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RightChange: We Should Repeal and Replace The Tax Code


The GOP Debate in Las Vegas was heated last night after Candidates trashed Herman Cain’s 9-9-9 plan without offering anything of substance of their own.  As Herman Cain pointed out at one of the past debates, he is the only candidate who has offered a plan that throws out our current tax code.  Particularly Congresswoman Michele Bachmann (R-WI), a former federal tax lawyer, has been critical of Cain’s plan saying that it gives Congress a new stream of revenue to raise taxes on.  Congress already has the ability to increase the tax rate no matter what type of tax plan it is.  Why do you think Obama is on a bus tour promoting his “tax the rich” tax plan right now?  His plan along with the Democrats is to raise taxes in 2012 to over 50% for the top 1% of income earners.  We can disagree about whether or not Cain’s plan is the right tax code for America, but what’s more important is that our current tax code is broken and needs to be replaced.

Let’s do a quick review of our current tax code, keeping in mind that over 50% of Americans do not pay taxes what so ever.  Currently, the top 1% of income earners makes at least $380,354 a year.  The top 5% make at least $159, 619.  Our current tax plan taxes the top 1% at a 35% income tax rate. That is just the income tax; it excludes Capital Gains tax, State tax, and the Alternative Minimum tax, and the Payroll tax.  This adds approximately 17% of extra taxes to the top 1% of income earners.  This means that approximately 52% of their income goes to the government. 

President Obama and the Democrats would take that rate higher.  Under our current tax code, the top 1% federal income tax rate will go from 35% to 44.8% in 2013 plus the Democrats want to add a 5.6% surtax to pay for Obama’s $447 billion jobs bill.  That means anyone making $380,000 and over will pay 50.4% in federal taxdes plus an extra 10-17% in state, Capital gains, Alternative Minimum tax, and the payroll tax.  That means that job creators will potentially be giving 60-67.4% of their earnings to finance government spending. House Budget Committee Chairman Paul Ryan (R-Wis.) provides another stunning analysis: 

If we taxed the top 1% of income earners at 100%, meaning, if we took every dime they ever earned, we would have enough money to fund the government for four months. 

When President Obama says the way to cut our deficit and create jobs is for the “rich to pay a little more” he is flat out misleading the American people.  The data from the IRS proves it.  In case you are not convinced yet: The Federal government received $2.17 trillion in revenue from taxpayers in FY 2011; $2.17 trillion wouldn’t cover the amount of money President Obama spent in the first 19 months of his Presidency.  The top 1% paid almost 40% of total federal income taxes in 2007.  So, almost 40% of that $2.17 trillion in tax revenue came from the top 1%.

 

The top 10% of earners paid 70% of federal income taxes.  This is why even Democrats like Senator Chuck Schumer (NY) think that demonizing the top income earners violates common sense:

“$250,000 makes you really rich in Mississippi but it doesn’t make you rich at all in New York and there ought to be some kind of scale based on the cost of living on how much you pay,” Schumer said.”

This broken tax system is the main reason the top income earners continue to find ways to get out of paying these outrageous tax rates.  Did you ever think that our tax system is to blame for the loopholes themselves? Perhaps the biggest loophole in the tax code is that over 50% of Americans have found a way to not pay any taxes at all.  Why isn’t President Obama making them a part of his tax reform?

This Math proves three things: 1. Our current tax code is unfair and broken 2. Our current tax code will not fix our deficit spending problems 3. No matter what our tax code is, Congress will always have the authority to raise taxes.

Our current tax code needs to be scrapped but it cannot stop there.   We also need a balanced budget amendment if we are ever going to reign in our spending to grow our economy.  If Congress’s ability to raise taxes is your objection to tax reform, then you will not be satisfied with any plan.  The only way to prevent Congress from raising taxes in an “unfair” way is to hold your elected leaders accountable.  As you can tell from the current Republican and Democrat establishment in Washington, the days of “trusting” your leader to carry out your views is over.   You may not think Cain’s plan is the way to go, but he is the only candidate presenting solutions that actually fix the problem.  He is getting the conversation started; the rest of Americans ought to join the discussion.  In 2010, voters sent a message to Washington that the days of out of control government spending were over.  Now it’s time to send the message in 2012 that the days of taxing and spending are over.

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