The decision to break away from England in the mid
18th century and form an independent country was based mainly on
the fact that England imposed taxes on the colonies without their
consent.  Since then, the government of the United States and the
governments of each individual state have been levying taxes to
pay for the cost of governing and the services that the government 
provides.  This is a necessary evil and on occasion we are required 
to vote on some new form of taxation.  A normal, middle class family 
that owns its home will pay: 1. Federal income tax;  2. State income 
tax; 3. City payroll tax; 4. Social Security tax (which includes 
medi-care); 5. State and county sales tax; and 6. Real estate tax.  
Some counties and/or states also impose a Personal Property Tax on 
selected items (usually luxury items like boats and airplanes).

The cumulative effect of this taxation can be staggering. 
For many years I have taught classes at a local community college
as a way to earn extra money for vacations and gifts.  The tax
bite on the additional income has made it almost too expensive to
bother with.  Federal tax amounts to 28%, state tax is 6%, city
tax is 2%, social security is 7.65% for a total of 43.65%.  Every
time I look at those numbers I wonder who I am working for.

As a result, taxation becomes a large political softball
that gets batted around every time any two or more elected
officials get together.  Everyone has a solution, and no one has
a solution, and nothing gets done.

I think that the first thing that has to be done is to agree
that government, at any level, is too expensive.  If I were to
try to look at the reason that government costs so much I would
be committing myself to a book of giant proportions.  Suffice to
say that the cost of governing the country is excessive and has
to be reduced.  

We must also agree that taxes must be reduced.  Then we have
to find a way to do that while ensuring that the new methods are
fair to all economic levels of the population.  One method that
has found a great deal of misguided support is the "flat tax". 
This proposal would eliminate federal income tax as we know it. 
Each employer would deduct 15% (or some agreed upon percentage)
of any payment to an employee and remit it to the government. 
The Internal Revenue Service would be able to reduce its staff by
90% because nobody would have to file a return at the end of the
year.  This is the way most city payroll taxes work now.  The
problem is that more income is derived from investments than from
wages and there is no provision to tax investment income. 

Another problem is that some income has a built in cost that
is not taken into consideration.  For instance, one man goes to
work and earns $500 per week.  He has no work related expenses
other than getting to the office.  His brother also earns $500
per week, but he earns it as an independent contractor working
for a delivery service.  He uses his own vehicle, pays for his
own gas and maintenance, buys his own insurance, and gets paid by
the trip.  Should he not be able to deduct his work-related
expenses from his gross wages before he pays any tax?  A third
brother is retired and receives $500 per week as an annuity from
his mutual fund investments that he made over the past 25 years. 
Are you starting to see the inequity here?

Let's assume that a family of four can survive on $500 per
week, or $26,000 per year.  A 15% payroll tax would amount to $75
per week, or $3,900 per year.  A family of four that had a gross
family income of $104,000 (4 times the minimum requirement) would
pay a tax of $15,600.  On the surface that looks fair because
both families are paying 15% of their gross income, but the first
family is using all of its income to survive, the second family
has over $60,000 in discretionary income, that is, money that
they can spend on items other than necessities.  Would it not be
fairer to take a little less from the first family and a little
more from the second family?  That is called indexing, which is
what the current tax code is supposed to do.  

In addition, the proponents for the "flat tax" want to
augment this tax with a federal sales tax and a "value added" tax
to be paid by manufacturers.  This will increase the cost of
consumable goods and services which will directly affect the
poorest wage earner.  The cost of the items that have to be
bought to survive will go up.  Those families with discretionary
income will pay no additional sales or "value added" tax on that
portion of their income that they save or invest, nor will they
be taxed on the earnings from that investment.

There appears to me to be a fairly simple answer to this
quandary.  Create an index that is fair and equitable and allows
for reasonable deductions for the most common of basic living
expenses.  An individual or family that is earning wages below
some basic level will not be required to pay any tax at all.  As
earning power increases, so should the tax obligation.  In order
to pass this type of legislation, Congress is going to have to
stop giving in to special interests and pull together to do the
right thing.  Unfortunately, I haven't seen much of that.         
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