A minimum income tax for everyone

In 2008, 32% of Hawaii tax return filers paid no income taxes, according to the Tax Foundation. In the nation as a whole, 45% of US households filing tax returns in 2010 will pay no income taxes – or will receive a net tax refund, estimates the Tax Policy Center.

I am concerned that we have reached a tipping point: those who pay no income taxes will be able to vote for higher income taxes on those who do pay income taxes. And those who pay no income taxes will be able to vote for more government services and more government welfare. Paying even a token amount of income taxes would change the way people feel about income taxes for everyone.

So I would like to make a controversial suggestion: maybe we need a minimum income tax for everyone with earned income.

There is a tax or fee for everything we do in Hawaii. If you buy something, you pay the general excise tax (GET). If you need state identification, you pay a state ID fee. If you want to drive a car, you pay a driver’s license registration fee, vehicle registration fee, and gas taxes. And if you have a job, you and your employer pay payroll taxes. Why not income taxes?

There is already a minimum property tax for nonprofit organizations: $300 in Honolulu (up from $100 in 2010). I don’t have updated numbers, but it used to be minimum property taxes of $150 on Maui, $100 on the Big Island, and $25 on Kauai. It sounds reasonable to have a minimum income tax too.

“Those who don’t pay [federal income] taxes – that is, who are not pulling their own weight in the community – have no real reason not to vote for more and more government services” (page 56-57), Mike Huckabee wrote in “A Simple Government: Twelve Things We Really Need from Washington (and a Trillion That We Don’t!)” (2011).

I rarely support a tax increase, but this is a matter of fairness – treating everyone equally – as well as raising revenue. Should everyone pay a minimum income tax? I’m not sure I’ve even convinced myself. What do you think?

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