I’m not a big fan of redistributing wealth via the income tax, which is what the progressive tax rates (the more you make the higher rate you pay) do. It’s not that I have any personal concern, having never been in the higher brackets, it’s just that it seems unjust. As for unemployment benefits from the government, no question that if you are out of work you need the help. But I’m of the opinion that the system as it is now amounts to an artificial block in the labor supply, allowing citizens to be unproductive, which in the long run only hurts themselves and society as a whole.
President Barack Obama has cut a deal with his adversaries, the Republican congressional leaders, in which the so-called middle class tax cuts would be maintained, and less whithholding would be taken out of everyone’s paycheck, and unemployment benefits would be extended, and the rich could keep their present tax rates (or tax cuts if you will — it’s all semantics) as well, and estate taxes would be held at bay — something for everyone.
While Obama is being heavily criticized by left-wing Democrats and right wing Republicans, it seems that he must be doing something right. As I have written before, it’s just lke the journalist — when all sides in a contentious issue take pot shots of your account, you’re probably doing your job correctly.
But what I’m thinking more and more is that our current income tax system is too cumbersome and costly to maintain and unfair.
And as for unemployment insurance, there should be no question in congress that people need the relief, so the extension should have automatically gone through long ago. But on the other hand I’m wondering if the government should even be in the unemployment insurance business. As it stands now, though, the right of workers to collect unemployment benefits, under certain conditions, is an entrenched part of the system, and unemployment is at record levels, so why is there a hesitation in the congress? Pass the extension and then work on revising the whole system or doing away with it.
But let’s look at both items, the income tax and unemployment insurance.
First income tax:
While I’m not really a conservative, I have to agree that it seems unfair and unproductive to penalize people for earning money (and there is always the question of what constitutes “earning”). Yes, there is a responsibility toward one’s government and fellow citizens, but that is a shared responsibility among all, or at least should be.
Some have proposed a flat tax, which I take it to mean represents everyone paying the same rate, regardless of income. The argument against that is that ten percent of a poor man’s wages is a lot more than 10 percent of a rich man’s portfolio. The poor man needs every penny he earns to put food on the table and to provide shelter and clothing and the other basics, whereas the rich man already has everything he needs with a lot left over for luxuries and finer living, so he can better afford to pay a higher tax rate.
But since when is the mentality in the United States of America that born a poor man one must stay a poor man and that the rich life is only available to those who are to the manor born and bred?
There is supposed to be opportunity for all. But having more income confiscated from you when you manage to earn more money seems counter to the idea of upward mobility.
It is true, however, that many accept this and go ahead and make more money and improve their lifestyle, the threat of government confiscation notwithstanding — and there are always tax dodges and a million quite legal tax tricks.
However, the government spends an inordinate amount of the tax money it collects trying to make sure that people don’t cheat the system, other than legal cheating.
But why not have a relatively low flat tax, one that the poor man can afford and one the rich man sees no need to circumvent?
Better yet, why not scrap the income tax altogether and go to some type of national sales tax or consumption tax?
Of course that old argument rears its ugly head again. A tax on the poor man’s necessitates is harsher than a tax on the rich man’s luxuries (interesting enough, a tax on yachts some time ago hurt somewhat lower class workers who had fewer yachts to build and sell) .
I’m beginning to sound like the late William Buckley, minus the big 25-cent words, sorry.
But it seems to me a national sales tax would garner a lot of revenue but also offer everyone a chance to get out of paying a lot of taxes. If maybe food and some other basics were exempt from the tax, then each individual could decide how much tax he wants to pay by deciding whether he really wanted that doodad or service he (or she) was about to buy.
Sales of consumer goods would not likely come to a halt or even slow. People always want things and with no income tax they would have more disposable income.
I think the real problem is the way our government spends and allocates money. The legislature simply passes laws that almost always result in the spending of more money and does so with little to no regard as to where the revenue is to come from.
The president submits a budget, but has little to no control as to how the money is actually spent, other than a veto — but not a line-item veto.
Perhaps the president ought to have a line-item veto. While I hate to make a straight comparison between government and business (they do have different roles in society), when it comes to economics, I feel compelled to think, what if the CEO of a company had no control over how the company’s money was spent — disaster.
And now to unemployment insurance. I’ve been hearing a lot of discussion on the radio as to whether extending unemployment benefits discourages workers from actually looking for work. Quick answer: of course it does, at least to a degree. The standard line by many is why should I take that job when I can stay at home and collect more in unemployment and not have the overhead of the costs associated with maintaining a job? And there is some merit to that line of thinking. Indeed a rich man who has a knack for understanding money might well ask the same question were that he was in the same position.
But unless we all want to be at the mercy of the government and what it decides to pay us in unemployment benefits, we eventually have to move on or move off of unemployment.
Before there was unemployment insurance there was moving back in with mom and dad or other relatives and there is a lot of that again nowadays.
But our society for decades has substituted government for family.
It’s getting costly. It’s bankrupting us.
Government provides the structure for a civilized society and protection for us and it is vital as such for that role. But it produces nothing and eventually if not enough people are productively involved our own government will go bankrupt and will no longer be able to perform its function.
The only reason the federal government has not yet gone bankrupt is that unlike ordinary citizens it can actually print more money (the official economic spokesmen for the government deny this, but their explanations are wrapped in semantics. In fact the money being printed today has no underlying value, other than it is the currency of the world’s only superpower (for now) and people are still accepting it (that could change quickly). But the routine of artificially creating money can only go so far. I suspect it is about to run its course.
It might be better if unemployment insurance (that’s what I was writing about before I wandered) was handled more like private insurance or was privatized.
As it stands now, employees don’t even pay for their unemployment insurance directly, employers do.
In real world insurance, the insurance company tends not to pay for things that are not legitimate claims. If you had private unemployment insurance it would be just that, insurance against losing your job, not an option should you decide you no longer want to work at a job or an alternative to actually seeking work, or even an alternative to taking a job you think pays too little or is beneath you (since when is it government‘s role to maintain your preferred lifestyle?).
And then there are the industries that hire seasonal or temporary labor, a labor force only made available by the fact that workers can collect unemployment benefits when they are not at these seasonal or otherwise temporary jobs. In this case, unemployment is a subsidy taxpayers pay to private employers, the same employers probably who rail against government involvement in business. Go figure.
For now, I would think it best that the current tax rates stay in place and unemployment benefits be extended — this way business and workers know where they stand for now.
What the elites, and indeed much of the nation, does not seem to be able to figure out is what our role in the whole scheme of things is other than trying to get something for nothing.
The nation will only be able to deal with the government deficits when it gets back to being fully productive and quits trying to figure out how to rob Peter to pay Paul.