Many readers will spend this week agonizing over the annual ritual of completing their income tax return. Scrambling to dig up scraps of paper that may be “deductible” and pondering if your family members are still considered dependents are just a few activities that mean the difference between receiving or paying thousands of dollars.
Our tax methodology is essentially a system where the payee allows the payer to determine how much they think they owe, and if it doesn’t match the payee’s value, the payer can look forward to more fees. Imagine if your doctor or mechanic had a billing system like that. If they didn’t go out of business, the government would probably make that pricing system illegal. Buying software or contracting with consultants to calculate the best guesstimated return is a multibillion-dollar segment of our economy.
Are taxes meant to help fund vital portions of government or as a wealth redistribution tool?
The growth of the wealth gap is mentioned frequently these days. Oddly enough, the gap has increased exponentially with the size of the Tax Code. What was around 400 pages 100 years ago, and a “modest” 45,000 pages around the turn of the century is now about 74,000 pages for the 2013 tax year. Our current Tax Code is very similar to computer program coding – the more lines you have, the easier it is to slip an exemption or loophole into the code and create a virus that exploits those gaps.
Let’s look at the financial incentive for people to micromanage the tax law. Let’s pretend I’m Mr. Money bags (emphasis on “pretend”), and a pending piece of tax legislation is going to cost me $1 million. It is worth up to $990,000 to me to fight it in the halls of government. Meanwhile, Rep. Sellyouout desperately wants to fight for my interests, but he tells me that the fight is arduous and expensive, and can’t go on unless there is a completely unrelated donation to his re-election campaign.
Meanwhile, Ricky the roofer, Sara the seamstress and Billy the baker are looking at some legislation that will cost their business $1,000 a year. They don’t have $990 to “fight” it in the halls of government, so they will have to make do. By the way, don’t tell anyone, but Mr. Moneybags probably was the one who suggested the $2,000 tax on small businesses in the first place.
This manipulation of the Tax Code fuels the call for a flat tax system. How would a 10 percent national sales tax on everything sound to you? Some might say eliminate taxes altogether and fund vital services with service fees and subscriptions, empowering taxpayers to be selective and savvy consumers.
Perhaps the biggest gap in the process is that we the people neglect to remember that the folks we vote into office on Election Day are the ones who spend the tax revenue and set the “rates” we pay. For tax day, we get to fill out a bunch of paperwork, perhaps cut a check to the government and grumble to ourselves (although some of us might write a column instead).
Where is our recourse?
Here’s a proposal: Let’s move tax day to the same day as Election Day. The connection between how much the people pay and who actually spends it would be unavoidable. We the people would be voting with our wallets. Watch the paradigm shift as politicians had to appease citizens who just watched their wallet lose a lot of weight.
Regardless of the efficiency or righteousness of the current Tax Code, this is our annual bill for all the wonderfully vital (and many not-so-vital) services our government provides. As you shuffle through the stack of forms and receipts, please ask yourself: Am I getting value for my tax dollar?
Brian Thiemer is chairman of the Solano County Libertarian Party. He can be reached at [email protected]