Fair Share of Taxes

The latest political mantra regarding taxes suggests that some American's are not paying their fair share.  Liberals have suggested that the wealthy are guilty of this sin.  Conservatives point out that 46% of income earners pay absolutely no Federal Income Tax after standard deductions and tax exemptions.

The truth is somewhere in the middle.  Lower income earners don't pay Federal Income Tax, but they do pay a variety of other Federal taxes.  Wealthy tax payers pay at a much higher tax bracket, but are entitled to a variety of deductions that reduce the tax burden significantly.  The group paying the highest percentage of their income to taxes is, and has always been, the middle class.

I'd like to see us step back from the political rhetoric and take a real look at our tax system.  The current system is somewhat unfair in that the middle class seems to be exploited by both the wealthy and the poor.  The exploitation is not extreme, but it is real.  Many people excuse the poor while vilifying the wealthy for doing this, but the reality is that exploiting people in this way is wrong regardless of your social or financial standing.  Using the government to rob someone is no more moral than using a gun or a knife.

Our current system is confusing and cumbersome.  I'd love to see it simplified.  If we'd like to simply modify, or "patch" the current system, however, there are a couple of things I'd like to see.  First, let's get rid of the capital gains tax and replace it by taxing capital gains at the tax payer's current income tax rate.  I see no reason to reward gains made through the movement of money while penalizing gains acquired through production.  We can modify this slightly to allow tax exemption for the sale of a primary residence at the time of retirement, and possibly for the purchase of another primary residence.  This would protect the middle class who often rely on their home as a primary investment.

Next, I would like to see the cap removed from Social Security obligations.  Currently, Social Security taxes are only paid on the first $110,100.  Let's tax all income for Social Security.

Finally, I would like all income earners to pay some Federal Income Tax.  It can be a token amount, but if people are going to vote for how the money is spent, I would like them to contribute to the fund.  It's easy to spend someone else's money.  I believe it's important for voters to realize they're actually spending their own.

Or we could scrap the whole system and look at a Fair Tax, a National Sales Tax, or some other hybrid system.  Maybe that would be a better idea...