What you want on taxes: more 'skin in the game'
If our elected representatives listened to the people who vote for them, we'd have a radically different tax system. That's the message from nearly 600 reader responses to a recent column. Missed that column? Let me give you the CliffsNotes.
I asked a question: How could it be that only 53 percent of households paid federal income taxes, but a much larger percentage of households had microwave ovens, personal computers, cellphones, flat-panel TVs and other goodies? I suggested that if we examined taxes in a framework of civic duty rather than envy, more people would be taxpayers.
Then I asked for suggestions that would improve our system and allow us to have more taxpayers.
The email flood started immediately. What was amazing was the consistency of the responses. Unlike most political topics, ideas weren't all over the map. Virtually all pointed in the same direction. They made a lot more sense than the indefensible tax system that we all labor under today. If there is primary message, it is this: Our tax system is truly despised.
Here are the basic themes:
- Everyone should have some "skin in the game." Indeed, that phrase was used dozens of times. One reader suggested a flat $100 minimum tax that everyone should pay, no exceptions. Another suggested $10 a month as a minimum tax. Others thought civic responsibility should begin when household income exceeded the poverty level...
The important thing, a guiding principle, was that everyone should contribute something, if only a token amount, to the cost of running the country we love and share. They wanted to avoid a voting bloc of no-pays. They wanted to make sure everyone understood that our government was spending money that it received from taxpayers.
- The existing tax system is complex and unfair. Many cited Warren Buffett's example of how he pays at a lower rate on his investment income than his secretary pays on her paycheck. Others noted that while we have very high marginal tax rates, there are so many deductions and wrinkles in our tax law that anyone with substantial income could pay at a much lower rate...
- And the solution is? A flat tax or, better still, a consumption tax. Frustrated by our current system, some readers wanted to eliminate all the deductions, preferences and exemptions that distort the proportionality of the tax system. Then they would tax every dime of income, but tax it at a single lower rate. Even more readers suggested that we morph from the complexity of taxing income, which is difficult to define, to taxing consumption.
Quite a few advocated dumping our entire tax system. They would replace it with something like the progressive national sales tax advocated by the Fair Tax organization in Houston.
The argument there is simple. Washington would no longer try to influence our decisions, at any level, with tax breaks. We'd make our choices, spend our money as we wanted and pay a sales tax to do it. That sales tax could be high enough to bring in more revenue than the current loophole-ridden hodgepodge of income, employment, corporate and estate taxes.
Collectively, we make a lot of sense. Sadly, what makes sense for you and me would eliminate the deduction, preference and exemption tools every member of Congress depends on to raise the fortunes spent to stay in office. It's a truly hateful impasse.
This article can be viewed in its entirety here.