Fair Taxes

By John A. Murphy

Americans making less than $100,000 a year should not have to pay an income tax.

In the year 2000, at the height of the last economic boom and before the most recent round of tax cuts were enacted, IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%.

I would initiate system wide tax reform that acts to simplify the tax system. Subsidies, export incentives, tax loopholes and tax shelters that benefit large corporations now amount to hundreds of billions of dollars each year and must be cut to the bone.

I would initiate a tax policy that moves to eliminate loopholes and other exemptions that favor powerful interests over tax justice. Small business, in particular, should not be penalized by a tax system which benefits those who can "work" the legislative tax committees for breaks and subsidies.

Corporations have been profiting in Washington, too. In 1965, individual taxpayers paid 66% of all US income taxes, and corporations paid about a third. But by 2000, the corporate share had dropped to 18%, just about half what it used to be.

Bush's tax cuts threaten our ability to fund critical national priorities; they unfairly shift the responsibility of paying taxes from the wealthy and corporations toward lower- and middle-income workers; they will burden future generations with enormous debt; and they have failed to create decent paying jobs or wage growth for working Americans.

The complexity and distortions of the federal tax code produces distributions of tax incidence and payroll tax burdens that are skewed in favor of the wealthy and the corporations further garnished by tax shelters, insufficient enforcement and other avoidances.

Corporate tax contributions as a percent of the overall federal revenue stream have been declining for fifty years and now stand at 7.4% despite massive record profits. A fundamental reappraisal of our tax laws should start with a principle that taxes should apply first to behavior and conditions we favor least and pinch basic necessities least.

I support a fair tax plan which would include the following provisions:

• Americans making less than $100,000 a year would not have to pay an income tax.

• After $100,000 there would be a graduated tax where the top rate would be around the 35% mark. There will be no loopholes.

• We must move the incidence of taxation from work to wealth.

• We would maintain the estate tax at 35% on estates above $10 million. There will still be a tax on smaller estates. All estates over $500,000 would pay some tax the estate tax as a whole would raise about $32 billion a year. The loopholes in the present state tax laws would be removed. It should be kept in mind that this tax would only affect approximately 2% of the American taxpayers.

• Sol Price, the founder of Price Clubs which is now merged with Costco, is correct we would have a "wealth tax". There would be a 1% "wealth tax". This tax would be levied on the 1% of Americans with the highest net worth.

• I would tax the things we like the least. We should tax polluters. We should tax gambling. We should attack the addictive industries that are costing us so much and luring the young into alcoholism and tobacco.

• There should be a tax on stock and currency speculation. If you go to the store to buy furniture, food and clothing, books you pay 6% or 7% or more in sales tax. Yet if you buy a thousand shares of General Motors stocks you pay nothing. This would not be an exorbitant tax rate in fact a 0.25% tax on the purchase of stocks, bonds, derivatives and currency speculation would produce hundreds of billions of dollars a year because of the volatility. It is now not unheard of to have a day on Wall Street where 1.5 billion shares are traded!

Then we will have more than enough to replace the taxes formerly paid by those citizens earning less than $100,000 and enough to provide for decent public transit and for repairing the public-works infrastructure to boot!