The Moral Tax: A Truly Fair Tax
Every election, there is a lot of discussion about what constitutes a fair tax. There is the current "progressive tax", there is the "fair tax", and there is the "flat tax". If the goal is to be truly fair, and moral, all of these methods are flawed. There is a better way, "The Moral Tax".
The current "progressive tax" system taxes people at increasing rates which ascend according to their income. A progressive tax penalizes success and rewards failure. I would argue, a progressive tax is, by definition, unfair, and immoral.
The "fair tax" proposal is a consumption tax. A percentage is taken at the point of consumption when goods are purchased. Everyone is allowed a prebate which is a monetary amount allocated to everyone. The prebate is set high enough to allow all people to buy the basic necessities of life. Since this money is pre-allocated, it is effectively pretax. People pay tax based on what they consume. Save and you pay less tax. Spend and you pay a higher tax. But, why is it fairer to save than spend? It's your money. A Truly Fair and Moral tax would not care about your personal cash flow.
The "flat tax" is a flat percentage, or a small schedule of flat percentages which change based on income level. No matter what you earn, there would be a specific percentage taken off, given a specific level of income. That sounds fair, but is it really? Even with a totally flat tax, consisting of only one level, a person making $50,000 pays more in dollars, but doesn't necessarily use more government products, than someone making $25,000.
So, What is a Truly Fair and Moral Tax?
In nearly every other type of commerce, Truly Fair and Moral pricing is really quite simple and intuitive. We see it every day, and few question the inherent moral righteousness and fairness of this much simpler system.
Can you guess what it is?
Take a step back, use a little common sense, and the solution for a truly fair, moral, and simple tax system becomes incredibly obvious.
For most items, everyone pays the exact same amount for the same item. Whether it is bread, or milk, cars, or trucks, townhomes or houses, gas, or electric, we pay a fixed cost. There may be a rate schedule based on consumption but we don't pay varying percentages based on our income. For any item mix, everyone would pay the same actual rate amount, either a fixed cost, or a cost based on a rate schedule that is the same for everyone.
Consider this; a loaf of bread or carton of milk costs exactly the same no matter how much you earn. I suspect virtually everyone would be in revolt if stores started pricing purchases based on how much you earn. Why is tax pricing any different?
A Truly FAIR tax would be "The Moral Tax", where, except for those too poor to pay it, everyone pays the same base dollar amount for the same deliverable, regardless of income. My suggestion would be that we stop there with a totally flat dollar amount.
But, some will argue that others will access consumables such as roads and bridges at a greater rate than they will, and the fixed rate could lead to unbridled consumption. This is known as the tragedy of the commons. But, that can be handled with a consumption tax on specific items where everyone pays the same rate for the same item. For example, the gas tax is the same for everyone, but entities which use more gas, pay more tax. A trucking company pays more for those roads, and bridges, than a grandma who only drives to church on Sunday. Higher volume gas consumers effectively build more roads and bridges.
Remember, these are government provided resources, they aren't free market items. In my opinion, we own them already, so we should get them at cost. In any event, under "The Moral Tax", regardless, of whether fixed or sliding scale schedules are used, the same rates would apply to everyone consuming the same items.
Everyone using the same resources would pay the exact same dollar amount. Now that is "The Moral Tax", a Truly Fair tax.