Can Taxes Ever Be Fair?

July 27, 2012

It is virtually impossible to answer that question to everyone’s satisfaction and the biggest obstacle to giving a valid answer is prospective. Your definition of “fair” is always directly linked to your prospective. What is fair to you may not be fair to me and vice versa. If you throw in ones political views then the playing field becomes even more distorted.

A person of liberal persuasion will nearly always say that it is only fair if the rich pay a higher percentage than anyone else. Meaning their share should be more, much more than anyone else’s.  Those of the conservative persuasion would say that the rich already pay more than everyone else, even if they are taxed at the same tax rate. They would also argue that it’s not fair to make someone pay absorbent tax rates just because they are rich.

First we need to establish the real definition of “fair” without any slant from one’s prospective, from www.merriam-webster.com the definition of fair that seems to apply in this application is the following:

“6

a : marked by impartiality and honesty : free from self-interest, prejudice, or favoritism”

 

That would mean that a fair tax would have to show impartiality to all taxpayers, not just some tax payers. How can that be possible, especially when you look at it from the left side of the room? It would seem to be an impossible task. The very nature of the view from the left side of the room, “fair” would have to be unfair. That is probably why the left rarely support “The FairTax” or any true fair tax for that matter.

 

So what is a fair tax? Is it one where everyone pays taxes at a rate according to their income bracket? Is it one where everyone pays exactly the same number of dollars? Is if one where everyone pays the same percentage? Is it one where no one pays any taxes? Personally I think the last option is the only “truly” fair tax but unfortunately that isn’t practical because taxes are a necessary evil for most governments.

Before we can go any further we must look inside ourselves and decide which side of the room we want to stand on. Do we want the rich to have massively high tax rates or do we want them to pay more taxes only  according to their economic habits? Do you want a fair tax system of an unfair tax system?

Our present tax system is about as unfair as a tax system can get. It is based on complicated tax codes and rates. Another requirement of any fair tax system is that it has to be easily understood because it isn’t fair if others can manipulate it, based on little known legalities. If you have to hire someone to do your taxes or to explain the system to you then the system isn’t fair. I doubt many people would say our present system is fair because it is far from it. It’s just not fair to expect the taxpayers to be lawyers to do their taxes. We have become tax slaves or at the very least a slave to the tax system.

So how can there ever be a true fair tax? There can’t be… at least not a fair tax that would fit everyone’s prospective. But we can try to make one that is as close as possible and how can we do that? Well to be fair, by definition it must be “marked by impartiality and honesty: free from self-interest, prejudice or favoritism”. That means everyone must be taxed exactly the same way and at the same rate. You can’t tax the rich differently than the poor and taxing by income defeats that purpose. You can’t write special provisions into the tax code for special groups. Therefore an income tax is inherently unfair. As for our present income tax system, is it fair to make everyone pay their taxes before they even see their pay check? Why should the government get your money before you do?

You could heavily tax corporations and businesses but how is that fair? Good business practices mandate that in order for a business to remain viable it has to make a profit while recouping all encountered expenses. That means they have to build into their selling price the costs of all business expenses which includes taxes, another words they pass their tax liability onto the buyer. That means businesses are actually immune to tax liabilities just by the fact that they recoup their taxes from the buyer. If they don’t recoup their tax liabilities it will cut into their profit margin when that happens one of two things can happen, they either go out of business or they go offshore by leaving America.  That means jobs are lost and is that fair?

All business taxes are paid by the end user, the consumer which is you and I, unless you want a socialist or communist system then you and I will always be paying the taxes for ALL businesses in America. That isn’t fair but it is a fact of life in a free society with a capitalist system.

You could say let us tax everyone with a flat tax that has to be fair, meaning make everyone pay a set tax amount regardless of your economic status. That would sound fair but would it really be fair? Could it really be fair? Would it be fair for someone who only makes an income of $20K to pay a federal tax of $10K, while a millionaire also pays that same $10K amount? Remember if you can’t exempt anyone or show favoritism to anyone because of their income or you will violate the definition of “fair”. Since no one can be shown favoritism, not even the poor, this eliminates the flat tax as a fair tax system.

You could tax everyone’s income at the same tax rate, another words everyone’s percentage would be the same. We would all pay exactly the same percentage of our income to the government. That means that that the rich would pay, say 10% of their income and the poorest among us would pay 10% of their income. Is it fair to make the poorest, even pay income tax at all? To be fair they would have to pay the tax but they can’t financially afford to do so.

Since an income tax is out, that leaves us with a consumption tax and you may say, how can that be fair? A consumption tax would mean the poor would have to pay taxes on everything they purchase which would be a burden to the poor and that can’t be fair. To be true to our definition of fair, a consumption tax would have to tax everyone at the same rate and the FairTax does that. But it doesn’t stop there, the FairTax calculates the cost of one’s basic cost of living per person and then it gives that amount of tax back to each and every one of the heads of households. The amount of tax payback to each household is based on the number of people in the household and the amount that is calculated from the basic cost of living.

That means everyone pays a tax on everything they purchase at the exact same rate regardless of how much they spend. Isn’t that fair? Everyone gets a pass on taxes for the bare essentials of living, even the rich. Isn’t that fair? The poorest can essentially live tax free while the rest of us pay taxes according to our spending habits. Isn’t that fair? The more you spend, the more taxes you pay… or the more you save, the less taxes you pay. Isn’t that fair?

The FairTax only taxes new products not used products so all the cars, houses, electronics, equipment, tools and other used items already in the system can be purchased tax free forever. Isn’t that fair? The FairTax will abolish all tax return paper work for all tax payers forever. Isn’t that fair? When the FairTax Bill is passed everyone will be able to take home their pay check without ANY income taxes being taken out. Isn’t that fair? That would create a huge increase in disposable income to be spent by every tax payer. Isn’t that fair to the economy?

What about the individuals who are misers and spend very little of their income? Yes they will pay less taxes, but don’t make the mistake of thinking that the rich will automatically take this approach about spending because they can’t and won’t. The rich have to spend more than the rest of us just to maintain their status. It takes money to make money. The rich don’t get rich by putting their money in a vault somewhere and forget about it. They put their money to work for them and that means they spend it to grow it. Therefore they will pay more taxes while making more money, isn’t that fair?

The rich don’t get rich so they can stash they money away and live in caves. They get rich so they can enjoy their riches and to do that they have to spend their money. When they spend their money they pay more taxes. Each and every one of us can make the decision on how much we want to pay in taxes. We can buy that new car and pay taxes or we can buy that used car and save our taxes.

I’m sure that the diehards on the left side of the room won’t see any fairness in what I’m saying but… just maybe some others might. Like I said your concept of fairness depends on your prospective but if you can at least see the FairTax from my prospective you just might see the fairness in the FairTax system. BJMJr

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 If anyone is genuinely interested in finding out about the facts pertaining to the FairTax Bill there are many websites that honestly talk about the facts but there are many more that distort the facts, so be careful where you get your “facts”. There are also many groups in Facebook that are always willing to help you separate the facts from the “fictions”. One that I am a member of is FairTax 2012 (https://www.facebook.com/home.php#!/groups/FTgrassroots/) and feel free to drop in any time and ask a question.

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Please feel free to like this article on Facebook and any of the other articles on the Georgia Conservative site (http://georgiaconservative.net/). Also please feel free to read any of the other articles among the Conservative Fifty pages. Then feel free to like this site or any other state site within the Conservative Fifty group. You are also welcome to comment on or share any of my articles and I thank you for taking the time to read this or any of my other articles. Thank you again, Bertrum J Meisner Jr.


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