Led by legislative Demcrats, the budget includes what they are calling “$15 billion in permanent spending cuts, $12.8 billion in temporary tax increases and $11.4 billion in borrowing.”  But most of it is just legislative double-speak and it amounts to a travesty for Californians. The $15 billion in permanent spending cuts included several billion dollars worth of “automatic” spending increases that now won’t happen. But that’s not really a cut, since these “increases” don’t represent real dollars already spent. Not real program cuts at all, just keeping the automatic increases from happening this year.

The $12.8 billion in “temporary” tax hikes also are a farce, espepcially since taxes rarely get reversed. The deal between Democrats and Republicans calls for a ballot initiative to allow voters to institute a spending cap, but if voters do approve it, then the “temporary” taxes automatically last for 5 years. These taxes include increases in sales tax, car tax, and income tax.

Oh, let’s not forget too that they are still needing to borrow money to make up the budget shortfall. How does more borrowing fix anything? It doesn’t…it just passes the buck down the line for others to deal with.

I’ve grown used to the California Democratic party being a shill for the public employee unions who are more concerned with their own members and getting more and more money than the general public at large. But the California Republicans just ran on a “no new taxes” pledge to get elected in November, and with their capitulation are clearly stabbing their base in the back.

California legislators have a long history of overspending, buckling to state employee unions in boon times, and creating unnecessary government programs and policies to employ former legislators. A state garbage board meets regularly, pulls in 6-figure incomes for board members (who are political favor takers) and does little to make life better for Californians. This is but one example.

California’s prison system costs twice or three times what most other state systems spend, yet they are squallor filled breeding grounds of violence and sickness. The problem? The promised salary increases and exorbitant pensions given out to the union guards at the expense of real reform and proper care.

The list could go on and on and on, but the fact is that California is governed by idiots who care nothing for their constituents and everything for their political donors and benefactors.

It’s no surprise to see that the number of non-illegal citizens leaving California is greater than those coming in to the state. No more California dreamin’ for some time I think.

In the economic disaster that grips the nation and the world, most economists say that raising taxes is counter-productive to recovery efforts. In the power halls of California, raising taxes is the first priority to managing a mismanaged governmental budget.

That’s not leadership. Too bad so many Californians aren’t paying attention.

(cross posted at Bring It On)

A quick primer on taxes and government: government levies taxes (and fees) to pay for the services its citizens demand. Without taxes there would be no public enterprises: no roads, no schools, no fire departments or police, no libraries, no national defense, no social security, and so on and so forth. In theory, every tax collected by government is supposed to be used to advance the public good and pay for the overhead of government.

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.”

I still believe this to be true- most Americans don’t mind paying taxes when they see the benefits. The anger comes when taxes are misspent and poorly accounted for. Bridges to nowhere, no-bid contracts, outright fraud by government contractors…these are the things that piss people off. And these are the things that get people up in arms whenever a politician talks about changing the tax code or hiking taxes and fees. In the view of most people, we pay enough in taxes already and its not our fault that the politicians spend more than they take in. So when someone hints that a politician wants to raise taxes, our initial reaction is “Screw You Buddy!”

In an election year, talk about who will raise taxes becomes even more rancorous, and the “truth” about the parties, their candidates, and taxes gets trotted out again. Republicans say that Obama will raise your taxes. Democrats say that McCain will simply extend tax cuts for the rich while continuing to spend as wildly as Bush has. Both positions are true. But they are not really so cut and dried.

Historically, Republican presidents have made efforts to reduce taxes in general, but the prime beneficiary has been the wealthy and the corporations. As they cut taxes to those groups, they also marginally reduce income taxes on the rest of us, but the real saving for the vast majority is barely a drop in the bucket compared to what the high-rollers get back. In addition to cutting taxes, GOP administrations also like to cut services. Seems to make sense- less taxes coming in, less services going out-perfect fiscal sanity, right? Well maybe if it were true. But what Republican administrations also do is spend a ton of money-on credit-while in office, leaving their successors with a huge deficit to contend with. They spend money on the military and on foreign meddling and promotion of American businesses abroad. What the GOP likes to spend the most money on isn’t programs at home for the benefit of Americans, but rather of the might of the American government abroad. Reagan’s deficit spending forced his Republican successor (the first George Bush) to raise taxes, and in turn, conservatives vilified him completely. The current president also began his reign by cutting taxes, mostly for the rich, and by increasing military spending on credit. Bush the Second may have lowered the taxes of the wealthy today, but his rampant spending of money he doesn’t have has all but guaranteed that future presidents will have to raise taxes just to pay the interest on the money Bush is spending now.

