Brian Miller/s column in Thursday/s Alligator showed his complete ignorance of basic economics and federal revenue code.
Miller would have it that we tax only the rich - at absurdly high levels - and have them carry the entire burden of taxation while the poor ride free. While this scenario works wonders in magical, happy Progressiveland, where gumdrop rivers flow to hospitals that provide free health care, this is a terrible idea in the real world.
The fact is that the rich already pay huge shares of the taxes. The wealthiest Americans - the top 1 percent - pay 35 percent of all taxes in America.
The not rich - half of all Americans - pay only 4 percent of the taxes. By some estimates, a full 43 percent of all Americans pay no federal taxes at all. The revenue code is wrought with so many exemptions, deductions and refundable credits (read: free money) that only the wealthy pay federal tax as it is.
Yet Miller would have us further shift this burden by removing the sales tax and only taxing the rich.
The super wealthy currently pay a marginal rate of 46 percent in some states. With coming Obama tax increases, that will jump another 10 points.
If the government took 56 percent of every dollar you earned, what would you do?
Easy! You wouldn/t earn it!
Money at that rate is often not worth earning. People instead don/t do the extra work, send the money to offshore accounts or funnel the money into stock options and benefits.
The rich are worse off, and the government has less money. Everyone loses.
You can/t tax the rich forever, Brian Miller. Everybody should pay his or her fair share in taxes instead of punishing the successful.
The sales tax, however, is a much fairer tax. It taxes consumption - something everyone does - at an equal rate across the board. The poor actually spend less of their consumption in sales tax because more income goes to necessities, which are usually exempt.
So when the rich buy a yacht or eat a steak for dinner, they pay tax on it like everyone else.
And when they take the money and invest it into companies that create jobs or drive technological growth, they pay even a bigger tax on it - 25 percent. They are hardly "tax free" as Miller/s lies would have you believe.
A sales tax falls on everyone: locals, tourists, rich, poor, businessmen and drug dealers. No one can avoid it because everyone consumes. It ensures everyone pays a fair share of tax on everything they consume. Only dollars that are not spent on consumption and are directed toward investment are exempt, as they should be.
Miller does raise one valid point - services are exempt from sales tax. But instead of raising taxes on the rich to make up for this, we should expand the sales tax to include services, so that special interests don/t receive preferential treatment. This extra revenue would allow us to lower the tax rate across the board.
Miller cannot comprehend that taxing the rich hurts the economy holistically. A sales tax taxes everyone at an equal level based on what they choose to consume. If people choose not to consume and instead invest their money, everybody wins.
No, it/s not very progressive. But like most things not progressive, it works.
Johnathan Lott is a political science and economics junior.
