Friday, October 12, 2012

Another civics lesson

Sometimes I think I missed my calling and should have been a high school civics teacher or a professor of history at some Podunk college. Still, I find within me this insatiable need to speak to my readers – whether here on my blog with its terribly few followers or at the small newspapers that I used to work for – about the American system was to be, historically, and how it really is.

For example: Taxes.

Why do we have taxes? To pay for those activities that we as the people who make up the governed – no matter what level, township, village, city, county, state or federal – have indicated to those elected to represent us that we would like to see government to provide for us.

Now, one of the two predicates for the American Revolution was that the American people wanted to have a voice (which parliament in London denied them) in the taxes that were levied on them. The second predicate was that that as citizens of Britain they thought it wrong that they would have to pay taxes that were not levied on other British citizens. They saw this as being patently unfair … I agree, and it still is.

Now, if you accept that definition and the precepts that the people have a right to voice in their taxes AND that those taxes apply to all citizens equally, then we in the United States have a major problem. Why? Because our taxes are not being applied equally to all taxpayers but rather there are giant differences, depending on a whole host of variables and factors that discriminate against individual taxpayers.

In other words, the government does not, will not and cannot treat all taxpayers equally. Now, you can say this is hunky-dory. You know, those who can pay more (a higher rate) should pay a higher rate. And those who do things that we as a society approve of or want to encourage get to pay less taxes than those who don’t do things we (generally as a group, with the majority ruling and sometimes only a plurality) like paying more.

Now, we have a whole variety of taxes and fees (which legally are different critters, as was pointed out by the Supreme Court this last summer in the ruling on the Affordable Care Act – known colloquially as Obamacare) that we Americans pay at each level of government. Local governments get to levy taxes on property, states and some cities get to levy taxes on sales, the federal government and states get to levy taxes on some products and activities (known as excise taxes) and the feds, states and some cities get to levy taxes on income and what is known as capital gains and interest income.

Pretty confusing isn’t it? I sometimes think it is all malice aforethought so those running the show can get away with what they want to do and line the pockets of their buddies, but I know that is being awfully cynical of me (who said being cynical is bad).

What complicates things even further is that these levels of governments can grant abatements, credits and deductions to encourage various things, like having a company or corporation open a new plant in your neighborhood to boost the tax base and bring in new jobs. Unfortunately, this is where things begin to go south, as the saying goes.

What happens is that those people who we elect to represent us … well, they are human, and most of the time they mean well … but business is business and anything to lower costs and maximize returns. Now, you can’t fault businesses, which are run by individuals who are trying to get the most from their investments of time, labor and capital – from the shop floor to the executive suite.

So, what do they do? They talk to the level of government that they want to curry favor with to grant them these indulgences. Something like what was going on in the Catholic Church back in the Middle Ages. Know you are going to sin? Well, go to the church and make a contribution and they will grant you an indulgence to absolve you of that sin and you won’t have to spend as much, or any, time in purgatory and go straight to heaven. This got to be a really big thing in the Middle Ages, especially with the wealthy who found they could just about do anything their little hearts desired and buy off the bishop to save their souls from damnation.

Well, that lasted until a priest by the name of Martin Luther came along and posted 95 reasons why the church was screwing up, screwing people and generally theologically wrong with this business of selling indulgences (and a host of other practices).

We need a Martin Luther for the tax codes in this nation. You see, as it stands now, everybody is out to game the system and get their own tax credits or deductions.

Look, nobody but nobody likes to pay taxes. That is a given. We pay taxes as part of our contract with our neighbors and fellow citizens. You know, we all chip in and then our government does something for the greater good, or something for each of us that individually we couldn’t afford.

For example, how many of us could afford to buy a fire truck, man it and operate it for that outside chance that we might have a fire on our property? So, we agree to pool our resources to fund the fire department. Now, here comes the hard part: Which is fairer? Everybody paying the same amount (flat fee) or how about we pro-rate it on the value of the property a person owns (a property tax), or on how much cash they have available on hand to pay (income tax) or maybe on how much value there is on the things they purchase (sales tax)?

I don’t have a magic wand and I don’t know what is best, but that same concept applies all the way through government and everything it does. With the federal government, which gets its income through customs duties, excise taxes and income taxes, this revenue applies to everything from Social Security to Medicaid to the Defense Department to the simple job of paying the people who clean the buildings on federal property and process all that paperwork we seem to want to generate.

Now, I do have some views:

Sometimes, a flat fee is appropriate.

Sometimes, an excise tax is appropriate … which is like a flat fee, only it varies by the product, such as the tax per gallon on gasoline or liquor.

Sometimes, it seems that an income tax seems appropriate. Only what seems inappropriate to me is the plethora of adjustments that can be made to the rate being paid. I am sorry, while I understand the rationale for all these deductions and credits and such, but they are the reason our representatives seem to be up for the highest bidder and that is wrong.

And then there is the argument about tax cuts and tax increases. Well, it all depends on whose baseline you want to take. To me, whatever the current rate is the baseline, but I know I am in a minority there.

I also am doubtful about raising the rate just because someone has the cash available to pay more. How would you like that at the store? You know, you get the same product at the check-out stand, but the cashier charges you more because you are dressed more nicely than the slug in front of you. No, I don’t think that is right.

So, as you muddle through your thoughts this election season, stop and think about those promises those candidates are making. You know what they really are doing is to buy your vote. Are you willing to sell it, just so you benefit or do you really want us all to chip in as we can to buy that fire truck, tank or whatever.

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