The Unequal Law

So Kenneth Bone is afraid that Donald Trump’s Supreme Court selections would take us backward on equal rights.  I’m not sure which rights he thinks would be reversed.  Right now, it does not matter the color of your skin or what gender you are, you have the same rights that everyone else does under the law.  So again, I’m not sure what he is talking about but I can tell you that there are laws that are unevenly applied but no one seems too concerned about them.  In fact, most people cheer these laws and want them to be even more unbalanced.  You might be wondering what law in the US is applied unequally.  It is the US income tax code.

 The income tax code in the US is one of the most complicated, convoluted, and onerous in the world.  From exemptions and write-offs to deductions and tax credits it is very hard for the average person to calculate their taxes every year.  Accountants and tax preparers are always busy around April and many people are anticipating their return, that is, if they have overpaid.  The politicians like to use the tax code to promise to make the rich “pay their fair share” and give more tax breaks to the poor and lower income levels.  It all sounds good, unless of course you are rich.  The belief that the rich don’t pay enough taxes is a myth and has been refuted by several different sources.  The truth is that the top 20% of wage earners pay nearly 70% of all income taxes while the bottom 20% pay nothing and even get money back over what they have paid in.  This is why I say the income tax code is inequality in action.

 We in the US should expect fairness in all laws and the Constitution guarantees this in the 14th Amendment Section 1.  All laws should be applied equally among the people but yet we cheer the unequal application of the income tax law.  If we are all equal under the law regardless of our race, gender, disability, sexual orientation, and marital status, why is income suddenly the exception?  Am I somehow less of a citizen if I make $100,000 compared to if I make $50,000?  Still in yet, if I made the higher amount, barring any available deductions, I would be taxed at a higher rate than I would making the lower amount.  This is discrimination based on income and is the only discrimination that is celebrated.  Yet it did not begin this way.

 The Constitution clearly stated in Article I Section 9 that no direct taxes would be levied.  But in 1913, the 16th Amendment was ratified for the direct taxation on income in the US.  This was originally promised to be a tax on the top 1% of incomes.  Does this sound familiar?  Ultimately, as with all laws, the abuse started.  Soon the law was changed and amended to include more people and lower income levels.  At one point in the US the top rate was near 95%.  That means that if you made over the threshold of the top income, you would pay $0.95 of every dollar above that level to the government.  People rarely paid this top rate due to deductions and write-offs written into the tax code over the years.  Still there was a true divide over taxes.  The Democrats always promised to raise taxes on the rich while Republicans urged lower taxes on everyone.

 It wasn’t until John F. Kennedy argued for lower taxes that Democrats even warmed to the idea.  Still the top tax rate was 70% but something unexpected happened after the tax rates were lowered.  There was more money coming into the government than before.  The same phenomenon occurred in the 1980s when the tax rates were reduced once again.  Liberal economists were aghast by the fact that with lower tax rates revenue was increased.  Most of them believed it was the economy and not tax rates but they still could not explain it.  The fact is when more people have more money due to low taxation, they spend that money and invest more as they have more to work with, this is especially true for the rich.  When those who earn more get to keep more of what they earn, they will be willing to invest in new technologies, new business ventures, and even buy more high-end items.  With this ability to spend, new business is created and more people are put to work, therefore adding new taxpayers to the mix.  Even with all the evidence that lower tax rates spur economic growth, the Democrats keep calling for higher taxes on the rich. 

 Many people think that the more you make, the more you should pay in taxes but they fail to realize that this would be true if everyone paid the same rate.  Let’s face it, 10% of $100,000 is more than 10% of $10,000.  Instead, those who make more are forced to pay taxes at a higher rate.  Let’s be honest, would you feel it were fair if you and another person were both issued a traffic ticket and the judge fined you more based of the fact you drove a nicer car?  You would upset and feel it was unconstitutional, and you would be right.  According to the Constitution, both of you should be fined the same for the same offense but that logic does not seem to apply to income taxes.  Furthermore, if you make one dollar over the tax bracket you are in, your taxes can increase by a greater margin than the increase of your income negating such an increase.  It all becomes confusing to say the least.  There are two alternatives that have been suggested, a flat tax and The Fair Tax. 

With the flat tax proposal, it would be across the board 10% on incomes up to $100,000 and 15% on incomes above $100,000.  There would be no deductions, write-offs, credits, or allowances for anything in this plan, you would simply pay your rate and fill out a card each year stating your income and taxes paid and overpayments would be refunded.  Opponents of this tax say that it would unfairly affect the poor by eliminating the Earned Income Tax Credit and other deductions.  They also say that the rich would pay a lot less in taxes due to the lower rate.  Proponents say that the simplified tax code means that everyone would pay something and that the rich would still pay the most taxes.  While both sides have legitimate concerns, this tax would be fairer than our current tax system.

 This brings us to The Fair Tax which would eliminate all income and corporate taxes and replace them with a consumption tax or retail sales tax.  Remember that this plan will mean that everyone will receive their income without government deductions for taxes, FICA, or Social Security.  What you make is what you receive minus deductions for insurance, retirement, and state taxes.  Each family in the US would also receive what is known as a prebate that is equal to the amount estimated by family size for taxes paid on food and clothes.  There would be no tax filing that would need to be done each year and no need for loopholes and deductions.  All taxes would be collected at the retail level so if someone resales something, taxes would not need to be collected on that item.  Unlike our tax code today, if you have a garage sale you are supposed to report the money you make on the sale as income.  That would not be the case with The Fair Tax.  As far as the rich paying more, they would by default as the rich buy not only more but more expensive items than others.  Therefore, the rich would pay more taxes.

 While there are both positive and negatives in either tax plan, they are a far cry better than our current income tax code.  This archaic, progressive tax system in a holdover from Communism and stifles the economy and can be used to punish people for simply making too much money.  That goes against everything the country was built upon.  The truth is that if you stand for equality, then you should stand for equality for all.  Taxation based on income level is as unequal as you can get and should be unconstitutional.

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