The Three Musketeers (“The Fair Tax is the way to go,” March 17, The Daily News) concluded their discussion of taxes with the determination that the Internal Revenue Service should be eliminated, the graduated income tax scrapped and a “Fair Tax” adopted, which is a euphemism for sales tax.
In the process, they opined that the IRS is corrupt and the administration uses it to punish enemies, the graduated income tax unfairly taxes wealthy individuals, negatively influencing job creation, and the corporate tax is too high.
Had their discussion included less GOP ideology and more factual research, their conclusions may have been different.
For instance, the current IRS scandal has been examined for almost two years by four congressional committees, the IRS inspector general and the U.S. Department of Justice and no one has factually concluded that the administration has influenced the IRS.
Do high tax rates negatively influence job creation? From 1953 to 1959, the average unemployment rate was 4.2 percent, while the top individual tax rate was 92 percent. Of course, there was a massive infrastructure project underway — we were building a national highway system.
From 1993 to 2000, the unemployment rate averaged 5.5 percent, while the top tax rate was 39.6 percent. During this period we created more than 22 million private sector jobs. Most economists agree that this period experienced the greatest economic expansion since World War II.
The current top individual tax rate is 35 percent, the lowest since 1931, yet the unemployment rate by comparison remains quite high at more than 6.7 percent.
The current corporate tax rate is 35 percent, which is fairly high among developed nations. However, the IRS reported that in 2012 the average tax rate paid by U.S. corporations was 12.7 percent, and more than 65 percent, including ExxonMobil and G.E., paid no corporate tax — zero!
Forbes Magazine reported that in its 2013 list of the 400 wealthiest Americans, the average growth in wealth in just one year was $800,000. The IRS reported in 2012 the average individual tax rate paid was 17.6 percent. The wealthy and corporations appear to be doing quite well under the current system. So, where are the jobs?
More than two years ago, President Barack Obama proposed a $50 billion infrastructure bill to repair our deteriorating federal highways and bridges. The GOP-controlled House of Representatives refuses to bring up the bill for action.
Jerome Bourgeois lives in League City.