Today's economy  /  Tax reform

tax reformMerriam Webster states Trickle-down Theory suggests that a policy of tax cuts and other financial benefits to businesses and rich individuals will indirectly benefit the broader and poor population.

 

Economists have proven tax cuts for the wealthy and large corporations do not spur economic growth.  Some Republican politicians cling to Reaganomics (and the gold standard) like it’s gospel rather than embracing what history has shown us – it was a farce and Reagan knew it.  He wanted to give tax cuts to the wealthy because he believed they paid too much. The theory touted as “trickle-down economics” or “supply-side economics” has long been refuted.  Between 1979 and 2005 after-tax household income rose 6 percent for the bottom fifth.  But the top fifth, their income rose by 80 percentThe top 1 percent saw their income tripleSince the Reagan era, there appears to be no correlation between raising or lowering taxes and the state of the economy1.

 

Robust middle and lower classes spur economic growth and our middle class is shrinking.  Our current tax code has become a spaghetti bowl of redundant laws with plenty of pork entwined throughout with little aid for your average American. Our greatest primary task is to put people to work and to put more money in their pockets…without going broke.

 

Individual Taxes

 

A flat tax of 20% on any income exceeding $75,000 will ease the strains on compliance.

 

Tax Compliance has become its own ugly beast.  The IRS has over 925 forms, and an additional 775 forms of explanation.  There are regulations, revenue rulings, private letter rulings, Technical Advice Memorandums, and determination letters—all written to explain this massive ball of bureaucracy.  A flat tax will eliminate extensive regulations for individual taxpayers, effectively wiping the slate clean, cutting excessive rules designed to protect the wealthy from paying their fair share.

 

Corporate Taxes

 

The entire tax structure has run amok and gotten so big and uncontrollable, you need a whole team of professionals to navigate it.  Big business claims lower taxes lead to an infusion to their businesses that trickles down to the average American.  Putting money in the pocket of the average consumer spurs economic growth, not trickle-down economics.

 

 

 

 

1 www.Smartasset.com , “The Tax Trick that has Congress Worried,” by Amelia Josephson https://smartasset.com/personal-finance/the-tax-trick-that-has-congress-worried.

2 USA Today, Corporate inversions mean tax hit for shareholders, by Kevin McCoy, http://www.usatoday.com/story/money/business/2014/09/22/corporate-inversions-tax-hit/15330195/.

3 USA Today, Corporate inversions mean tax hit for shareholders, by Kevin McCoy, http://www.usatoday.com/story/money/business/2014/09/22/corporate-inversions-tax-hit/15330195/.

 

 

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