I know way back when I went on a rant about how the student loan bubble is going to burst and colleges will fall and then basically all hell will break loose. So let’s try that again… What am I attacking this time?

TAX REFORM!!!

Everyone thinks they can solve it by making the system SoOoOoOoOoO SIMPLE. You hear it all the time – “It shouldn’t be impossible to figure out what you owe in taxes.” And while I agree they are complicated, I 100% disagree the IRS needs to be abolished (still don’t even get what people mean when they say that).

Here’s why, and I’m going to explain it really low level and then expand.

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Let’s start with income taxes – that one that everyone seems to hate so much.

The simplest tax ever would probably be a flat tax… Like everyone owes the government $1 per year or something. Then people who make $2 per year would be like, “Hey, what the flip! If that guy over there makes $100 per year and I only make $2 – my $1 tax is HALF my fucking income!!

Completely fair point right? So, change to a percent, right?

Let’s do 10% of everyone’s income for example…

If someone making $25k a year has to pay 10% on their income their left with $22,500. At the same rate, a person making $100k a pear has to pay 10%, they’re left with $90,000 (those are both very REAL scenarios in America right now). But the way we have it set up, the person making $100k will be taxed more. Why? Because they can afford it! The person making $25k really can’t. Life already is expensive enough, they need the money to EAT, the richer person needs that money for more lavish things.

Taking that a step further… If you make a million dollars a year, you’d be left with $900,000. You don’t think THAT person shouldn’t pay a little bit more into the system PROPORTIONATELY than the person making $25k? It’d be chum change for them to pay the $2,500 tax bill of the $25k salary person.

The way income taxes are constructed right now MAKES SENSE… As you make more and more money, your HIGHER levels of income get taxed more. So if you earn $10 million per year, every dollar over $420,000 gets taxed at 40%. Why? Because THOSE people can afford it. And the reality is that the first $10k you earn doesn’t get taxed AT ALL.

Steal from the rich and give to the poor” (that’d be the logic at least).

And here’s the thing that is JUST the income tax portion of it all…

Then, as will always happen – we see smart people taking advantage of the system. And let’s take the housing market for example.

Right now, if you buy a house for $100k and sell it for like $125k (so long as you lived in it over 2 years) you’ll receive the $25k “gain” on your house tax free… Seems fair right? I’d assume MOST people will live their lives in or around that threshold. The only time gains get taxed differently are when you buy that same house for $100k and sell it for OVER $350k (gains up to $250k on houses lived in over 2 years are tax free)! The odds of something like that happening are minimal, so those tax laws are pretty beneficial I’d say to MOST people.

The people it doesn’t benefit? People who buy $2 million homes and THOSE homes appreciate by $500k (the same 25% as the earlier example).

Tax the rich, making laws that benefit the poorer.

If/when tax reform goes into effect and it is “simplified” for all to understand… I think we’ll just be taking ourselves back DECADES of trying to make things fairer and closing loopholes that people used to benefit.

Simplifying the tax code may sound sick in the fact that you’ll be able to do it easier than having to go to H&R Block or do it on Turbo Tax or whatever people use to do their taxes… But I promise when you look at the bigger picture, you’ll realize the lesser incomes will be getting fleeced.

I’m up for debate on this one because I’d love to hear what the benefits exactly are, and TO WHO.

 

 

Tax Reform Has Been Going On for Years – Don’t Undo it All,
@WCS_Taylor