Tax System Badly Needs Reform
Posted: January 30, 2013
Recently, I received a message espousing the “goodness” of taxes. The cryptic rationale supporting this contention was that “modern society is expensive.” I found it bizarre that anyone would blindly support taxation.
Notwithstanding that collecting revenues cannot be separated from a discussion of how those revenues should be spent, our attention should focus on how said revenues are collected. Without this examination, one might say, if taxes are good, so is morphine. What is “good”?
In both cases it depends on to whom it is administered andwhy, and in what dosage. And with regard to taxes, it depends also on how they are administered. My belief is that our tax structure is archaic and our collection mechanisms are totally misguided and inappropriate. Our current tax structure is more like morphine (especially to the politicians): easy to misuse, and creates addiction.
First, our collection system and philosophy regarding what is to be taxed is fundamentally flawed. We should not tax productivity such as income, wealth, interest, dividends, or capital gains. To the extent taxes are necessary, they should be collected against consumption. A tangential discussion about spending is also necessary.
Our current tax system is more aligned with the motives of a communist/socialist state than a free-market economy. It is a progressive tax that steals from the productive. This practice is counterproductive to creating wealth. But it is great for feeding a large central government, armed with a tax code that picks winners and losers. The progressives created this monstrous and communistic tax system with the knowledge that most people would not recognize the those who peddled the notion that it is somehow fair to punish producers, or that takers have some right to the fruits of the labors of the producers.
Another fundamental flaw in our philosophy of taxing income, productivity, and wealth lies in the unchallengeable fact that increasingly larger sectors of our economy do not participate in this charade. Two distinct groups who do not participate: those who work and produce but do not report their earnings to the government — under-the-table workers, many illegal aliens and criminals — and those who pay nothing because the government has determined they are too poor to pay. I have enormous sympathy for those who are unable to work, and we have a moral obligation to take care of them. This group has burgeoned in size, but many capable Americans choose not to work. Government redistribution programs enable them to be unproductive. Unfortunately, they are also allowed to vote, which means voting for candidates who promise more government benefits.
Another group uses government-sanctioned loopholes to avoid taxes. Even the Russians gave up on a progressive income tax. They now have a flat tax of 13 percent; business is responding positively. Funny, even Vladimir Putin knows more about free market economics than Barack Obama. We have the most progressive and onerous tax system in the world, except perhaps with regard to the French, but even their courts will not allow their progressives to slaughter the rich.
A flat tax would be more productive than a progressive income tax. Not taxing interest income, dividends or capital gains is crucial. And again, a better tax would tax consumption. There exists extensive literature on this subject such as “The Fair Tax Book” by Neal Boortz. The theory is well thought out and much more appropriate for a free market economy.
Allan Betcher, a retired government employee, lives in Luray.
Notwithstanding that collecting revenues cannot be separated from a discussion of how those revenues should be spent, our attention should focus on how said revenues are collected. Without this examination, one might say, if taxes are good, so is morphine. What is “good”?
In both cases it depends on to whom it is administered andwhy, and in what dosage. And with regard to taxes, it depends also on how they are administered. My belief is that our tax structure is archaic and our collection mechanisms are totally misguided and inappropriate. Our current tax structure is more like morphine (especially to the politicians): easy to misuse, and creates addiction.
First, our collection system and philosophy regarding what is to be taxed is fundamentally flawed. We should not tax productivity such as income, wealth, interest, dividends, or capital gains. To the extent taxes are necessary, they should be collected against consumption. A tangential discussion about spending is also necessary.
Our current tax system is more aligned with the motives of a communist/socialist state than a free-market economy. It is a progressive tax that steals from the productive. This practice is counterproductive to creating wealth. But it is great for feeding a large central government, armed with a tax code that picks winners and losers. The progressives created this monstrous and communistic tax system with the knowledge that most people would not recognize the those who peddled the notion that it is somehow fair to punish producers, or that takers have some right to the fruits of the labors of the producers.
Another fundamental flaw in our philosophy of taxing income, productivity, and wealth lies in the unchallengeable fact that increasingly larger sectors of our economy do not participate in this charade. Two distinct groups who do not participate: those who work and produce but do not report their earnings to the government — under-the-table workers, many illegal aliens and criminals — and those who pay nothing because the government has determined they are too poor to pay. I have enormous sympathy for those who are unable to work, and we have a moral obligation to take care of them. This group has burgeoned in size, but many capable Americans choose not to work. Government redistribution programs enable them to be unproductive. Unfortunately, they are also allowed to vote, which means voting for candidates who promise more government benefits.
Another group uses government-sanctioned loopholes to avoid taxes. Even the Russians gave up on a progressive income tax. They now have a flat tax of 13 percent; business is responding positively. Funny, even Vladimir Putin knows more about free market economics than Barack Obama. We have the most progressive and onerous tax system in the world, except perhaps with regard to the French, but even their courts will not allow their progressives to slaughter the rich.
A flat tax would be more productive than a progressive income tax. Not taxing interest income, dividends or capital gains is crucial. And again, a better tax would tax consumption. There exists extensive literature on this subject such as “The Fair Tax Book” by Neal Boortz. The theory is well thought out and much more appropriate for a free market economy.
Allan Betcher, a retired government employee, lives in Luray.