The current taxation system; fair or unfair?
Recently, a very interesting article was posted on an online think tank forum; “Is the current taxation system fair to you?” It was started by a gentleman who is quite senior in his business career and he was asking this question because he was being asked if the current taxation system that we have is fair. He started to speak and I did not quite understand what he was saying until I read what he had written down later.
He said, “Well actually, I don’t think it is fair; it is just, well, our country works too. You see the problem with the current taxation system, is that people do not earn enough money to pay taxes on their wealth. This is unfair because they have worked so hard and produce nothing and yet they still get the majority of the pie.”
This is very true; it is not fair for the rich to get richer and for the poor to get poorer. I also realize that some people are born into poverty and have no where else to go, but that does not make it unfair. Fair is defined differently depending on who you look at it from. Fair to me is getting the same amount of return from your investments as you have put into them to date. In other words, you get a fair break.
Now then, I would like to bring up another point before I end this, which is, the current taxation system does work for the most part, because there is an overall benefit to everyone, especially the small businesses. What this means is that if you are a small business and you hire someone to do the accounting and the taxidermy for you, that person should be paid a fair wage. With that being said, this makes it fair for the employees as well as the owners.
Now then, what does that mean when asking the question; is the current taxation system fair to the small business owner? Well, when they ask that question, they should also look at the “employee share option” that is set up by many of these tax havens around the world. This employee share option reduces the tax load a small business has to pay on its books. In addition, they also give the owner a nice bonus each year in the form of a percentage of the profits that their business makes.
Now then, many argue that the small business owner cannot afford to invest in such things as this, especially if it means taking a loss. This is simply not so. Just ask yourself this question, is it fair that I pay you more money in taxes than you earn? If the answer is no, then why should you have to pay taxes to the government?
The current taxation system in the United States is what is known as a progressive taxation system. What this means is that the more that you earn, the bigger portion of your paycheck you must share with the government in order to be entitled to deductions and other benefits from the IRS. Now ask yourself this question; is it fair for you to pay more in taxes than you make, month after month, year after year? Then again, is it fair or unfair for you to have to share your wealth with Uncle Sam when the government asks for some of it?
The solution to that question is that you are entitled to ask that question of yourself. You have worked hard for everything that you have, and you deserve a fair share of the fruits of your labor. And that small portion is being called a deduction today. So, is the current taxation system; fair or unfair? The only answer that you will get is what you have already earned.