High sovereign debt implies increase in taxes in the near future. However, Barack Obama, who wanted to raise taxes, is facing stiff resistance from the Republicans. So also
There are specific problems with our tax system
First, it is
very difficult to calculate the best tax rate or the lowest tax one can pay
through the system. Second, taxes have unintended consequences. They sometimes
promote or prevent marriages, home purchases, bigger cars, etc. Government has no business
interfering with the lives of taxpayers in such a way. Third,
taxes are unfair. The rich often pay lower taxes than the poor. Fourth, there
is no way to measure return on taxes just as we measure return on capital.
Finally taxes are high because they are paying for over-regulation by government or they
are paying for large governments.
Better simplify the tax system
It might be better if tax was simplified into
just one tax, either on income or consumption. Incomes should not be classified according to
their sources. All incoming cash flow should be treated as income. There should
be no part exemption what so ever. Government can define a level of
income below which tax rate is nil. Above that income, taxes should be at one
single rate. The only flexibility in policy will be to determine what rate
should be.
The common argument is about the beneficial
taxes on cigarettes. Those are not taxes. Those are penalties imposed on
cigarette manufacturers for damaging lives of people. Those should be recovered
as penalties and directed towards treatment of heart and lung diseases.
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