Historically, Democratic presidents have raised our taxes and then spent those revenues on programs that help Americans at home first, and then the outside world with the left overs. FDR and LBJ are the posterboys for tax and spend presidents, but they spent the money on projects that invigorated the American economy and gave the common folks a chance to better their position in life. Sure, these two men also spent a hell of a lot of money on war efforts (WWII & Vietnam respectively), but at least in the case of FDR it was a defensive war effort and not a war of choice. And when these two men explained to the American people what they wanted to do and why they needed the new taxes, a majority of America agreed with their ideas and felt that at least their taxes were being used well.

But for the last 8 years  Americans have watched their local, state, and national government gobble up more and more taxes while providing less and less services. Almost every legislative budget session ends with a cry from politicians about how they need more taxes to keep things running, and as they trot out the standard lines about how without taxes we’ll lose schools and police officers and the like, the voters pony up the dough. We’ve become so used to governmental waste and excuses that fiscal reality doesn’t even enter the picture. They say they need the money to give us what we say we want. Such is life. Or is it?

California state government is entering its umpteenth consecutive years of budget shortfalls. When voters were asked if they would support tax increases or spending cuts to balance the books, 63% of voters said they wanted government to cut spending. Yet when asked where those cuts should occur, no single category of services got more than half agreeing to cut costs. Most public spending in California goes to schools, health care and public safety. (Well, most really gets eaten up in nonsense studies, commissions, over-spending, and fraud, but that’s another facet of the story.) Nearly 70% of the voters would not support spending cuts in any of those areas. So the reality is that voters don’t want to cut spending or raise taxes-they want to continue to live in Fantasy Tax Land where they get all the goods and someone else (like their children and grandchildren) pays all the bills. That sounds to me a lot like taxation without representation-you know, one of those little issues that led to the American Revolution-and future generations will have financial obligations they never agreed to or even benefitted from. Our tax policies are really setting the stage for a future revolt. But again I digress…

Getting back to the current presidential election, I have heard time and again from conservative leaning voters that although the do not like McCain and do not see him as a “real conservative,” they simply won’t vote for Obama because “he’s gonna raise my taxes!” In fact, its become the latest GOP talking point in an effort to derail Obama’s growing popularity. But will it work? Not if voters really examine the issue and try to understand the dynamics of the reality.

The reality is this: our government is broke and operating only on imaginary currency and borrowed cash. The War in Iraq has created a multi-trillion dollar sinkhole, financed by loans from abroad and the guarantee of future generations toiling for a foreign master. The Bush Administration has continued the fine GOP tradition of slashing taxes, but they forgot to cut costs as well. If the old “truth” we started with ever did apply, it certainly can’t be true today. In todays world, Republicans not only tax less, they spend more than ever before, and in the prpocess create the worst fiscal imbalance ever seen in such a short time.

So what’s the next president to do? Cut taxes even more and keep fighting wars of choice or raise taxes and adjust spending to accomplish the things we need and want to accomplish?

In trying to decipher the difference between Obama and McCain on taxes, the truth can be boiled down pretty easily, and Business Week does a good job with it:

“Senator McCain’s tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their aftertax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts, and those whose taxes fall would, on average, see their aftertax income rise much less.

In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the distribution, while taxpayers with the highest income would see their taxes rise. “

Of course, the details become a bit convoluted, but that is the crux of their attitudes on taxation. If you are really rich and taxes are your only concern, by all means vote McCain. But to say that Obama is going to raise taxes on Americans, and then to fear his leadership because of that, is simply not logical.

