What is the purpose of income taxes?

Let's look at the options:

1. Raise revenue
2. Reduce the disparity of income
3. Social engineering (targeted taxes and subsidies)
4. Limit the power of the rich
5. Reward political supporters
6. Punish political opponents

Which ones do you think are currently being used?

Which ones do you think are legitimate use of the tax code?

Each purpose supports a very different income tax rate and special provisions.

The current income tax is used for ALL the above. As a result it is complex and its many missions are in conflict.

If you believe that the purpose is to raise revenue, then you want a growing economy that broadens the tax base. You will want a tax rate that balances a growing economy with maximizing revenues. It is my guess that this tax rate is around a flat 10%. Could be a bit higher, could be a bit lower. But a low flat rate would spur investments and jobs and set the stage for a long term growing economy that would maximize revenues.

It is also my guess that even the poorest segment of our society would have improved lives. However, the disparity between the productive wealthy and the poor would also widen.

If the goal is to reduce the disparity of income, you will want a sharply progressive tax. This will reduce investment and job creation. It will reduce the tax base. There will be fewer rich people for sure. Perhaps it may make a statistical difference in the gap between the rich and poor.

If you believe that the purpose of the tax code is social engineering, (i.e. tax breaks for green energy) then you can reward the industries and companies you like (yes the current tax code describes breaks for companies where only one company is eligible) and punish companies you don't like (investment banks).

If you are afraid that "unfettered" capitalism will move the locus of power to uncaring business interests, then taking their money and moving it to the public sector will move the capitalists from serving their customers to serving Washington. In the last year, we have seen a sharp growth in CEO activity in Washington and growth of lobbying.

And of course, politicians always have and always will reward and punish us citizens to keep us voting for them.

Just keep in mind, if you believe the tax code is for anything but number 1, raising revenue, then you are reducing the power of the economy, moving power to Washington and creating an unfair and uncertain playing field for entrepreneurs, investors and businesses.

Your choice.