Sunday, May 15, 2011

Letter to WSJ on Arthur Laffer flat rate tax

Chicago PM Sunday 8 May 2011

Editors, The Wall Street Journal


The Wall Street Journal's Arthur Laffer OpEd “The 30-Cent Tax Premium” of Monday 18 April makes the startling statement that “Taxpayers must spend significantly more than $1 in order to provide $1 of income-tax revenue to the federal government.” A sobering Tuesday 26 April letter points out “the few million or so tax-industry employees who will lose their jobs when their 'tax-compliance time' is freed up for more productive purposes.”

It would appear that since tax payers are voters, they would not vote for congress people who would enact such economy distorting rules and procedures. Unfortunately this link was severed by the Current Tax Payment act of 1943 that moved the responsibility of actual remittance of income tax dollars from the voter to the employer. If the money doesn't get to the feds, the employer goes to jail, never the voter/employee. But the employer has an out not available to the individual voter: because every employer must send these real dollars in, they have no competitive reason to do anything but add this cost to their prices, inadvertently, but decisively, converting income taxes to a silent national sales tax.

At the other end of this monstrosity is an army of voters with fistfuls of pay stubs saying “you earned and your employer paid” demanding that they earned an old age pension, lifetime medical care.

The result of this political parlor trick is clearly visible in the 2011 Statistical Abstract of the United States table 478 showing 37% of the total 2009 federal income of $2.345 trillion coming from employer bank accounts, not voter's.

(Adding the Social Security boondoggle brings that total to 2/3 of total 2009 federal income.)

Fixing this scam needs only a majority of the House of reps, 60 Senators, and a President with backbone enough to change the US Tax code 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, including a note: "Here is how much the feds are expecting you personally to send in within 30 days"

Requiring voters to send in a check for 20% of their take home pay every month would quickly demonstrate to them who they should elect to Federal office.

This could not be done overnite, but randomly choosing a single letter every quarter, and requiring all voters with names beginning with that letter to submit to the new pay as you go tax system, would get the whole thing done in 9 years. This period would include two Presidential elections, 4 house elections, and a complete rebuild of the Senate.

Arnold H Nelson

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