But suppose Obama does indeed raise taxes on us all. What if he has to? He has said that he would help fund many of his ideas from the savings we are spending in Iraq. Sorry Obama, we don’t have that money anyway. Any money not spent on Iraq is only money that future generations won’t have to repay. It’s not money we have that we could spend at home today. So maybe he will have to raise taxes. If he does, you only have the GOP to blame.

And might McCain also have to raise taxes at some point? Or would he continue to heap debt on future Americans?

When it comes to taxes, and the waste of the whole system, both political parties share the blame. The current Democratically controlled Congress has been as fiscally irresponsible as their GOP predecessors, and certainly in state governments like California, Democrats deserve more of the blame for bad fiscal policy.

But this presidential election is more important than just who might raise taxes, and if you really look at the details, Obama’s tax policy ideas are much friendlier to the average working American than McCains are. And more importantly, Obama’s thoughts on how best to use America’s tax resources-for Americans in America-make for a better future than McCain’s tax and bomb mentality ever will.

(Cross posted at Bring It On!)

Now that you’ve finished your taxes for the year, I thought a little refresher on where those tax dollars are being spent would be in order. So without further adieu, here is where your federal tax dollars are spent:

MOST TAX DOLLARS SPENT ON MILITARY

Out of every tax dollar collected by the US government,

42.2¢ goes to the military to pay for wars, weapons, and every now and then a few bucks for a wounded soldier.

22.1¢ goes to health care initiatives like Medicare and Medicaid and a few pennies for those pesky kids programs.

10.2¢ towards non-military debt-you know, paying off that national debt that comes from bigger government under Republican administrations.

8.7¢ funds anti-poverty programs like welfare, foodstamps, and shelters.

4.4¢ gets thrown at education where it is promptly turned into administrator salaries and profits for the big companies who print standardized testing materials.

3.9¢ underwrites the costs of governmental services-from the courts and justice systems to the lifetime benefits our elected officials receive but would never let the rest of us have.

3.3¢ pays the bills for any projects related to affordable housing and community development-mostly this is used to buy poisonous FEMA trailers from some corporation tied to the current administration.

2.6¢ is spent to promote and explore the wonders of science and space, the future of cleaner, renewable energy, and to protect the environment…no, really, it IS!!!

1.5¢ of every dollar is for agriculture and transportation. Half to farmers to keep them from planting certain crops and half to people who can’t seem to make a road that lasts more than a season or two.

and finally,

1¢ gets sent abroad in the form of foreign aid-but only to countries who promote abstinence, fight terrorists, or lend us lots of money.

I know this only adds up to 99.9¢ out of a dollar…I guess that other tenth of a cent is beign siphoned off the top ala Office Space and is accumulating in a slush fund somewhere for out of work politicians to draw from in case of a caviar emergency or something. (Hey…a tenth of a cent can really add up when you’re talking billions of dollars in tax receipts.)

(BTW- these numbers were culled from a slide show presented at cnbc.com)

Cross posted at Bring It On!

Consider that when Bush took office the federal government had a budget surplus, and despite way too many pork barrel projects, earmarks were much lower than they are now. But then came a series of tax cuts, an increase in federally mandated spending programs, an unnecessary war, a couple of tax rebate give-aways, and unprecedented borrowing to finance the largest expansion in the federal government in over 50 years. The surplus disappeared. The spending didn’t.

Republicans like to pretend that the only thing Democrats care about is “Big Brother” government. Hah! Bush has presided over the biggest “Big Brother” expansion ever. Republicans think that only Democrats expand the size of government. Hah! Bush has added more government jobs to the federal payroll than probably any other president since FDR. Republicans like to pretend the Democrats will take all your tax dollars and waste them on untested and ineffective social programs that ultimately hurt people more than they help them. Can anyone say No Child Left Behind???

The fact is that Republicans aren’t alone in disliking taxes. Democrats don’t much like them either. But where Democrats can accept the fact that it takes taxes to run government, Republicans only seem to think that taxes are evil.

