The allegation that “47% of Americans don’t pay Federal taxes” has entered the American political lexicon and will remain in it long after Election Day.
Regardless of the accuracy of the comment, there is an element of truth in the following: people that don’t pay into a system have no stake in it.
This exception extends not just to the poor, there are plenty of wealthy people who avoid taxes by virtue of bogus tax deductions (or the refusal to report their income).
Our friend Jamie Smith, who obtained 12.5 million in 2007 through a fraud (as found by a Virginia jury), is a perfect example of that. As he testified in his trial, he simply declared the stolen $12.5M as a “loan” on his amended return and wrote it off against future income. So he pays nothing. To date, the Feds have done nothing about that fact – other than throwing more money at his phony “security” business.
Last week, in his debate, Tim Kaine addressed the issue honestly, by stating that he was “open” to some type of minimum payment which would address “zero-filing” taxpayers.
In a display of chutzpah, the REPUBLICAN candidate, George Allen, has attacked Kaine for considering a “tax increase on poor people.”
But wasn’t that Mitt Romney’s whole point? That more people should be come stakeholders in the Federal system?
(More pertinently, does Allen have any plan for avoiding sequestration? Does he even care that the hard-core “no taxes” position by the U.S. Congress will cost thousands of jobs in Virginia, if no deficit deal is reached?)
The reality is that the current Federal system vastly discriminates against working people, whether they’re making $500,000 or $50,000 a year. It benefits people who live off capital (Romney), off stolen funds (Smith), or off other undeclared income.
The unfairness of the current system is one of the reasons I have never voted for an income tax increase in 12 years of legislative service. (Look it up). You’re only hitting those folks who work hard and play by the rules.
The question of closing loopholes and expanding the tax base is always worth asking. That’s all Tim Kaine did. We need more politicians, Federal and state, to be asking the same questions.