The TaxProf has produced a nice summary of the most recent tax data. What is shows is the source of an ultimate moral hazard. A near majority of our citizens pay no net income taxes. Therefore, there is no restraint on their demand for increased spending of all types. A majority of our legislators are happy to agree, because it is a sure route to a lot of votes. A few "scapegoat" de jour votes are the only loss. When coupled with a free ride on budget deficits, we have created the potential for a "perfect financial storm."
The Hedge Tax was devised the eliminate this hazard. Changing the flat income tax rate is the only source of new revenue, and that rate directly affects 85% of the taxpayers. There is a limited Asset Tax included in the Hedge Tax, but that is likely to be continuously maxed out. The requirement for a balanced budget eliminates the final escape hatch for legislators. New spending programs face an immediate reaction from the voters. Support the Hedge Tax.
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