Dec 6, 2010

Deficit & Taxes - SOLVED

This weekend a local paper, Community Impact, published a nifty little chart detailing the Bush tax cuts, Obama's tax cut plans and the pre-cut tax world. And while I'm normally way into social policy and bored by economic policy, I gotta say, that chart got my attention hardcore.

Currently, under the Bush tax cuts, Ross and I are in a tax bracket that takes 15% of our taxable income. I'm cool with that. However, if nothing happens with the potential extension of the tax cuts that will jump to - are you ready - 28% of our income!

No obviously this just ticks me off. I work hard for that money and I would really prefer to keep it, thankyouverymuch. But as I'm looking at this chart, in addition to being ticked about my current tax bracket (in the non-tax cut world), I start to get ticked about my future tax brackets. I knew that it was a graduated index and in theory, back when I had zero dollars, I wasn't too bugged by this. Now that I have a few dollars though, it really ticks me off. Why do you get to take more of my money when I'm working harder to make more of it? At the end of the day, am I taking on more stress and hours so that the government can have the difference in my income? Hello, talk about no good deed goes unpunished.

So this is what I'm proposing:
  • Flat tax rate...roughly 20% which I think from the 10 minutes I spent reading this chart in the newspaper, might have a shot at meeting our federal expenses. I figure if you make $20,000, then 20% (or $4,000) hurts you just the same as someone making $100,000 (and paying $20,000 in taxes). Thus nobody is punished for working their butts off to make a good wage. That said I'm also open to there being an income level at or below which you pay no taxes. Maybe under $10,000? I'm not sure but I bet some economists out there have an idea or two about that.
  • Base unemployment on minimum wage. I realize this isn't directly related to taxes but in the blog title I promised to solve the deficit too. Hear me out. Current unemployment benefits are related to your income when you lost your gig. Employers have to pay into a fund to help support those benefits. So if Joe was making $100,000 his unemployment benefits would be costly. And Joe would have no reason to take a significantly lower paying gig because it would very likely be less than the unemployment benefits he was receiving. I'm not faulting Joe. At the end of the day, you have to do what's best for you and yours. But why should our system encourage Joe not to work? But if unemployment benefits had a closer relationship to minimum wage, then anything over minimum wage would be a step up for Joe, thus encouraging him to start working sooner and relieving the stress on the unemployment system. Further, Org X (Joe's old employer) would be paying less into unemployment, thus freeing up more of their resources to invest in capital.
I'm not an economist. Heck, I had to cheat off my high school sweetheart to pass economics. But we keep trying what the economists suggest and bad news y'all, it isn't working. So I vote we go with this plan and see how things shape up.

Thoughts? Ideas? Votes for president?

PS I fear I may be tip toeing on the line of Republicanism! But I still firmly believe in same-sex marriage and am pro-choice. That's enough to remain a registered Democrat right??

1 comment:

eringobragh said...

Steve Forbes was a big supporter of the flat tax idea. Didn't really help his Presidential campaign... Maybe you should check out his ideas and improve upon those!