At the outset, I would like to reiterate that I believe a combination of socialist and capitalist policies is the best for a human society to thrive and prosper.
In the capitalist area of this society, I want to outline my idea of an ideal and fair tax system.
Firstly, I would like to address the capitalistic portion as it relates to the socialist portion.
One necessity for addressing the some of the socialist portions of a good society would be for the state to provide some things, facilities and resources to all its citizens, with some variations depending upon their individual needs, but by and large, spread over a population. It is possible calculate average costs per individual, plan and budget for these. The social responsibility for individuals would cover areas like common security (policing), basic infrastructure (roads, water, electricity and these days internet), national defence and health (medical facilities).
As one would expect, profit from capitalist ventures is taxed and funds a portion of the socialist policies. But it does not need to be entirely so. There can be common owned assets that function in a capitalistic manner to provide employment and benefits to all.
Now I want you to consider the following questions. I am asking them to provoke thought and for us to question the meanings of terms we normally associate with them. I find that things are not straightforward as we like to think they are.
1) Would we all agree that the socialist portion tries to address the varying and common human needs of people who are not able to fend for themselves in society, those that are not full, productive citizens - like children, the disable, sick and elderly?
2) Would you agree that, to be fair, the responsibility to support them and pay for them should be equal upon all the rest of the population?
3) When it comes to social services like policing, water, roads, defence etc that society provides to all, do you agree we all should get the same amount irrespective of our income?
I mean, you don't surely agree to a person paying more taxes getting better police protection, more access to public roads, more public facilities than others, do you? When we see some 'rich people' or 'celebrities' or people with influence being showered with government funded resources, it makes us mad. Why? Did any or many of them pay a lot more in taxes? Would it not be fair then, if they got back more?
4) Do you also agree that people that work harder or contribute more, are more enterprising, should rightly, to be fair, keep their earned wealth?
Then why do we tax the wealthy more? Even if it is a percentage of their earnings of profit, governments use the specious logic -they made that much under the system and that their fair share of tax should be higher!! No, people should make their wealth through their own efforts, government should only provide a level playing field and same laws for everyone. Ideally, everyone would pay equal taxes - an equal, fixed amount, not even a fixed RATE or percentage of their earnings. Why is a harder working, honest richer person more liable to pay for others? Yes, that is the law now, but let us mentally question why that is fair? If it is not, let us acknowledge at least, even if we cannot change it.
Would you agree that a person earning more should not be using more government benefits and social resources than someone earning less, unless they pay extra for it ? Once they have paid for it, their profits are legitimate and should NOT be taxed anymore than anyone else's income.
That would be the principle of true fairness. That word 'fair' has been mutilated and distorted beyond recognition and its true meaning, along with other words like 'freedom', 'democracy', 'socialism' or even 'free market' or 'free trade'.
We all know truly, deep in our hearts what is fair and what is not. It is not always politically expedient to speak our minds, but atleast let us do so in our minds as we read this. I think it explains why the world over, we see hardworking, enterprising, even honest capitalists, being taxed more just because they earn more and are helpless under politically made laws. Rather than come outright and debate it, or work to change laws legitimately, many find it more convenient to use the system against itself and hence we see an obvious tendency for big, successful people and businesses having higher clout in the political process. This also results in making it easier for crooked capitalism to survive and thrive.
Ultimately, any fair honest capitalist venture will find it difficult to survive against a more crooked and corrupt capitalist venture. It would not be competitive anymore. Hence, even the proportional taxing (even at a fixed RATE of income or profit) is unfair in my opinion. Nowadays, even that 'flat rate of tax' is a bad word and politically incorrect. There is talk of 'fair share' of a tax on a person or individual of 50% or 75% or even 90% marginal rates! What is fair about that? Bill Gates does not consume more government services than an average citizen is entitled to. In fact, people like him probably save the system a lot by paying their way through!
If the system is inherently fair, people will only make as much as they fairly deserve and they are entitled to keep it. It is another matter that many will voluntarily give back and help others. Governments should not frame policy counting on that. It only breeds distortion, unfairness and corruption in the long run - something we see today. It also breeds distortion and corruption of words, dialogue and statements. This leads to using legal methods to keep their earnings in other countries with different laws, capital flight and all kinds of unproductive, morally sapping work and keeps a lot of crooked operators who run this system and its counter agencies. It is totally wasted human capital and resources.
I believe that in a truly fair system, a person who does not contribute 20,000 times as another will not earn 20,000 times as much. Something that we see commonly today. So, the supposedly 'fair tax' system is causing a worse imbalance. That is because, the system in inherently unfair, even for an honest capitalist. A crooked capitalist probably has a fairer deal from society today.
What do you think of a fair, flat, fixed tax on all productive citizens? We are far from it, as a society these days. If we want to achieve this, we should be decreasing taxes for productive earners to make it flatter, not more and more skewed even in percentage. At the same time, we need to acknowledge that we have an inherently unfair system as it is. This is what I see, when I look at things dispassionately and logically. Taking into account a basic human notion of fairness - take or give what you give or take, one should be able to keep one's fairly, honestly earned wealth to do as they wish (within bounds of equal, fair law).
It is possible to have a mixed socialist and capitalist economy and society, removing basic, fundamental unfairness and just implementing the fair rules. The government should NOT be in the business of favouring one or another business, unfairly over other interests or the interests of the people. People, left free to work and be creative, under a fair system, will produce and give back a lot more than governments, politicians and political parties can ever do.
If one looked at things logically and considered 'fairness' as a basic requirement and frames policies with that taken into account, I believe it will greatly reduce corruption of government and private individuals and companies. I also believe it will greatly boost productivity and actual benefits flowing into the society. I don't think it is easy to achieve the kind of fairness I mention here anytime soon. We seem to be moving away from it. I am not sure it is achievable politically or logically from the current economic mess around the world.
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