Tuesday, February 26, 2008

Taxation - Thinking about a Fairer System ???

Thinking about how we tax all of us in the US, I'm left with the feeling that:

1.) Those who work - and don't earn a huge amount often pay a lot of their income in taxes and
2.) Those - with substantial - "assets" - often appear to have ways of paying far less in taxes than they could easily afford to.

Thinking initially in these areas, I wonder why we don't tax: "assets" ?

Assume that Couple X owns:

1.) Two or more houses or condos or similar,
2.) A stock portfolio/ bonds/ bank accounts - with a value of $1-10 Million or more

vs. Couple Y who:

1.) Own a single residence (or rent) ,
2.) Have stock portfolio/bonds/bank accounts - with a value of $100,000 or significantly less.

Why shouldn't Couple X - have an exemption of some of their assets and pay taxes - on the remainder? Such a tax could be lessoned by (taxable) income that they received from the asset.

It often is stated that we should Not significantly tax capital gains or interest/dividend income because it will discourage investment and similar. I suppose that people can hid money under their mattresses and always there are incentives to look for the weaknesses in tax law to "save people money".

It seems that we should figure out ways to create as simple a tax system as possible which is progressive and requires people who have the ability to pay taxes to pay them, and those who have less of such an ability to pay significantly less.

I can't instantly construct a tax system to do what I am suggesting. I do think however that we should move towards more equity and fairness for all - and that such ideas could lead us on such a path.


No comments: