Taxed Into Perdition
What do you think is wrong with the current tax system in America?
“Everything!” it seems.
No matter who you talk to, everyone seems to have a gripe with the current tax system in America. Part of it you can chalk up to the fact that no one really loves to have any of their hard-earned money extracted from their wallets to pay for government services. There is always a perception of waste, fraud and abuse, as well as funding certain government programs that you completely disagree with.
Maybe the tax code is the work of the Devil: “Obey Me! Or Else!”
The other part has to do with the notion that everyone thinks ‘everyone else’ should be shouldering more of the tax burden: the not-so-well-off think the rich should pay more; the rich think the middle- and lower-income wage-earners should pay something, and everyone thinks foreigners like the Chinese should pay more to import their products to America…except when it is something you want or need like cheap underwear.
We fought a Revolution to get away from ‘taxation without representation’ in 1776, in case you have forgotten. Now we have ‘excessive taxation WITH representation.” So how’s that working out for you?
Let’s tick down the problems with the current system and see if we can come up with a magic bullet that might solve these burrs under your saddle:
1. I pay too much in taxes
2. Rich people don’t pay their “fair share’”
3. 50% of Americans don’t pay any income tax anymore
4. I pay more in payroll taxes than I do in income taxes
5. Lobbyists in Washington get special tax breaks and loopholes for big corporations
6. Little guys like me can’t take advantage of the tax code like rich people and corporations do
7. The tax code is way too confusing
8. I pay through the nose on income and payroll taxes and we still don’t have balanced budgets!
All of these perceptions are true, in one way or another, to some group or sector of the economy. With over 140 million households filing tax returns, a significant percentage of the population is going to feel aggrieved some way or another each year.
I’ve never heard anyone come to Congress and say, “You know, I think I am being taxed just about the right amount to live in a free society protected from invasion and attack by the best military in the world, drive on highways to anywhere in the nation and have a safety net that I could fall into if adverse circumstances befell me or my family.”
So what can be done about it? Every single time we’ve seen a “tax reform” effort pass Congress, the tax code has become 10 times more complicated and the law of unintended consequences has run amuck by producing outcomes far removed from original goals.
We are becoming increasingly interested in the concept of a consumption tax being passed to completely replace the existing federal tax code in America. But we most definitely do not advocate any sort of consumption tax to be placed on top of the sclerotic tax system that already resembles swiss cheese with all the loopholes now in it. There is a perception that there are relative winners and losers in the US tax code every year, that it is “unfair” in many regards – and that is not a good thing for any democracy.
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