Saturday, July 31, 2010

The nation's wealth decisions in the hands of citizens?

Chicago Saturday PM 31 July 2010

Editors, The Wall Street Journal


The Wall Street Journal's Daniel Henninger closes his Thursday 29 July column “Taxes: A Defining Issue” writing: “...[T]o compete for the next 50 years, the U.S. is going to need a tax structure that keeps more of the nation's decisions about using its wealth in the hands—and minds—of millions of intelligent citizens....:

The 2010 Statistical Abstract of the US shows 62% of the total 2008 federal government receipts of $2.745 trillion was withheld from wages. So nearly 2/3 of all the actual dollars that came into the US general fund were from employer bank accounts, not employee's. If the deductions do not get to the general fund, the employer goes to jail, never the employee. And the employer is by law required to give the employee a statement saying something to the effect that “you earned, and your employer paid”, implying that if the feds were not requiring the tax, the employer would give the money to the employee. If the employer got a reduction in property taxes, he would pass it on to the employee, right?

But employers, as opposed to wage earners, can pass all of this on to customers in price increases, resulting in the federal government being 2/3 funded by a silent national sales tax.

This anomaly can be simply corrected by changing paragraph 3402 of USC Title 26 — 'Internal Revenue Code' Subtitle C 'Employment taxes' Chapter 24 'Collection Of Income Tax At Source On Wages'... from "every employer making payment of wages shall deduct and withhold upon such wages a tax..." to "every employer making payment of wages shall pay all of those wages to the employee...." The employer would still calculate the tax, replacing the reassuring note "you earned and your employer paid" with "here is how much the feds are expecting you to send in within 30 days"

Would this be inefficient? Certainly for an insatiable federal bureaucracy. But after a few months writing checks to the Government for 20% of their take-home pay, decisions about using the nation's wealth would quickly revert to the hands—and minds—of millions of intelligent citizens....:

Arnold H Nelson

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