A Fair Tax Code

     What would be a Fair Tax Code?  One first must determine what is meant by the term 'fair'.  If one desires to be objective, the definition of the word "fair" is one that is "just, unbiased, and honest".  Let us attempt to chase the objective holy grail of fairness and build upon this objective definition of fair.  

Honest -- What would make an honest tax code?  
•   It should be simple and straightforward so that most everyone understands and can comply with it. It's difficult to be honest when the code of conduct is so complicated that the average bubba can't understand them.
Unbiased -- What would make an unbiased tax system?
•   One that is relatively free from social engineering that favors one particular group over another. 
Just -- What makes a just tax code?  
•   One that is equitable -- what applies to one, should apply to all.  

    What kind of tax code can we define using this objective foundation?  To answer that one needs to determine what are some common needs for individuals in contemporary society.  For starters, every self supporting individual has the need for basic living expenses of food and lodging. Beyond that, there is a need to promote individuals to save for retirement and other future expenses, and perhaps promote pooling resources for the catastrophic risks of life related to health care and disability.  Each one of these topics deserves some comments and expansion.  As a disclaimer, some of what I may discuss herein may be from the position of a devil's advocate and may on the surface seem at conflict with other perspectives presented at this site.  Such is the nature of the multidimensional world of ideas, which allow one to view one issue from various perspectives.   

Basic living deduction

     A fair tax code should provide a basic exemption for everyone from taxes and/or a lower tax rate on the basic needs of life -- housing, food, pension, and health care.  How any individual uses their basic living expenses should be generally reserved to individuals as is defined in the 10th Amendment.  There of course is the caveat that those who show little to no ability to take care of themselves may have that responsibility delegated to others.  If one desires to live with three roommates and save on housing expenses so that one can direct their resources elsewhere (such as saving for purchase of a house, college education, or eating out more often), one should be allowed that freedom.
    Some notable exceptions to this freedom 'might' be related to health care and saving for the future.  Should an able bodied individual be able to skip out on paying for their health care coverage and thereby put the rest of society liable for coverage of any health care problem an uncovered individual might have?  Should the same be true of allowing people to skip out on saving for their retirement.  I think not, as it seems unjust for other individuals in society to be forced to pay for another's continued irresponsibility.  However, this doesn't mean that I support a nationalized system of health care coverage or government run Social Security.  There are many better social marketplace solutions that result in a superior system of Health Care and Pension financing for all when compared to government monopolies of these various social marketplaces.
     One can debate the merits of whether or not it is desirable or fair to provide an additional exemptions for dependents.  It's probably politically pragmatic to provide exemptions for the first two dependents and existing dependents upon implementation date.  To extend such exemptions to an unlimited number of dependents would seem to bias the tax code in favor of large families over those without families.    

Saving for   the future

     It is a fact of life that there is a need to save for a variety of future needs. Retirement living costs & 'Medicare', house purchase, education, and unemployment expenses are perhaps the primary needs for savings. There may be others options worthy of consideration such as disability and long term care insurance.  It would seem fair to develop a tax code that promotes savings with a similar structure basic living exemption, only adapted to the peculiarities of savings and investment.  In other words, all income from investments (or premiums) devoted to saving (for retirement, unemployment, etc) up to a basic level should be free from taxation.  Why exclude this income from taxation?  Society functions best if individuals are promoted to be self reliant yet work together as a community.  To achieve this goal, it is desirable to promote individuals to have some personal savings for hard times and predictable future expenses.  This can be best achieved if income from saving's is free from additional taxation and if these savings can be reasonably accessed when one or more of these needs arise.  

Generational Equity

    Generational equity is another perspective that needs to be looked at in a fair tax code.  Basically, under the principle of generational equity, each generation should basically pay its own way through life.  Balance budgets don't necessarily mean that each year spending must not exceed expenses.  Rather balanced budgets should mean that government spending on each generation doesn't radically exceed the tax revenue paid by that generation.  The bottom line is that budgets in the short and long term should be generationally balanced.  If there is a generational deficit, the deficit generation should be subject to some future taxation or spending adjustment that balances the books for that generation.  

Conclusions

   As one steps through the process of developing a fair tax code utilizing a reasonably objective premise and foundation, one starts to develop a pattern of fairness that transcends the various aspects of our unique individual economics and life.  It is possible to utilize some of this in developing a fair business tax codes. One also moves towards a tax code that is similar to various 'flat tax' proposals.  It should also be pointed out that the most "flat tax code" are slightly progressive -- those with higher incomes pay slightly more than those with less income.
  Over the entire spectrum of incomes and individuals, a fair tax code would strive to achieve a self sustaining counterpoise between basic individual/family needs while promoting those who have enough success to embellish beyond those basic needs.  A just tax system would not leave behind those struggling to make ends meet while also not creating an impediment to further creation of wealth.  It is the creation of wealth across the general society that assures the prosperity of the widest range of individuals within that society.  
     As a final comment, one should not overlook other numerous advantages a fair tax would have in promoting prosperity by allowing individuals to pave their own road to the American Dream as compared to getting lost in the maze of micromanagement created by our flatlander politicians.