Wow! A very busy thread where very few points were discussed in great detail. Instead of picking out specific posts, I'm going to address some of the highlights with my take on the subject.
First, the idea that business owners choose what taxes they pay is ridiculous. I say this as a person who owns his own business and who has several family members who have made their own businesses, as well. You have your gross revenue. Then you are allowed to spend that revenue on certain things and won't be taxed on those. This includes such luxuries as paying your laborers and buying office supplies. Unfortunately, groceries don't seem to count as office supplies to the government. When you have spent the money you are allowed to spend tax-free, you have the money left over. That is your income, or pay for doing your job. This is taxed very similarly to other income because it's the amount you get to keep after keeping your business alive. Alternately, you can keep it invested in the business, but not spend it, but that includes not spending it on yourself and is therefore not income. When you use it to buy a car, you have to call it income and pay taxes on it.
Next, progressive/regressive/fair taxation. We have covered in great detail previously the differences between FIT, FICA and state taxes. Those who talk about the whole tax burden are not being dishonest, but they are lumping together hugely different subjects.
FICA is not progressive because it was designed to provide a return based on the investment you make. It is supposed to replace retirement planning. It is not progressive because the idea was to get a return value based on your investment. It caps at 106k because the theory is that if you make more than that, you don't need more help when you retire. I agree that the burden is higher on lower incomes, but so is the reward. If you raise the input, then fairness would demand you raise the return and the same thing applies.
State taxes have a hugely varied application. Some are more fair than others. The key here is that it is NOT the job of the federal government to compensate for state taxation. There are 51 governments involved here. You can pick on certain states, sure, but putting it on the federal government makes it pointless to have states since they would then have to provide some balance to the state government. What's to keep NC from taxing at 50% if the federal government will just give the money back in a sense of "fairness"?
Then you have FIT. This is a progressive tax that, by itself, is absolutely progressive. It increases based on higher incomes. The wealthier pay considerably more than the poor. This is the tax I refer to when I speak about fair taxation because it is the only one applying nation wide that was designed to be progressive.
Capital gains is a different beast. The thing about CG is that increasing the rate rarely increases the revenue. If you treat it as normal income, people will change their investment approaches to make sure the government gets less. Which is more important here? "fairness" or total revenue?
Inheritance and gifts, imo, should not be taxed again. The thing about it is that there wasn't a trade. Also, they have already been taxed as income. Yes, we pay multiple taxes on the same income all the time, but it shouldn't have the same tax applied multiple times. I know the argument that the person receiving the money has not paid taxes on it yet, but I personally feel that we leave things to people because it's something the GIVER wants to do. They are still paying taxes on it twice.
Then we get to the thing that bugs me the most. People are too focused on getting more money in the government's hands to misspend. Currently, the government gets $2,301,743,014,779 a year that is manages to do very little with. They need severe cuts to spending. We don't have a revenue problem, we have a spending problem. The government should easily be able to survive on 2.3 trillion dollars. That is also not including state governments who use the money to care for roads, schools, emergency services and more. Those things don't even fall on the federal budget!
Another annoying thing to me is the statements about the wealthy benefiting more. I'm not sold on it. In fact, I feel the opposite is true. I am fine with helping people who really do need it, though. However, the problem is that so many factors are ignored. In whatever way they supposedly benefit more, they pay more taxes already. More use of the roads? Well, they paid more sales taxes for the goods they are shipping, the trucks that ship them, and the employees they hired to move the stuff. Benefiting from the education of their employees? They also pay higher wages, which means more taxes. Also, those employees are benefiting and paying more because of the education, too. Additional emergency services (police protection)? Well, they pay higher property taxes and purchase taxes for those properties. They also don't get welfare, government funded healthcare, or anything else the poor receive from the government. Let's stop acting like they are getting these things for free and the average worker is paying for it.
Long post, but I came in late and saw lots of things I wanted to comment on.
