Fiat Currency Taxes – Part 1

(This article was written back in 2017, but has never been published; until now)

Wall Street believes the Republican tax scam will pass. Stock prices have been continuing to rise and many “experts” explain that the current rise is a harbinger of the tax scam’s passage. Of course, Wall Street is not necessarily a great prognosticator and a good reason for that is the only metric that they predict is corporate profits. If profits rise, stock prices also rise and by lowering a “fixed cost”, such as taxes, profits will rise. Unfortunately, Wall Street does not consider long-term prospects anymore, which can reveal how quickly profits will become losses. Take a closer look at how a big change in tax policy will affect corporate and personal finances, even if you are currently making money from a booming market.

Two things come about from looking at the Republican tax scam with that perspective. First, Wall Street is correct that over at least the first six months, the lowered taxes on businesses will raise profits and will even increase demand by individuals seeing a few more dollars in their paychecks. Dollars that will be gobbled up by coinciding inflation. But the real negative impact of the tax scam on the American middle class happens at tax time next year. For years, the wealthy have lowered their tax burden via various deductions, many of which are only available to wealthy individuals. The changes made to the tax code eliminate all of those deductions that middle-class taxpayers used to take advantage of. Middle-class taxpayers from high-cost-of-living states are restricted by the amount of state and local taxes they can deduct; the amounts one can claim for charitable deductions are just enough to cover your annual church donations. In return, the tax scam will raise your standard deduction just enough that the little you can deduct forces you to not itemize.

Should the tax scam become law, it is imperative that a proposal for a progressive tax policy be put forth. It should reverse all the scam provisions of the Republican tax law. Such a plan must accomplish concrete goals that are defined and validated. The plan should provide guidelines to alter future tax policy when the goals are not met. It must reduce income inequality and increase opportunities for personal advancement. A progressive tax plan cannot unduly reward wealth, and work must be available to all who want it. The tax plan should provide for everyone to have, at a minimum, an after-tax income that meets the cost of living. Means testing should be standardized and only used when absolutely necessary. Tax rates for individuals must progressively increase as income rises with the highest rate(s) over 50%.