The Time For Bold Tax Reform Has Come

In 1913, the 16th Amendment to the Constitution, which gave the government the authority to tax people’s income (up to 100% of it), was sold to the public as only taxing the rich. Sound familiar?

By 1913, 36 States had ratified the 16th Amendment to the Constitution. In October, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid income tax at the time.

Americans Paying Zero Federal Income Tax Grows

There is a growing number of Americans who pay zero federal income tax after taking advantage of deductions and credits.  This, a result of morphing the income tax system into spending programs during the Clinton administration. The number of Americans in this group has increased by 35%. Up from 43.4 million people in the 2006 tax year to 58.6 million in the 2009 tax year.   No doubt due to record unemployment and more wealth-spreading going on.

Prior to The Taxpayer Relief Act of 1997, tax relief was generally given in the form of lower tax rates or increased deductions or exemptions. But the 1997 Act  launched the modern proliferation of individual tax credits and refundable credits that are in essence spending programs operating through the tax system.

Large Number of Non-Payers Make Tax Reform Difficult

Federal tax reform requires that the base of the federal income tax be widened, so that overall tax rates can be reduced. However, because of the large number of Americans currently paying zero federal income tax, any attempt to broaden the tax base will be a difficult sell for lawmakers. The millions of Americans who have no federal income tax liability will either be indifferent about tax reform or will positively oppose it, as it would require bringing them into the federal tax base.

When more people don’t pay taxes than pay taxes under the current system, why would anyone think that these non-payers would vote for anyone who would make them pay a ‘fair’ share? Similar problems are bankrupting European countries over benefits. Reforms there means taking benefits away.

These findings raise serious questions about the future of the U.S. income tax system, and the possibility of base-broadening tax reform when the majority of the federal tax burden is borne by a shrinking pool of taxpayers.

I got your base-broadening tax reform right here. It’s called the FairTax and it is what ‘Phase 2’ of Herman Cain’s economic plan is all about. It broadens the tax base from 140 million people to every living human being within the borders of the United States. Under the FairTax, the tax base includes our population of 320 million, plus foreign tourists, diplomats, and illegal aliens. You can’t get a broader tax base nor a better stimulus for job creation, economic growth, personal economic security and national economic security.

One thought on “The Time For Bold Tax Reform Has Come”

  1. Thank you for your Tax Reform Articles. I want to wake up the non voting base and those who fear the consumption tax with a simple proposal.
    ” Offer more Pre-Bate” for 5 years”. Limit government growth to 2% while transitioning from income taxation to a “Fairer Tax”.

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