Posted by
Andrews on Tuesday, April 15, 2008 3:35:58 PM
I almost forgot about the union rule that requires I write something witty about taxation on April 15th. But as I saw all the posts making absurdly exaggerated claims for he fair tax, or decried our current system, or otherwise meditated on tax matters, I realized I would be remiss (and probably in violation of Pundits' Union bylaws) if I failed to write about taxation today.
As I complain about taxation all the time, I don't really see a need to make a special point of commenting on it today, but union rules are union rules, and anyone who writes political commentary must write on taxation on April 15th, the same way you can't say anything nasty on December 25th, or have to write about resolutions on January 1st.
So here is my contractual obligation piece on taxation.
First, I suppose I need to say that I think our current system of taxation is far from ideal. There are so many conflicting rules, contradictory incentives and disincentives, that it is simply a mess. It is engineered so that most payers do not realize how much they pay, and, thanks to withholding even tend to think of the state as the organization that sends them a check rather than theat which steals up to a third of their income. In short, I am horrified by our current tax system.
On the other hand, before we make any change we need to be very sure that the change is much better than what we have. It is not a small undertaking to restructure a tax system, so we should not change lightly. If the new system is no better, or even just a slight improvement, it is hard to justify a wholesale change.
Which is why I am still standing by my opposition to the FairTax. I had thought this was a
dead issue, but with the coming of April 15th I have seen more articles on this topic than I anticipated. So apparently the partisans remain, even if there is currently no high profile champion. Of course, thanks to their choice of bills, the current incarnation of the FairTax is a dead issue, as the present bill is so written that it will not take effect until the 16th amendment is repealed. Since there is no chance of that happening, even were the present bill to pass it would achieve nothing. Which means the FairTax is effectively dead until new proponents draft a more realistic bill.
But even were the FairTax still an issue, I think it is less desirable than the other comprehensive alternative that made the rounds at the same time, the flat tax. I have written about this
elsewhere, so no need to go into that again, but I will say that the flat tax just seems more equitable. Yes, it still has the "corruption problem" the FairTax supporters say is inherent in our system, but, as I
pointed out before, there is a
corruption problem with the FairTax that proponents fail to mention. In reality, no system will stop tax avoidance schemes, so that should not be a factor in judging a system. And, in my mind, if we are going to have a national tax scheme, I just think one that taxes based on your spending seems
less fair, and less beneficial, than one that taxes all income at a fixed percentage.
But you may disagree. I can see the arguments on the other side, they simply do not persuade me.
Then again, I am hardly a partisan for the flat tax either. I argue for it against the FairTax, but only because it is the better of two bad choices. In reality, I would much rather return to
our original taxation scheme, where taxes are collected by the states, using whatever plans they please, and then proportional amounts are sent to fund the federal government. Not only will it mean that we can choose our taxation scheme by deciding where to live, but it will have the
added benefit of making the states fight against federal spending, as every dollar spent by the federal government is a dollar they will have to give up.
Of course, returning to a federalist funding scheme would mean the end of out of control federal spending, as well as the demise of the omnipotent federal government. As neither one is going to be embraced by any of our current crop of politicians, or at least not by more than a handful, I doubt I will see this reform any time soon.
As that is the case, the best I can hope for in the next few years is the extension of the Bush tax cuts, and maybe, if I am lucky, the repeal of the ATM. It is sad that I can hope for no better, but I will take what I can get.
And with that, I have fulfilled my obligation to write a tax article, and I can forget about the topic until next year.