12:53 PM, Jan 31, 2023
Eliminating the IRS: The Solution for a Billionaire Near You
tagged with politics
I really dislike criticisms of the House GOP's proposal to replace the IRS and presumably all federal taxes with a 30% sales tax. When they are framed as, "it will hurt working families," it's an appeal to emotion, which I consider a cowardly way to talk, even if the statement is true. And cowardice is usually a means of hiding something, so it sets off my bullshit-meter almost as much as when snake oil salesmen try to convince me to buy something that has, "adaptogens" in it. Before I go into this in any detail, let me first say that what is being proposed has no chance of getting any oxygen in the Senate, let alone a vote. Further, President Biden would never sign it. But just to explore the idea, let's dive in.
The wealthiest taxpayers in this country pay the majority of their taxes not through income, sales, or property-- but through capital gains. They make an investment, and sell it for a profit. That profit is taxed at a modest rate as it is-- a maximum of 20%, which is much lower than income tax for the highest earners --yet it is a very high priority for the politically-connected wealthiest Americans, to eliminate it. This is part of the GOP plan.
At the other end of the income-slider, most taxes are paid right now through state and local sales taxes, which of course would not be removed by the GOP plan. They would go right on being assessed and collected, with a brand new 30% federal rate on top of that. As the lowest-earning Americans are overwhelmingly living from paycheck to paycheck, they have minimal financial options. Home ownership is well out of their reach, as is investment. Their income is low enough that they effectively pay no taxes on it. In short, they are subject to the whims of the political ruling class, and have little say in their lives. "I got no rudder," as philosopher Malcolm Reynolds once said.
The vast majority of federal tax revenue in the US comes from the wealthiest and the highest earners. Their taxes fund most federal programs. Their contribution is high, and without it, the federal government would be starved for funding. But what has to be kept in mind about this dynamic is that these people can afford it. They can afford to eat whatever and whenever they want. They can afford to donate to charity. They can afford to send their kids to high-priced private schools. They can afford home ownership and private investment. They can afford comfort, safety, and luxury. They can afford to live however they want.
They can also afford to spend money to lobby elected officials to deregulate their industries. They can afford to spend money to lobby elected officials to relieve their tax burden. They can afford to spend money to establish astroturf
organizations to fool lower-income voters to vote for the interests of the wealthy and not their own. They can afford to spend money to get their allies elected to office. The list goes on.
The aim of the GOP's tax plan is to shift the tax burden away from the wealthy, and onto the lower end of the income spectrum. And on the lower end, people decidedly cannot afford the added expense. The result of this will be a cocktail of disastrous consequences. More people would turn to crime. More people would turn to public aid programs to simply survive, placing a heavy financial burden on state and local governments. Fewer people would be able to afford healthcare, increasing subsidies and local government expenditures to support non-paying hospital visits.
Also, after all this, even the most optimistic predictions show that this tax plan will not be sufficient for the federal government to pay its bills. That means the GOP, presumably in control, would propose cutting or eliminating expenditures for social security, defense, and medicare.
But none of that concerns the GOP's donors. And that's the point.