Here it is kids…no matter who takes over as next president, we are going to have to see a serious reversal in domestic funding policy. That likely means higher taxes and lower spending. Hopefully the next president will get us out of Iraq which would save a serious amount of change. but it won’t be enough, especially in the short term. Especially when our government (both Dems & Reps) think it is wiser to borrow another $150 billion they don’t have to hand out to citizens so they will rush out and spend it. This is an economic stimulus plan? For what? A month? Gee Mr. President (and all the rest of you in Congress), what kind of stimulus plan will we get when that $600 bucks is all gone? Do they really think that peopl e are going to have extra money all the time now that the government sent them a check for a few hundred bucks? The only thing this plan stimulates is the Chinese manufacturing industry and the banks- for about a month.

Of course, in our brave new world, most people don’t give two seconds thought to government finances, just so long as their special interests are being funded.

Fiscal prudence means that not everyone gets everything all of the time. Fiscal malfeasance means that some people get everything they want, most get a bone thrown to them, and behind the scenes the red tape is stacked higher than the Sears Tower.

Well boys and girls, federal spending affects us all, and when you turn over the federal purse to a bunch of failed businessmen and drunken sailors, somebody eventually has to pay. That somebody will be all of us when the next administration gets to town.

So for all of you whining GOPers who are so upset that a Democrat in the White House will raise your taxes, shut up already. YOUR guy put us all in this situation to begin with. Just because he’ll be out of office when the bills come due doesn’t make it any less his fault. If you want to complain, send a letter to Bush. But quit whining to me about it.

(cross posted at Bring It On!)

Tobacco taxation, in its msot current incarnation, is touted as a way to reduce the smoking of tobacco by increasing the price of the product. The theory (and it has been proven to a small extent among some smoking populations) is that if the price of tobacco increases fewer people will smoke, or at least those who smoke will smoke less. In this case, tobacco taxation is being used as a tool to change behavior. But you should ask yourself if the government really wants to have fewer smokers around. I submit that they do not, and the constant attempts to increase tobacco taxes to pay for any myriad of government projects should bear out my stance.

For instance, in the case of SCHIP, the federal government decides that in order to fund the program they need to increase tobacco taxes. Yet, under the behavioral modification theory, the fact that they plan to increase taxes on tobacco should lead to fewer packs of cigarettes being sold, meaning that there would be less tax money to fund SCHIP. In that case, where does the remainder come from? In fact, the government hopes that raising tobacco taxes will not affect most smokers, who are in fact addicted to the substance, and they will just keep smoking and paying the taxes. They know this is what will happen, and they count on smokers keeping right on smoking. They WANT smokers to keep smoking.

But SCHIP isn’t the only thing dependent on tobacco taxation. Aside from health related programs (that are dependent primarily, if not solely, on tobacco taxes) governments use tobacco taxes to swell their general funds accounts, thereby using tobacco money for projects unrelated to health care. When the states sued the tobacco companies and settled for multiple billions of dolalrs, they said that those funds were to be dedicated to health care costs for smoking related diseases. But state governments have repeatedly raided those “windfall funds” and used them for anything from roads to environmenta l impact studies to school building projects and so on. And they rely on smokers to keep those dollars rolling in.

It’s bad enough that tobacco taxation is a regressive tax policy, that is, one that targets those with less overall income disproportio nately. But what makes tobacco taxation policies worse, to me, is the fact that it is a hypocritical policy based on saying one thing while depending on the other. Governments claim to want less smoking, but then they turn around and base programs and policies on a dependence to tobacco taxes.

How does this even make sense? It doesn’t, and everyone knows it doesn’t.

And when you consider the fact that government rules and regulations are constantly limiting the places where people can smoke, you have to wonder where all these smokers are going to go to continue to light up so that the governments can continue to collect the taxes that they rely on.

Smoking is a bad health choice. That much has been proven pretty conclusively . But instead of trying to ban smoking (as the government does with much less harmful drugs like marijuana) the government takes a two-faced approach- don’t smoke, but if you do, smoke over there in the street; and please smoke because we want your money to pay for these programs.

One wonders if the government really even cares about the programs they seek to fund with tobacco taxes. If they were indeed intent on taxing tobacco out of existence, they’d surely not tie that revenue to programs that enjoy wide support, like children’s health insurance. Unless they want the program to die a slow, smoker-like death.

How can anyone support the current dichotomy of tobacco taxation? It is a policy riddled with contradictio n and hypocrisy. I think legislators simply have too much smoke in their eyes to see the absurdity of their actions. Maybe we should apply a tax to bad governance instead.

