Taxes

April 21, 2016

Hello everybody out there in farm country. This radio commentary is brought to you by John Deere and the National Corn Growers Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you. 

And now for today’s commentary—

I paid my income taxes this week. You know how the IRS does it. They ask “How much did you make? Okay. Send it in.” I know – it’s not quite that bad. However, every year at this time, we are reminded that we need tax reform. The system is too complicated. There are thousands of pages of rules. A small business can never get it right without professional help.

Here is a fact worth thinking about. This year, our federal government is bringing in more money than ever before. We shouldn’t be adding to our debt this year. But that’s not the case. We are spending it faster than IRS can rake it in. We’re going to add more than 500 billion dollars to our debt this year. That is on top of the 19 trillion dollars we already owe.

Tax reform needs to be more than closing loopholes. 

1. We need to lower the tax rate for both individuals and corporations. Our corporate rate is one of the highest in the world.

2. With lower rates, we can take away some special deals. Maybe we shouldn’t be allowed to deduct state and local taxes. Limit the interest deduction on your home. Don’t allow any deduction on a second home. Maybe employer health insurance should be taxed.

Also, we need to stop big corporations from shifting money to other countries to avoid taxes. 

There are many other reforms that can be added to this list. The challenge will be to get the President and the U.S. Congress to do something they don’t want to do. They like to use the Tax Code to reward what they consider to be good behavior or punish bad behavior.

Finally, after making the many tax cuts and reforms, we should consider a consumption tax. Most advanced nations have a consumption tax. With a consumption tax, everyone pays something, but those who consume more (probably individuals with more money) will pay more –sounds fair to me.

In closing, let me say that I am not impressed with any of our Presidential candidates’ tax and spending plans. Trump, Cruz, and Sanders would spend us into bankruptcy. Kasich and Clinton are a little better, but there are still many unanswered questions.

If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com. Have a great weekend.

Until next week, I am John Block from Washington, D.C.