Why should a group of hard-working, innovative, and lucky(?) people be asked to contribute to the less fortunate, some of whom are lazy, unimaginative and unlucky?
Income Redistribution is an economic concept supported by nearly every economist; rightfully so. People who earn more, pay geometrically more income taxes than those who earn much less. Automobile insurance premiums are based on risk, with low-risk people paying much of the premium that high-risk people could never afford to pay. In many states, homeowners support schools and other municipal functions that renters use but are not required to support. High taxes paid by the more fortunate are used for social programs like welfare, school subsidies, etc. Tax exemptions for people with large families are compensated by single people or people with no children. Very little taxation credit is allowed for the wealthy to offset taxation by their charitable works. Corporations are taxed at rates which inhibit the growth which could create more jobs and less expensive products.
Part of the tax forgiveness for large families was conceived to keep birth rates high enough to meet future labor demands. (Germany actually pays citizens "kindergeld," depending on the number of children in the household. It's a billion-dollar social program that has failed miserably. Germany has been importing labor, mostly immigrants, for many years with no end in sight.) The subtle American approach has been equally unsuccessful.
Tax loopholes and political "pork" have created a class of very rich taxpayers who pay no tax at all; some corporations fall into this category as well. Close to one-third of all American banks (Subchapter "S" status) don't pay federal income tax.These individuals and corporations are not pulling their fair share of the load. Virtually all government spending is totally void of entrepreneurial concepts which could save billions annually. Political "pork" attached to virtually every bill passed by Congress cost taxpayers billions every year.
Unemployment compensation actually encourages unemployment and only serves as a bridge to full welfare. A working person pays taxes and contributes to the economy in many ways. A person on welfare only takes. When a person returns to the workforce, unemployment compensation should continue until the worker's first wage increase. (If it stops when a person is reemployed, the person feels a sense of loss; like working for "half wage.") When the worker receives a pay increase (longevity or promotion), unemployment compensation would be reduced by one-half of the pay increase. In this manner, the person realizes financial advancement while unemployment compensation is also reduced.
It's time to rethink the American income tax framework and social benefits in terms of the above. Should social programs, like taxation, encourage people to have children that they can't afford? Most states have a sales tax which intends to compensate for property and income tax shortfalls. Perhaps state sales tax could be restructured to be higher for purely luxury items and lower for necessities. A "flat tax" (everyone pays the same percentage of income, like 9%) may not be economically feasible, but incorporating some elements of flat tax into our income tax code may offer some relief to all taxpayers. Certainly, closing tax loopholes, which sharply reduce taxable income, would go a long way to increase tax revenues.
Certainly, the "haves" are responsible to support and nurture the "have-nots." Unfortunately, the American taxpayer isn't getting good value for a dollar paid into the system. "Have-nots" remain in that category far too long and become a serious liability to the overall system. The challenge is to help an individual move up the socio-economic scale and become a productive citizen who pays taxes and doesn't receive welfare (easier said than done, but nevertheless the goal). Essentially, if the word "social" precedes a program, it's broken and badly in need of repair. We owe it to ourselves and to the future of America.
