It is often said that the only things you can really count on are death and taxes. Of the two, death is probably easier to accept. Death, at least, is fairly applied to everyone. Taxes, on the other hand, are a complicated, unequal, seemingly arbitrary and often manipulated endeavor. And while we all can accept the fact that taxes are a necessary component of any effective government, there is much room to argue about how government acquires them and how government uses them.
When we talk about taxes, most people think immediately of the income tax. Perhaps because we have to deal with this tax every year in such an obvious way, the income tax is the one that gets the most lip service from the politicians. But the income tax is just one of many taxes we pay each and every day. Some of these taxes, like the income tax, go into government general funds and get budgeted to pay for services and administration. But most of the taxes imposed on us are use taxes or special purpose taxes, whose use is supposed to be concisely directed at its inception.
Gasoline taxes, for instance, are supposed to be used for transportation related projects and maintenance. Social Security taxes are supposed to be used for the national retirement program. Unemployment taxes are supposed to create a pool of funds to assist out of work citizens. Then you have property taxes, which usually are earmarked for schools and local public emergency services, and sales taxes, which go into the general fund or have an intended recipient, and on and on and on. Finally, you have the hidden taxes imposed upon us by our government’s bureaucracy, disguised as filing fees, license fees, permit fees. When you add all these taxes together, you would think that the government’s vaults were bursting at the seams, yet somehow we’re beyond the verge of bankruptcy and still spending money we don’t have.
Most Americans don’t really mind having to pay taxes. We understand that in order to get the things from government that we demand they provide, we must all share the burden of paying for those services. What really angers us though, is the obvious waste, corruption, diversion, and outright theft of our tax dollars at the hands of the people who are supposed to protect our precious dollars and us. And equally in our wrath, are the handfuls of corporations and millionaires that exploit an over-complicated tax code and weasel out of their share of the burden.
One of the reasons for the creation of our nation, for our fight for independence from the monarchy of England over 220 years ago, was the issue of taxes. Back then, the colonists had no say in what was taxed, how much it was to be taxed, and when they had to pay the tax. None of the taxes collected by England were used to improve the lives of the colonists, but instead were returned to the crown for its own enrichment. Finally, the colonists revolted, and history tells us the rest.
In establishing their new national government, the first Americans gave their own and future leaders the limited ability to collect taxes from the citizens to pay national debts, provide for common defense and general welfare. They were both specific and at the same time vague about what the taxes were to be used for, and laid out no collection plan other than to say that “all duties, imposts, and excises shall be uniform throughout the United States.” (One hundred thirty years later, Congress added some clarification, giving the government the power to collect income taxes to fund government services.) Following this pattern, state governments created their own tax systems for their costs, and counties and cities followed suit.
What has emerged is a system that is over-lapping and wasteful. It is a system that is filled with special favors, loopholes, meaningless restrictions and complex formulas. Adding further to the madness is the lack of oversight and accountability to the public and the seeming lack of concern by that same public. We now have a system that rewards tax dodgers by giving them bigger tax reductions. We have a system that is continuously plundered by corporate political donors through their spineless, bought politicians. And the result is that we now have the most complex and corrupted tax system in the world.
I’ve talked before about the price of freedom and how each of us has to earn our freedom each and every day by giving back to our community and our country. Paying our rightful share our taxes is a very important and necessary part of freedom. Equally important is ensuring that our elected officials are using those tax dollars in the most economical way while achieving all that we demand of them.
In order to create a more fair, less duplicitous, and more accountable tax system, we need to first redefine what we want from our governments, or rather, what each level of government should be responsible for. We must stratify the duties of national, state, and local governments and eliminate the waste. Why do we need emergency services at all three levels? Why do we need prisons at all three levels? Why do we need environmental committees, conservation committees, and scientific and medical research spending at all three levels? Why can’t each governmental entity be responsible for certain aspects of societal needs? And then, let each government create and collect a fair tax to pay for the costs of providing that service.
