This policy would have the wealthy paying wayyyy less in taxes.
Right now their entire income is taxed, and at a higher rate than the middle class.
Think about it, the more money you make, the more you save...
So here a poor person is getting close to 100% of their income taxed, middle class maybe 90-95%, but a person who makes 100 million is probably not
spending a huge percentage of that...
If a person makes 100M right now, they'll pay 35M or so in tax. But under this policy, even if they spend 80 of it(unlikely), and it is taxed at 30%,
they are only paying 24M in tax.
This policy gives people who save more a lower tax rate...which is the wealthy.
There is a reason for a progressive tax. Mostly, because a family of four with an income of 20K simply can not pay very much and afford food and
If everyone is just taxed at the same rate, with no regard for situation, more people are starving and homeless.
People who are extremely poor right now do not pay tax, because they can't. If there is a 30% price increase, someone who isn't making much money can
no longer afford to live.
You can't give a tax return unless you keep track of everyone's spending.
This system doesn't work in practice.
edit on 12/7/2012 by PatrickGarrow17 because: (no reason given)