the Tired Donkey previously, he must note that a donkey is simply one of the 52% of the citizens of this, the greatest country on Earth, who actually pays federal income taxes. Now, want more proof that donkey payments can’t get us out of our massive debt problem? The Tired Donkey can provide it. Buried in another piece in the New York Times is this gem derived from stats provided by the non-partisan Congressional Budget Office:
The [debt ceiling] deal [Congress] reached . . . contains cuts of at least $2.1 trillion over the next 10 years. By the end of that period, the federal debt could equal as much as 80 percent of economic activity, and rising. That assumes Congress chooses to preserve all of the Bush-era tax cuts, but even if Democrats succeeded in rolling back cuts for the wealthy, the ratio could reach 76 percent, and rising.
The Tired Donkey added the emphasis in there so you would not miss the point. Freeloaders beware because a day of reckoning is coming: even if donkeys are taxed to the point of extinction, it will only make a 4% difference in our staggering debt load ten years from now. Your days of freeloading are nearing an end.
So is there a solution to our problems? Certainly. In the short term, we need to eliminate the difference between capital gains taxes and ordinary income. Intrigued by that idea? Read more about it here. In the long term we need more of the citizens of this great land to help support it, and the best way to do that is via the Fair Tax. Washington, please get on it. Now.