What Is So Goofy About Eliminating Taxes? By Laurence M. Vance
(2024-09-21 at 22:00:04 )

What Is So Goofy About Eliminating Taxes? By Laurence M. Vance

A prominent libertarian is calling Donald Trumps tax proposals to eliminate taxes on tips and Social Security benefits "goofy." What is so goofy about eliminating these taxes and letting United States of Americans keep more of their money?

Said Mr. Trump about tip taxation: "For those hotel workers and people that get tips, you are going to be very happy, because when I get to office, we are going to not charge taxes on tips. You do a great job of service. You take care of people, and I think it is going to be something that really is deserved."

According to the Internal Revenue Service (IRS): "All cash and non-cash tips received by an employee are income and are subject to Federal income taxes. All cash tips received by an employee in any calendar month are subject to social security and Medicare taxes and must be reported to the employer.” Tips include:

-Cash tips received directly from customers.
-Tips from customers who leave a tip through electronic settlement or payment. This includes a credit card, debit card, gift card or any other electronic payment method.
-The value of any noncash tips, such as tickets or other items of value.
-Tip amounts received from other employees paid out through tip pools, tip splitting, or other formal-informal tip sharing arrangement.

Said Donald Trump about Social Security taxation: "Seniors should not pay taxes on Social Security and they will not."

According to the Social Security Administration (SSA):

Fifty percent of a taxpayers benefits may be taxable if they are:

-Filing single, head of household or qualifying widow or widower with $25,000 to $34,000 income.
-Married filing separately and lived apart from their spouse for all of 2020 with $25,000 to $34,000 income.
-Married filing jointly with $32,000 to $44,000 income.

Up to 85% of a taxpayers benefits may be taxable if they are:

-Filing single, head of household or qualifying widow or widower with more than $34,000 income.
-Married filing jointly with more than $44,000 income.
-Married filing separately and lived apart from their spouse for all of 2021 with more than $34,000 income.
-Married filing separately and lived with their spouse at any time during 2021.

(Income here is "provisional income" - adjusted gross income + nontaxable interest income + half of Social Security benefits.) Congress has never adjusted the income thresholds that subject Social Security benefits to taxation. They have never even been indexed for inflation.

Would eliminating taxes on tips and Social Security give the federal government less money to spend and increase the deficit? It certainly would. But consider this: according to the IRS Data Book:

During Fiscal Year (FY) 2023, the IRS collected nearly $4.7 trillion in gross taxes, processed almost 271.5 million tax returns and other forms, and issued about $659.1 billion in tax refunds.

In FY 2023, the IRS closed 582,944 tax return audits, resulting in $31.9 billion in recommended additional tax.

The federal government takes an obscene amount of money from United States of American taxpayers. And it spends even more money than it takes in. In fiscal year 2023, the federal government spent $6.13 trillion, resulting in a deficit of over $1 trillion. And of course, more taxes will be collected and more money will be spent this year.

Any elimination of taxes or reduction in taxes collected should be welcomed, no matter how "goofy" it is.

As usual, Ron Paul gets it right:

It is common to describe tax cuts as "costing" the government. Saying tax cuts cost the government assumes that the government has a moral claim over an individuals earnings, so anytime those running the government allow individuals to keep more of their money the rulers are being generous.

The truth is that income belongs to the people who earn it and that saying tax cuts cost the government is like saying burglar alarms cost thieves. Therefore, any legislation that cuts taxes is a victory for liberty.

What is so goofy about eliminating certain taxes and letting Americans keep more of their money in their wallets, purses, and bank accounts instead of handing it over to the profligate Congress to spend on unconstitutional government programs, government boondoggles, and United States military adventures around the world? I do not see anything goofy about it at all!

Reprinted here with the permission of Mr. Laurence M. Vance and the Future of Freedom Foundation!! Please visit "Mr. Vances blog" at Lewrockwell.com and please visit his website "Vance Publications"!!