Abdul At Large
What Should Tax Reform Look Like?
Republicans in Congress are about to begin negotiations on tax reform, and as someone who considers himself a practical, moderate conservative, they’re getting it all wrong.
Now don’t misunderstand me, I am a big fan of cutting corporate tax rates. I firmly believe, and the data is out there to show, that reducing corporate tax rates makes America a much more competitive job market when it comes to business. I am also a fan of simplifying the tax code.
However, if the GOP wanted to hit out of the park and do real tax reform, they would get rid of income taxes altogether and replace it with a commercial transaction tax.
Of all the taxes a government can levy, I have always found an income tax to be most morally reprehensible. I firmly believe that it’s your money. You worked for it, and you should be allowed to keep as much of it as you want to do whatever legal thing you want to with it.
The way a commercial transaction tax works is that you only pay the tax when you engage in a commercial transaction. So whether you’re buying groceries, a car or a TV, you pay the tax. And you get to keep all of your paychecks.
Now, of course, some folks wonder what about “the rich” and will they pay their fair share? Yes, they will. Because when the rich buy expensive cars, homes or jewelry, they will pay the commercial transaction tax. And for you social justice warriors out there, when the rich get disbursements from their investment portfolios, they will pay the tax as well.
And here’s something else to ponder, a commercial transaction tax can even reach the underground economy because even drug dealers and hookers have to eat and buy clothes, well at least the drug dealers have to buy clothes.
And when it comes to simplification, the commercial transaction tax is real simple. You pay the tax when you engage in the commercial transaction, that’s it. And since the tax collection would function as a sales tax, there’s already a system in place.
And as far as what the actual rate should be? We can leave that to the economists, but I've found that 3-5 percent tends to be a good range when looking at the nation's $19.3 trillion economy.
So if you’re not happy with the GOP tax plan, I don’t blame you. There’s a much better system out there. A commercial transaction tax. That, my friends, is what real tax reform looks like.
Photo: Getty Images/Elizabeth Simpson