(cross posted at Bring It On!)

In the President’s own message (accompanying the official budget), Bush says, “This Budget reflects our highest priorities while reducing the deficit and achieving a balanced budget by 2012. I am confident that this approach will help make our country more secure and more prosperous.”

We can only surmise then that for Bush, helping the richest .2% get even richer on the backs of the middle class and the poor is our highest priority. And his deficit reduction plan is ludicrous to expect so long as he keeps funding wars off the books and through ’emergency spending.’ The only people who will gecome “more secure and prosperous” are the corporate oligarchs to whom he owes his political legacy.

Bush wants to permanently extend the repeal of the Estate Tax he pushed through in 2003, an act that would reduce the federal kitty by over $440 billion in the next decade. (Of course, in politics nothing is ‘permanent’ but a decade of tax free hand-me-downs is the next best thing.) Longer term projections show that a permanent repeal would cost the Treasury up to $1 trillion by 2021.

So what cuts does Bush propose to offset these tax losses- money not being paid by the richest of the rich? Who are the winners and who are the losers in the Bush Budget? A little compare and contrast helps illustrate the picture for us( these figures are projected over the next decade):

The Walton family (owners of the world’s largest retailer) would receive an estate tax break of $32.7 billion.
The Bush budget cuts Medicaid by $28 billion over the same 10 year span.

Winner: Walton Family
Loser: Every American family who has medical co-pays or buys prescriptions. (And this will be on top of the 10-year, $28.3 billion cuts to Medicaid passed by the Republican Congress last year.)

The heirs to the Mars Candy Bar fortune would receive a tax break of about $11.7 billion.
The Bush budget cuts over $3 billion from the VA budget over the next five years.

Winner: Mars candy heirs
Loser: Every wounded veteran alive today.
The Cox family, heirs to the Cox Cable fortune will gain $9.7 billion by the permanent repeal of the estate tax.

The Bush budget cuts $1.5 billion from education. I guess the rhetoric about No Child Left Behind is just that- rhetoric.

Winner: Cox family
Loser: Kids and local school districts who are buried under an avalanche of federal mandates that continue to be underfunded.

The Nordstrom family rakes in over $825 million with the tax break.
The Bush budget wants to eliminate one of the country’s most successful anti-poverty programs, the Community Services Block Grant program. The ‘savings’ amounts to $630 million. The fact that this program provides dervices and aid to over 15 million of the lowest income people in the country is apparently not part of the compassionate conservatism practiced by Bush.

Winner: Nordstrom family
Loser: 15 million of the poorest Americans

The Ernest Gallo family (makers of cheaep wine) can expect to pass down an extra $468 million dollars from tax breaks.
The Bush budget wants to cut $420 million from the Low-Income Home Energy Assistance Program, that quaint little federal safety net that keeps 5.4 million senior citizens and low-income families from freezing in the winter time.

Winner: Nordstrom family
Loser: 5.4 million needy seniors and families.

Former Exxon Mobile CEO Lee Raymond and his family will keep a larger portion of that ludicrous retirement package, saving $164 million due to the permanent repeal of the estate tax.
The Bush budget wants to eliminate the Commodity Supplemental Food Program. This is a program that provides food for poor seniors, and low-income children and mothers. The price tag is…$164 million.

Winner: Raymond family.
Loser: The poor, the hungry, the huddled masses.

And these are just some examples to think about. Bush wants to give as much money back to the wealthiest of all Americans and balance those loses on the rest of us, including all those military men and women he keeps saying he supports. That is absolutely disgusting.
It is up to Congress to put a stop to this massive wealth transfer scheme. It’s been going on too long under Bush already. We know what Bush’s priorities are, and they have nothing to do with the welfare of American citizens. Not even the wake-up call in November can open his eyes. And forget about opening his heart. Bush hasn’t got one.

Highlighted in the report are the following:

There’s the $43.8 million spent on a temporary police training camp that has never even been used.

There’s the $36.4 million for armored vehicles, body armor, and weapons that no one seems able to account for.

