Jewish World Review Feb. 7, 2003 / 5 Adar I, 5763
Drs. Michael A. Glueck & Robert J. Cihak
How about tax cuts for the "rich" and "poor"?
As President Bush's proposed growth and stimulus package is debated, much
will be said about how it "unfairly favors the rich" yet seldom (if ever)
are "the rich" defined in terms of quantified income.
Since the vast majority of Americans do not perceive themselves to be rich,
they generally assume "rich" means someone who earns more than they do --
and therefore accept that it is "unfair" that the "rich" benefit more
thanthey do. Similarly, neither the criteria used to assess "fairness" nor
the issue of "fair" to whom is ever addressed. What is perceived as "fair"
by those who benefit from increasing taxes on "the rich" may not be
"fair" by those who pay the bulk of taxes.
Thomas R. Damiani, a Newport Beach business consultant who has extensively
studied this issue tells us, "It is important to realize that whether a
proposed income tax rate cut favors one income bracket over another is
entirely the result of the current graduated income tax system
wherein higher and higher tax rates are levied as taxable income increases.
To ensure that future tax rate reductions do not "unfairly" favor the
"rich," the U.S. should adopt a flat tax system where all taxpayers are
levied the same rate for all taxable income. This would ensure that any
reduction in tax rate would uniformly benefit all taxpayers in proportion
to their income."
FLAT TAX WOULD HAVE NUMEROUS OTHER BENEFITS
- First, the tax code would be simplified so everyone could understand it.
Flat tax proposals permit a tax-free allowance and levy an income tax that
a fixed percentage of income above that allowance. Although the tax-free
allowance varies depending on family size, the percentage used to calculate
income tax is constant independent of income. The Internal Revenue Service
and tax courts would be relieved of their current burden of writing,
interpreting, and enforcing the current incomprehensible tax code.
could decide how best to manage, invest or spend their own money without
having to endlessly decipher the tax consequences.
- Second, there would be no need to debate who was and who was not "rich";
therefore the country's taxpayers could quit fighting class warfare and get
on with being more productive. No one would need to resolve how much of
their income "the rich" were entitled to keep. Everyone would have the
opportunity to proportionately increase their after-tax income by either
improving their skills and marketability, by working harder, or both.
- Third, all taxpayers would become stakeholders required to pay more of
their income in taxes any time federal spending exceeded federal revenue.
According to the Internal Revenue Service figures in 2000, the lower 50
percent of the taxpayers paid a total of 4 percent of federal income taxes.
Since this constituency enjoys the same voting power as the 50% that pay
remaining 96%, they constitute a political group currently enjoying
representation without taxation
- Fourth, a flat tax would increase incentives for taxpayers to increase
productivity and create economic growth. As an example of disincentives in
the current system, a self-employed California family earning over $75,000
per year pays 30 percent in federal income tax, 9.3 percent in California
income tax, and 15.3 percent in federal self-employment tax for a total of
percent paid to the government! This is hardly an incentive to work harder,
take risks, and attempt to create new jobs.
As we debate President Bush's proposed tax cuts, wouldn't it would be
for the nation to focus on economic growth (which benefits all) instead of
class envy, wealth redistribution and emotional arguments based on
concepts of "fairness," "the rich," and arbitrarily deciding for the "rich"
how much of their income they deserve to keep.
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Michael Arnold Glueck, M.D., is a multiple award winning writer who
comments on medical- legal issues. Robert J. Cihak, M.D., is past
president of the Association of American Physicians and Surgeons.
JWR contributors are Harvard trained diagnostic radiologists.
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