Well, D'UH!

There are many arguments for a flat tax: Compliance costs are lower, it’s easier to understand, it doesn’t create a divide-and-conquer dynamic with regard to the tax brackets, it aligns taxpayers’ incentives, etc. But there’s a practical moral argument, too: The tax code is corrupt. Using the tax code as a cookie jar full of special favors for friends and supporters is corrupt. It does not matter that it’s legal, it is immoral. The purpose of taxes is to raise revenue for the government, not to repay political favors or to bribe voters with their own money. I do not think our tax system probably is really salvageable: Obamacare is not the only thing that should be repealed and replaced.

via www.nationalreview.com

Kevin D. Williamson, over at The National Review wrote this article, "Our Tax Code Is Corrupt," from which I quoted. Mr. Williamson's main point is that our tax code is corrupt (D'UH! again - believe me, I know!), and pulls out General Electric as an example.

Now, Mr. Williamson favors a flat tax, whereas I am leaning more toward the Fair Tax, but I agree totally with his main point about our corrupt tax system (and for the third time: D'UH!!!!!)

Comments

[Man of the West]

1.

...I am leaning more toward the Fair Tax...

That's 'cause you're smart. The more I read about the history of taxation in this country, the more I'm convinced that the Fair Tax will have most or all of the salutary effects of high tariffs--it was during the period from the War of Northern Aggression to Woodrow Wilson that we had, simultaneously, an almost unbroken string of Republican presidents, enormous economic expansion, small federal government, high tariffs and no income taxes--with few or none of the negative effects (the occasional shielding/propping up of businesses that would otherwise go under due to shoddy management.

[Kat]

2.

Well, MotW, it also seems to me that a FLAT tax's percentage can be bumped ever upwards (just like our current system has been) by Congress, as well as be wormed in to ever-increasing areas of taxation. Plus, there will be loopholes and opt-outs and evaders, just like now.

The Fair Tax, OTOH, is - as you know - consumption based. NO ONE escapes it, and if people start seeing their prices go up on food&c. that THEY pay for out of their pocket (vs. the "well, it's withheld from my paycheck so I never see it anyway" of our current tax system) there would be heck to pay if Congress started playing those shenanigans.

And I like the idea that you pay tax on a NEW thing ONCE. Used items would have no tax - and, gee, wouldn't that encourage recycling? ;-)

[Mark]

3.

Fairtax is total and complete nonsense.

It sounds great - of course. I was fooled for a while. But the fine print is drastically different than what they told us in their books.

For example, their books tell us "Only people" pay taxes. But in their fine print, almost half of government revenue (40%) comes FROM A TAX ON GOVERNMENT.

That's right. State goverment, city government, county government. Before you stupipidly go "So?" realize they HID this.

The state government of California, for example, would owe 16 BILLION. And every city in CA -- Los Angeles would we 800 million.

THat is just ONE city - 800 million! One state - 16 billion.

And this is the important part -- THEY DON'T TELL ANYONE THAT.

Got that ? It's in the fine print, and even then, it's hard to spot.

I had to ask Fairtax leaders -- official spokesmen - to explain it. See their OWN explanation.

Your city - YOUR county, YOUR state would owe billions! How can state or city government pay?? Only PEOPLE pay taxes, remember?

Fairtax depends on this BS for their math - their math only "works" if they can pretend this nonsense.

Don't get mad at me that you were fooled -- I'm just telling you what their OWN fine print says, and what their OWN official spokesman said to explain it.

http://fairtaxfineprint.blogspot.com/

[Citizen Tom]

4.

I am no expert on the fair tax, probably because I am not that interested in it. The prebate strikes me as an unnecessary complication. The real problem is that we pay to much in taxes.

Anyway, the fact state and local governments would pay a national sales tax should not come as a big surprise. The Constitution does empower the Federal Government to collect sales taxes. Since state and local governments buy things, I am puzzled as to why Mark thinks it is issue.

What I would prefer is a Pollution Added Tax.
1. Task the EPA with listing a bunch of nasty chemicals produced by industry.
2. Charge a board of experts with rating the environmental damage caused by each chemical.
3. Charge committees in Congress with setting tax rates.
4. Tax companies for selling the chemicals. Credit companies for recyling products that contain the chemicals.
5. Then give teams of government chemists and accountants the task of auditing companies that produce these chemicals (an EPA IRS).

Perfect idea? No, but it penalizes the right people for polluting the environment, and it gives companies an economic incentive for reducing pollution and designing their products to be recycled. And it does both things without requiring unnecessarily complex regulations. Of course, politicians will make it complex, but that is another problem.

Moreover, a Pollution Added Tax should make Mark happy. Since state and local governments produce few products, they don't have many pollutants to tax.