There’s the $73 million facility built to train Iraqi security forces that has massive expansion cracks in the walls and trickling sewage from ceilings.

This does not even include all the billions stolen by shady civilian contractors who have been hired to perform certain services for the troops- there’s plenty of billions down the drain there too.

But of course, in the mind of the President, where all is well in Iraq (or at least was until around November 2006) and getting better by the day, what’s a few more billion unaccounted dollars between friends. After all, this Iraq war was all about generating massive corporate profits for the Military Industrial Complex and their derivatives, not about anything so noble as spreading democracy or making the world a safer place.

For those who don’t remember high school history (or were never taught it in the first place) the Stamp Act was enacted by the English in 1765 on the American colonists as a way to defray the costs of protecting the colonies and fighting the French in the French & Indian War. While not the first duty or tax levied in the colonies, the Stamp Act marked the first tax levied on goods that originated, and for the most part stayed in the colonies. It would require all paper (or similar) items that contained printed material to be embossed with an official stamp, or mark, at the cost of three pence per stamp. To the British rulers, this seemed like a reasonable cost to pass along to the colonists. The colonists, our forefathers, felt differently.

The big problem stemmed less from the tax itself than in the manner in which it was conceived and implemented. Remember the phrase “taxation without representation?” This is where it originated. The colonists were so incensed by the Act due to the fact that they had no input whatsoever on the why, how, and what of this new tax, and the fact that all the revenue raised would leave the colonies and head back to the English crown, despite the fact that the English were already working to strip the colonies of their resources, maintained martial law and the unwanted billeting of soldiers in citizens homes, and all around dismissed the colonists efforts at self rule and independence from a monarchy thousands of miles away.

The colonists revolted by not only by refusing to pay the tax proscribed by the act, but also by boycotting as many British goods as they could, which in turn created turmoil in England’s economy as well as it’s monarchs ability to maintain control over his territories.

In essence, the Stamp Act was one of the final straws heaped on the backs of colonists by what they saw as a despotic ruler who had no real right to rule in the Americas. We know less than 10 years later, the American colonies turned their revolt into revolution and began a war against the English for independence, a war that we won, solidifying our most basic beliefs into a country ruled by law, elective representation, and individual freedom.

Okay- the correlation for today? Where they fought against taxation without representation, today we must toil against representation without representation. Yes, you read that right. Our government today operates in a fashion not so unlike that of George the Third so many years ago. (It is ironic perhaps that this time, the despotism is being led by George II.) Our elected leadership no longer represents the interests of ordinary, average American citizens. They work for the corporations and special interest groups that yell the loudest. Politicians on both sides of the aisle don’t make efforts to represent the mainstream of Americans, who are not so ideologically divided as we are made out to be. Sure, we have different ways to reach our goals, but those goals are pretty much the same- Liberty, Security, and Prosperity.

As the current administration, their rubber-stamping colleagues in Congress, and the ineffective and unwilling minority party continue to chip away at civil liberties and funnel tax dollars towards corporate benefactors, Anericans need to ask themselves if this is the country that many hundreds of thousands have fought for and died for since the late 1700’s. Americans need to decide whether the excesses and abuses of King George III are being mirrored by Boy George II. If they are, as I and many others suspect they are, it’s time for another revolt in the streets of America. No need this time to take up arms though, we have a perfectly peaceful opportunity to turn the tide around.

This November, when it comes time to elect your new federal officials, don’t put your trust in politicians who don’t really represent you. Do what the colonists did, and did so effectively. Boycott the major political parties, elect independent or third party candidates, or at the very least, elect any non-incumbent you can.

The Stamp Act represented abuses against our forefathers by a distant, tenuous ruler. They had the courage and tenacity to stand up for freedom. So that their sacrifice, and the sacrifice of all who came and fought after them will not be tossed into the ash pile of history after a mere 241 years, won’t you rise up now and show the same courage?

(cross posted at Bring It On!)

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.

