Taxes and Tea Parties
Every April, everyone has taxes on the brain, even if they’ve taken care of things months ago. Yesterday was America’s “Tax Freedom Day.” In theory, that’s the day that the nation has earned enough money to pay off our tax burden. Awfully late in the year, isn’t it? It’s actually earlier than it has been in recent years. Tomorrow is the deadline for income tax filing.
All of these taxes, astronomical as they seem, are probably not even going to touch the hole that our current financial stimulus package is digging. And oh yippee, the incentives to buy houses that people really can’t afford, make me a little bit more nauseous every time I see them. You know the ones I mean, those commercials on TV that “now is the time to buy a house, have an $8000 tax credit!” Everything else aside, does no one realize that those homes are going to be in the same situation in just a few years? These measures are making it easy for people who can’t really afford to get a mortgage to get a mortgage, on top of rescuing people who can’t pay their current mortgages. The downward spiral is just going to continue tightening unless someone allows us to just hit the bottom already! People don’t learn when they don’t get appropriate consequences. Radical change is necessary, something to shake up the current mind frame of relying on measures like spending our way out of a financial crisis.
Obviously, our tax system is ridiculous. Surely we can all agree on that, even the people in love with the current stimulus package. There are so many pages upon pages of complexity, that most people who file their taxes online with no help but a computer program are making errors. Online filers usually have a computer to check the simple math, and I know that when our tax returns were even filed with typos, they were summarily rejected. One of the reasons for that complexity is corruption. K Street is filled with lobbyists and advocates that are currently earning every penny they are paid, finagling breaks for their employers.
There are going to be Tax Day Tea Parties all over this country. This movement has been accused of being “AstroTurf” — that is, a fake grassroots movement. Honestly, I’m feeling rather jaded right now and tend to sympathize with that sentiment. The street full of people who are furious at the Democrats for policies that will result in raising taxes may think they are completely sincere, but blaming the Democrats for the situation is disingenuous. Policies have been corrupt for a long time, and the current system just encourages more of it. Discussing real change is imperative. Railing against the powers that be is nice, but solutions are in order. Hopefully, whether these movements are fake or not, people will start opening their minds to new ways of looking at things, instead of business as usual. There are a couple of tax plans out there that I am aware of that really excite me.
The Flat Tax system is a far simpler alternative to our current system. Under it, everyone above the poverty level would pay a standard 17%. This would apply to individuals or businesses. Every individual would get a personal exemption, but no loopholes or special circumstances would apply. This plan has been floating around for over a decade, and a few years ago brought back to attention by Steve Forbes.
For years, I’ve been a fan of the Fair Tax system. Even though it’s on loan in Louisiana right now, I even have my own first edition printing of The Fair Tax Book, signed by John Linder and Neal Boortz. This last presidential election it got a little bit of press, but not enough. The Fair Tax is a national retail sales tax on new goods, with food and other essentials being exempted. The 16th Amendment would be repealed, and no more income tax. It would be a progressive tax system, because rich people simply do spend more. Still, the millionaire next door could control the taxes paid by controlling consumption. It would discourage wastefulness and encourage responsible monetary habits. That would mean more reducing, reusing, and recycling, too. Bonus! I really do love this plan.
As tired as I get from banging on the same drum year after year, I hope people are truly thinking this week. Letters need to be written to congressmen, people need to vote, people need to write about the issue, even when they’re feeling jaded. We all need to get involved. At those Tea Parties all over the world tomorrow, or simply if you are sick of it all, talk about solutions. I’m really encouraged when I hear people willing to think outside of the box, instead of clamoring for more revision of the same old system.
One of the biggest problems I see with the current tax structure is simply how easy it is for the super-wealthy to find and exploit loopholes. If those loopholes were closed the U.S. tax revenue would skyrocket. I don’t know enough about the flat tax system or the fair tax system to speak to them but in general I am wary of anything that would require a complete overhaul of the existing infrastructure. That task would be too large to be managed well without enormous cost to the taxpayer. It’s kind of a catch-22.
While I would accept a Fair tax plan over the current system, I’m going to lean towards the Flat tax plan. Mostly because I favor the no deductions, no exemptions, other than the set individual exemption, rules. This keeps companies and wealthier indiviuals from being able to simply write-off most of their taxes. They could even keep the individual personal exemptions and most of us would come out better off.
I’ll agree with Apollo that it would be nice if the loop-holes shut, but I’ll have to disagree about the cost of an overhaul. Most of the loop-holes are intentionally left there because of big business, and lobbyist influences, so they will never be written out. More than likely they will just be shuffled about. The cost of overhauling is minimal, compared to the cost to fund the IRS, and it’s ever-changing set of laws. We would be moving from a multi-tiered systems with paperwork for every deduction, and exemption, to either a sale tax that is charged at purchase, or a single sheet of paper that informs you, you made X dollars, and paid X taxes, done, see you next year.