Wednesday, March 08, 2006

Latest Missive

Its tax time again and with it we’ll hear the pleas for tax reform. We’ll hear calls for the elimination of income taxes and converting to a consumption tax or a flat tax. While these reformists make a good case, serious tax reform in all reality is not going to happen. Serious tax reform will only occur once we eliminate the current campaign finance rules. Over the last 30 years or so lobbying has become big business in our nation’s capital. Our congressman and senators spend their time satisfying the needs of the lobbyists. The end goal of lobbying to get a specific tax rule that allows the lobbyist to justify to his clients that he is doing something for their money. Our representatives then provide the arcane rule to justify the support of the lobbyist. I thought we were supposed to be a government of “we the people” not a government of “they the special interests”.
How did our representatives become so beholden to their lobbyists and not their constituents? Many Americans just don’t see or chose not to see the relationship between our annual tax liability and the efficiency (if one can say that with a straight face) of our government. The most important feature of our existing tax policy is that the money does not come straight from our pockets. If we don’t have to write a check for it, we simply don’t seem to care how our government spends our money. We do our taxes and the most important line is the last, the amount of our refund. Talk about being lulled into complacency. Imagine for a second we eliminated withholdings and required everyone to pay their taxes in lump sum. Would we not become a nation of concerned tax payers and voters overnight? Would we not demand better accountability from our representatives?

Our progressive system of income taxes only compounds this problem. Progressive taxes breed corruption, complacency and class warfare. Believe the liberal scare mongering or not, but a small group of higher income taxpayers pay most of the individual income taxes each year. Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all years since 1990, this group has paid 90 percent of all individual income taxes. In 2000 and 2001, this group paid over 96 percent of the total. So if I pay $1.75 for a hamburger and you pay $50.00 for the same hamburger, wouldn’t you want, no, wouldn’t you demand something more in return? Maybe kickbacks like a free soda or french fries? Maybe part ownership or a seat on the board of directors? This how progressive taxes work, higher income groups pay a larger percentage of their income for their share of government than other groups. This being the case, shouldn’t they be entitled to more control? The easy answer to the liberal state of mind is no, they shouldn’t be given more control of our government. The hard part for them to swallow is the government shouldn’t be taking more either.

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