Growing up in a capitalistic society, we are raised to look at money as an end in itself rather than a means to an end. What I mean is, for most of us, the acquisition of money is what drives our lives. We need or want things that cost money, so we work to make money. We trade that money for things and then need more money to get more things. The more we have, the more we need. The more we need, the more we work. Capitalism requires a certain level of materialism to function properly, and we seem to have that down to a tee. But as our lives grow increasingly more dependant upon a steadily increasing flow of money, and as our materialistic tendencies increase with each new innovation, we slowly lose focus of what is really important in life and we instead turn all our energies into amassing as much money as we can (or as many things as we can, which can prove how much money we have or had.) Rather than spend our relatively short time on earth in harmony with each other and nature, we construct an adversarial environment that pits man against man with money right in the middle.

Of course, governments need money too, and as a result, we have taxes. Because government does not produce anything sellable (in theory at least) yet it is expected to provide many tangible and intangible things for the citizenry, the only source of money for the government (again, in theory) is taxes. The bright side of taxes, at least in a democratic society, is that their collection and use is supposed to provide for the common needs of the society, so you get back what you put in, in some manner or another. Unfortunately, the reality is often somewhat less than that. Too often, the people in government spend public tax dollars as if they had won the lottery, providing little oversight or accountability for the way those monies are spent. Such waste or abuse causes the average citizen to have to provide more tax dollars, making him earn less or work more. In addition to setting tax rates and spending tax dollars, government also creates legislation that causes more money to be drained from the everyday worker and into the pockets of the business industry, setting up an adversarial environment between man and the government.

And then there’s business. Provider of jobs (so people can earn money) and creator of goods or services (so people can spend money.) Friend of the politician (through political donations) and befriended in return (with tax subsidies and tailor-made regulation.) Business is the glue that holds the whole system together, but being in that position requires a greater level of trust and integrity than exists today. Part of the reason for the animosity between people and business stems from the mutual reliance each has on the other. We wish we didn’t have to work for a living and business wishes they didn’t have to pay us to work for a living, but as we can’t have one without the other, an uneasy truce exists. The other reason stems from the misguided notion that a business entity is the same as an individual, at least so far as the law is concerned. Businesses exist to provide jobs, goods, or services. They exist to generate money for the workers and money for the owners. But they are not thinking, breathing, sentient forms. Businesses are piles of paper and rooms of inventory. They have no need for food or shelter or health care. Yet government policies and regulations afford businesses many of the same rights that are afforded to individuals. As such, businesses (and those who head them) can affect social mores and agendas more readily than average citizens can simply because business has greater wealth resources than individuals do. An already adversarial environment just gets that much worse.

Underlying all this commotion though, is still the idea that money is an end in itself. And with that concept comes the tendency of people, government, and business alike to devise any scheme to get more than they are entitled to. Because in addition to satisfying our materialistic tendencies (which I believe are more ingrained than innate), money also carries with it an element of power or control. The more money a person has, the more control they have over their destiny or the things they want to have. The more money a business has, the more it can control its corner of the marketplace and the more power it has in the political sphere. The more money government has, the more it tries to spend it, usually on ill conceived plans, but just as often on things or in ways that the tax payer would not approve of. Too often, tax money just fades away or gets diverted while the original intended use is forgotten about. Yet government always wants, and has the power to get, more money than it needs. And all too often, business and government conspire to get more from the citizens, whether it is money or work or both.

The business of money is yet another area to consider. Banking, insurance, and investing are all aspects of our financial world that touch us each on some level, including government and businesses. Because money is so important in our world, entire industries evolved to help us manage, protect, and increase our own supply. In a not so surprising turn of events, these industries are among the most powerful “behind the scenes” forces that shape financial and economic legislation in ways that affect the daily lives of John and Jane Doe, sometimes for the good, often for the bad.

Money is important. There’s no getting around that. But is it the most important thing in life? Problems with money are often the main cause of family strife, business failure, or government corruption. For those who have little, it’s never enough. For those who have some, it’s never enough. And for those who have plenty, it’s still never enough. This is the prevailing attitude of the majority of people in our country, and the majority of businesses as well. The next several essays will talk about various economic issues, among them credit and bankruptcy, insurance, taxes, trade, saving money, business and labor, unions, and the consumer society we live in. I’m not an expert on economics, but I hope to take a fresh look at these necessary aspects of our world and throw in a little Common Sense where it’s needed. I hope you’ll join me.