Let me get straight to the point; I hate taxes! There, I said it. I feel better already. I wish it were that simple. But did you know that as of 2009, the tax code is approximately 67, 204 pages, about twenty times the size of a Harry Potter book, and much less entertaining. So, with all this talk about extending the Bush tax cuts or not; unemployment up today to 9.8%; extending unemployment benefits forever, etc. the thing we ought to do is reform the tax code by eliminating the income tax and implementing the Fair Tax. By the way, I support the Fair Tax!
Since that is not going to happen overnight (if it ever does), what should we do today? It's not a zero-sum game solution. Nevertheless, both Washington and Wall Street operate in that manner, which probably explains why the entire system is rigged. But I digress...So, the Democrats want to limit the Bush tax cuts to those individuals making less than $200,000, or couples making less than $250,000; while the Republicans want to extend all Bush-era tax cuts and make them permanent for even the 2% of households earning more than $250,000.
I hate the IRS and hate the income tax I have to pay to those SOB's every year on top of what gets deducted from my family's paychecks every other week. But $250,000 doesn't go very far when you have 3 or more children, private school, groceries (don't tell me there isn't inflation) and extra curricular activities (sports, music lessons, etc.). It doesn't go very far at all even if you have none of these things but live in San Francisco or New York City. Lincoln, Nebraska with $250,000 in household income is A LOT different than $250,000 in Manhattan, New York. I dare someone challenge me on that. Heck, I submit that $250,000 in Marietta, GA is different than the two cities I just mentioned. The point is that looking at a static household income like that is part of the problem. With the Fair Tax it doesn't matter how much one makes or where you live.
It shouldn't be viewed as a zero-sum game by the politicians. Good ol' Chuckie Schumer (D-NY) should know better than to say the Republicans want to "Give tax breaks to millionaires". Last time I checked millions had seven digits, not six. And like I said about New York City...So, this is where I tread lightly...I can't believe I am going to suggest this but this country is so screwed that we need to make some sacrifices, so I say tax the rich! Make them pay their fair share. However, my definition of rich is much different than the politicians or elites that debate this stuff. I am talking about wealthy, uber rich individuals and households. Especially people like Paris Hilton and The Kardashians who provide no value to society. I dare someone challenge me on this too! I'm talking about people that make more than $1,000,000 in annual income. I call that rich, no matter where you live.
I can hear the argument from my Republican friends that small business owners fall into this bracket and they are the engine of the economy and if the Bush-era tax cuts expire for the wealthy that jobs will be affected. In the past, this would be my argument as well because those are the talking points of conservatives. I listen to Hannity, Limbaugh much less, Neal Boortz and others. I agree with a lot of what they say. But I'm not dumb and take what they say as gospel either. Let's not kid ourselves -- both sides have their talking points. I agree that small businesses are the engine of this economy and they create more jobs than large companies. I want to be my own boss more than anything, so I'm coming from what I think is a fair and educated support for taxing the uber rich.
So, back to the argument of small business owners being hit hardest. Most small businesses are S-Corporations or Partnerships. S-Corporations and Partnerships do not pay income taxes. Instead, income is passed through to its owners and taxed on their individual income tax returns. Owners of pass-through entities receive income from their businesses in primarily two ways. The first way is through salaries and wages, and the second is through K-1 distributions. Salaries and wages are reported on W-2 Forms and are subject to withholding, social security, Medicare, and federal and state unemployment taxes. K-1 distributions are reported to the shareholder on Schedule K-1, and are not taxable, nor subject to withholding or payroll taxes. The nonpartisan Tax Policy Center analyzed IRS data in March 2009, looking to see how many wealthy tax filers could say that half of their income or more came from business income. The center found that, among the wealthiest filers -- the top 1 percent -- only 32.5 percent earned more than half their income from business-type income. The percentages for non-wage income were even smaller among taxpayers earning less. In conclusion, do many wealthy tax payers report types of business income that might be from owning a small business? Sure. But it's impossible to tell how many meet the definition of what most of us think of when we think of small business owners. Other data indicate that among all tax payers who might be small business owners, most would not see taxes go up if the Bush tax cuts for the highest earners are allowed to expire.
What I am suggesting, besides scrapping the whole tax code, is to extend the Bush-era tax cuts for everyone making less than $1,000,000 in annual household income for two-years. Increase the tax rate for anyone who is on The Kardashian's reality tv show or any of those Housewives reality shows or anyone that does not contribute any value to society like Kate Gosselin. Increase the tax rate to 50% on Hollywood actors who make terrible movies yet get paid more than $5 million for it. Increase the tax rate to 75% on Hollywood actors that not only get paid a lot of money to make terrible movies but also hold telethons for other countries and insinuate that Americans (not Democrats of course) are arrogant and selfish and think that America is exceptional. This is tax policy that I can believe in. Besides, I think I just solved the fiscal mess by raising taxes.
If that fails, there is always another option. Fair Tax!!!!!