For example, the federal government maintains, trains, and regulates a national police force. Their job primarily consists of catching bad guys and putting them in prison. Each state, county, and city also maintains, trains, and regulates a police force, doing the same things as the national force. Each entity has its own costs, rules and forms. But really, they are all providing the same service. Often they work at odds though, trying to out-do each other instead of working together. This is how we spend of our tax dollars. Paying multiple agencies to do the same job. (Ideas for reform can be found throughout the essays on this site. For thoughts on legal-law enforcement reform, see essays published between 1-18-05 and 2-3-05, available in the archives on this site.)
We must realize that in order to have a more accountable government, we must be willing to make some major structural changes. We have to be willing to put leaders into office that will lead the charge. We have to be willing to fully pay for what we demand and demand accountability for what we pay. And we must create a system that is fairly applied.
That last part is really the tough part. How do we decide who pays what tax? A use tax seems fair, as it is used to fund something directly benefiting the user of the taxed product. Therefore, all who use it and benefit from it pay for it. (In some sense then, all taxes are use taxes, since we all use government in one way or another.) Perhaps by breaking down the costs of services we could derive a per person cost. But that isn’t fair to someone barely making enough to survive, since more of their money would be spent in taxes. Perhaps then a sliding scale, similar to the one we have now is the better way to go. But then we have people paying for things they will never benefit from.
Obviously, we can’t please everyone all the time. What we need is a system that combines the fairness of use taxes with the proportionality of sliding percentages and is apportioned effectively through the three strata of government. We need a simple tax code that explicitly specifies the taxed item, the type and cost of the tax, and the reason for the tax being collected. We need a tax code that does not favor one individual or corporation over another by providing special loopholes. We need a tax code that allows strict public oversight of expenditures and serious penalties for misusing tax funds or diverting them to questionable activities or projects. We need a tax code that reminds us that our tax dollars are necessary a
nd well spent. We need a tax code that is connected to the spending process to ensure a more balanced budget. We need a tax code that restricts our government from wastefulness and greed.
As it stands now, we’re not getting what we pay for. We will all benefit from a more rational tax system, because less money wasted means less money needed, means less money collected. Or, less money wasted, means more money available, means more projects and programs. Either way is fine, as long as the American public finally stops getting the shaft.
This entry was posted on Thursday, September 1st, 2005 at 5:23 am and is filed under Common Sense, Democracy, Economy, Government, Politics, Reform, taxes.
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September 1st, 2005 at 1:46 pm
Paragraph four says what I would say (taxes are necessary; the problem is misuse of tax money and the cheaters who don’t pay their share).
If those two things could be corrected, there would be broad support for sensible, realistic, and yes, even honest, pay-for-goods-and-services taxation.
September 1st, 2005 at 2:38 pm
I guess I would hacve to disagree with the notion that most people don’t mind paying their fair share.
We have seen politicians get themselves reelected on a “something for nothing” platform-no taxes for anything, and no calls for any other kind of service. And the people who support these politicians seem perfectly willing to ignore the obvious-that somebody, somewhere, has to pay for things, and/or fight in these wars.
The horrible result of the selfish instincts of many American voters has been to see thousands of our soldiers repeatedly put through a meat grinder with no relief as the kids of the said selfish voters can be found anywhere but the Recruiter’s Office, as well as a retaining wall that broke in a southern US city because there was no money available to shore it up-that money had basically been handed over to people who didn’t need it.
September 1st, 2005 at 5:34 pm
You state:
What we need is a system that combines the fairness of use taxes with the proportionality of sliding percentages and is apportioned effectively through the three strata of government.
I’d be very interested in any of your ideas of how to create this type of taxation system without it falling back into the overly complicated tax code we use now.
September 1st, 2005 at 9:25 pm
If we started to restructure the tax code, what would you restructure it too?
If you try to put a simple percentage tax on everyone, then our government would lose out as they would have to cut services. Some say taxing the rich is good, but remember, they pay a huge portion of taxes, and if they felt like they were being cheated they would simply buy an island elsewhere and live on it.
