Federal Taxes

I was planning a post on another subject, but heard a report on Federal Taxes and got sidetracked.

In fact, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center. This is because our progressive tax system levies higher taxes on higer earners and lower taxes on those who make less. Is this right? I don't agree with it, but the decision is not mine to make.

One obeservation I will make though, is that taxes are used by politicians to direct public policy and as a method to generate votes through class warfare. This is just plain wrong.

The simple answer in my mind -- Cut the cost of government, pass a balanced budget amendment and install a flat tax with the following conditions:

5% of all earned income above 35K per wage earner to the Federal Treasury. This will be used to operate the federal government and if government has to grow smaller and programs dissolved as a result, so much the better. I think we will more faithfully follow the constitution if we leave it up to the individual states to manage the day to day activities of government. The states will still have the ability to levy taxes in any amount and manner their citizens allow. Those who are not comfortable with the taxes levied in their state of residence will have the option of moving to a state with a tax they deem more acceptable. I ask, why should the Federal Government, operating under the limitations placed by the founding fathers, require more than 5% of the American peroples wages?

5% of all earned income per wage earner to be set aside for entitlement programs. This will cover Social Security, medicare, medicaid and any other entitlement programs agreeable to "We the people". This should have a 10 year grandfather clause requiring no reduction in current benefit levels. Thereafter, if this set aside requires a reduction in current benefits those affected will have time to make other arrangements. Why should the American people give more than 5% of their income for entitlement programs?

5% of all earned income used to pay off the Federal Debt. This is self explanatory. I beleive that those who are most responsible for the cost of government have to help repay the debt they help to create. In this way, all will be less willing to allow the government to grow. At the point in time that the debt is repaid, the tax should be extinguished. This will give the taxpayer incentive to make sure the debt is repaid.

This seems both fair and progressive to me. Progressive because the highest wage earners will still carry the greatest tax burden and fair because it takes away our politicians ability to use the tax code for social engineering.