Tuesday, January 11, 2005

Tax Reform

The Bush Administration is pushing tax reform, but what type of tax reform are they really pushing? I don't know, but they need to explore all alternatives and not just rate reductions, adjustments to deductions or tax credits. I vote to throw the whole system out and start with a blank slate.

In reviewing the history of taxation, what I don't understand is: why are we so infatuated with taxing income? While it might sound appealing to some to require those with higher incomes pay a higher tax rate, exactly what is the logic? In answering that question, liberals often say "from each according to his means, to each according to his needs."

If we're going to stay with a system of progressive taxation and hammer the rich, we would be more effective if we taxed wealth and not income. By taxing income, we penalize those with no wealth as they move up the economic ladder and actually hurt their chances of creating wealth for themselves and their families. If we taxed wealth, we would tax everyone according to their means (i.e. net assets) and not their incomes and actually accomplish what the liberals say they want to achieve. Now, I don't agree with them, but if we're going to do it (progressive taxation), then we ought to do it right!

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