September 1st, 2005 at 10:42 pm
Interestingly, I posted a few days ago about the KPMG folks who settled out of court for a large sum of cash to get out of being held accountable to a larger dollar amount for tax evasion and creating shelters for their rich clients. It would be nice to go to a flat tax rate and a simple tax code, but I am sure those with enough cash will still figure out how to slip out of their responsibility.
Another of my frustrations is the lack of support for education – and educational institutions – although many dollars are used, the way it is spent is problematic. There indeed has to be a better way – a way were we pay what we can without breaking our backs and the rich don’t escape from any responsiblity by sheltering all their bux and not paying a dime. It has to be a crime.
September 3rd, 2005 at 7:15 am
(responses)
I’m a bit distracted by the Hurricane aftermath horrors, but I’ll try to respond to your comments…
Shea- Misuse of tax money is a great evil, and the current disaster shows this too clearly. Instead of using citizen collected tax money to benefit the citizens, the tax dollars are being shovelled into the hands of corporate donors like Halliburton in no-bid contracts and the like.
It ought to be a crime. Good to hear from you.
Jolly- Let me correct that to say “Most honest people don’t mind paying their taxes.” Though again, in light of the sheer ineptitude our governments have shown, people must be asking, “This is what we pay our taxes for? No effective leadership and diverted funds?”
And yes, our “everything for nothing” attitude must come to an end, because as we can plainly see, it doesn’t lead to an effective government response when we really need one.
Siphoning off the taxes into special interest projects or wasting it through over bureaucratization doesn’t help average citizens much either. Glad you dropped by.
Bentley- I don’t have the answers for everything, and I certainly don’t claim to be an economist. But throughout this blog, I have offered numerous reform ideas that could significantly reduce the amount of taxes we need to be paying, as well as eliminating areas for tax dollars to be diverted to. How we collect taxes is just as important as how we spend them.
I do think that we could implement a tax code that has far fewer loopholes and “outs” for people and businesses to take. I mean, whats the point? “Here’s what you should pay, but here’s what you could pay because of the various reductions we’ve created for you if you can find and understand them.” Why not just make the rate and leave it at that? Less chance for evasion that way I think.
Thanks for the comment.
Nook- Do the rich really pay a huge portion of the taxes? Or do they pay only what they can’t hide? And as I mentioned to Bentley, I have written about many ways to really reduce government spending. All it takes is integrity, honesty, and courage to do what is right by the citizens of this country, something both sides and all branches of our government seems to have forgotten about.
I’ve not yet thought of an entire tax restructuring, but know that it is too complex and too easily manipulated by those with the resources to manipulate it.
Thanks for making me think though.
Windspike- Oh yes, the reduction of evaded taxes with no other punishment for behaving so crassly. But then, this is no real surprise is it?
Indeed, tax money is spent poorly across the board and many reforms must take place to return the taxes to benefitting the people.
Blog on brother!
September 4th, 2005 at 5:08 am
Very interesting post. Informative. All I want to add is that taxes and corruption seem to fall hand in hand in Canada also. We are not without are fair share of scandals. Some of it embarassing and criminal. We too are wasting and acting irresponsibly these days.
June 26th, 2008 at 10:45 am
[…] In 2005, I wrote this about taxation: “Most Americans don’t really mind having to pay taxes. We understand that in order to get the things from government that we demand they provide, we must all share the burden of paying for those services. What really angers us though, is the obvious waste, corruption, diversion, and outright theft of our tax dollars at the hands of the people who are supposed to protect our precious dollars and us. And equally in our wrath, are the handfuls of corporations and millionaires that exploit an over-complicated tax code and weasel out of their share of the burden.” […]
June 26th, 2008 at 10:46 am
[…] In 2005, I wrote this about taxation: “Most Americans don’t really mind having to pay taxes. We understand that in order to get the things from government that we demand they provide, we must all share the burden of paying for those services. What really angers us though, is the obvious waste, corruption, diversion, and outright theft of our tax dollars at the hands of the people who are supposed to protect our precious dollars and us. And equally in our wrath, are the handfuls of corporations and millionaires that exploit an over-complicated tax code and weasel out of their share of the burden.” […]