Random thoughts on taxation
I couldn't sleep last night, so was up, sitting in the dark in the living room, pondering the universe. I've been having some conversations over the past month or so with David Funk, who is a candidate for the 3rd Congressional District in Iowa. During one of those conversations, the concept of "flat tax" or "fair tax" came up. We didn't dwell on it much, as we were focused on something else at the time, but this is the concept that came to circle my brain in the wee hours of the morning.
Being who I am, I almost always have to ask questions of what is considered the status quo. My usual questions are "why" and "what if". I look at our current tax structure, and I simply have to go to "why?" Why is it so darned convoluted? Why does it seem to penalize a person for working hard and being successful? Why does it seem to be a de-motivator to the person who is motivated, and at the same time, is a de-motivator to the person who is already less-than-motivated?
Then, I got started on the "what if" mode.
What if:
Crazy? yeah....just crazy enough it could work!
"Regressive tax!" I can already hear the battle cry. I would disagree. The person that makes $17,500...they're only going to pay the transaction tax on the goods and services they purchase. I don't see them going out and buying a boat. Or a Lexus. Just the things they need. And they pay the transaction tax on those items that they are the end-user on. The person that makes $250,000....they're going to pay the transaction tax on the goods and services they purchase. Are they going to ONLY buy the goods and services that the person making $17,500 does? Not hardly. They probably ARE going to buy that boat, that Lexus, those stocks and bonds, that new computer, use that lawyer's services...and EVERYthing...all goods and services...are subject to the transaction tax. So, I don't see it as being regressive. Those that spend more, they pay more. Those that spend less, they pay less. If you make less, you tend to spend less. If you make more, you tend to spend more.
But what's this about cutting the IRS by 90%?
Ah, that's the beauty of this....we don't NEED the IRS at their current levels.
In my little world, I would have the seller of the good or service collect the transaction tax from the end-user/purchaser. The seller would submit these collected funds to the State Dept. of Revenue, just like many states currently do with sales tax (yes, I know, there are some states with no sales tax, but there are NO states without ANY taxes).
The State distributes the appropriate shares to the local city, the county, and retains what the State's share is. On a monthly basis, the States all submit the Federal Government's "share" to DC...to the now-pared-down IRS. Or, heck, directly to the Treasury Dept., for all I care.
That way, the STATES can handle what the STATES are supposed to do, and help get the Federal Gov't's hands out of those things it shouldn't be handling. For instance, who knows better how to handle education in Iowa....Iowans, or elected representatives from 49 other states over in DC? And just because something works really well for high school students in South Dakota, does that mean it would be a panacea for high school students across the country?
In this manner, we are returning control of the purse strings and the caring of the citizens of the country to the governmental entities that should be in control of them...the states legislatures, the county elected officials, the city elected officials. Rather than the cookie-cutter, one-size-fits-all approach we have at the Federal level. Or, worse yet, the 47,987-page attempts to micro-manage something that is best handled by local governments.
Another advantage...the Federal Gov't won't always know exactly how much money they're going to get every month from the tax. So they will have to be more concerned with intelligent cash-flow management, and not be given to negative budgeting.
and that is my two cents worth for today.
--Larry Voorhees
Being who I am, I almost always have to ask questions of what is considered the status quo. My usual questions are "why" and "what if". I look at our current tax structure, and I simply have to go to "why?" Why is it so darned convoluted? Why does it seem to penalize a person for working hard and being successful? Why does it seem to be a de-motivator to the person who is motivated, and at the same time, is a de-motivator to the person who is already less-than-motivated?
Then, I got started on the "what if" mode.
What if:
- we eliminated ALL taxes. Sales tax, liquor tax, income tax (both individual and corporate), property tax, inheritance tax, road-use tax, vehicle tax (also known as "licenses"), hunting tax (also known as "licenses"), gasoline tax...everything. Dump them all.
- we reduced the IRS by 90%.
- we had each state retain their present Dept. of Revenue.
- we had everyone pay a "transaction tax" on everything. Every good or service they purchased. The end-user pays the tax.
- we allowed no exceptions, no exemptions, no credits, nor trade-offs, no way whatsoever for ANYone, individual or business, of not paying this transaction tax on every single transaction.
Crazy? yeah....just crazy enough it could work!
"Regressive tax!" I can already hear the battle cry. I would disagree. The person that makes $17,500...they're only going to pay the transaction tax on the goods and services they purchase. I don't see them going out and buying a boat. Or a Lexus. Just the things they need. And they pay the transaction tax on those items that they are the end-user on. The person that makes $250,000....they're going to pay the transaction tax on the goods and services they purchase. Are they going to ONLY buy the goods and services that the person making $17,500 does? Not hardly. They probably ARE going to buy that boat, that Lexus, those stocks and bonds, that new computer, use that lawyer's services...and EVERYthing...all goods and services...are subject to the transaction tax. So, I don't see it as being regressive. Those that spend more, they pay more. Those that spend less, they pay less. If you make less, you tend to spend less. If you make more, you tend to spend more.
But what's this about cutting the IRS by 90%?
Ah, that's the beauty of this....we don't NEED the IRS at their current levels.
In my little world, I would have the seller of the good or service collect the transaction tax from the end-user/purchaser. The seller would submit these collected funds to the State Dept. of Revenue, just like many states currently do with sales tax (yes, I know, there are some states with no sales tax, but there are NO states without ANY taxes).
The State distributes the appropriate shares to the local city, the county, and retains what the State's share is. On a monthly basis, the States all submit the Federal Government's "share" to DC...to the now-pared-down IRS. Or, heck, directly to the Treasury Dept., for all I care.
That way, the STATES can handle what the STATES are supposed to do, and help get the Federal Gov't's hands out of those things it shouldn't be handling. For instance, who knows better how to handle education in Iowa....Iowans, or elected representatives from 49 other states over in DC? And just because something works really well for high school students in South Dakota, does that mean it would be a panacea for high school students across the country?
In this manner, we are returning control of the purse strings and the caring of the citizens of the country to the governmental entities that should be in control of them...the states legislatures, the county elected officials, the city elected officials. Rather than the cookie-cutter, one-size-fits-all approach we have at the Federal level. Or, worse yet, the 47,987-page attempts to micro-manage something that is best handled by local governments.
Another advantage...the Federal Gov't won't always know exactly how much money they're going to get every month from the tax. So they will have to be more concerned with intelligent cash-flow management, and not be given to negative budgeting.
and that is my two cents worth for today.
--Larry Voorhees
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