Tuesday, January 1, 2013
‘Taxes” is a four-letter word.
If you don’t believe it, just bring up the topic and watch as faces redden and tempers rise.
People almost unanimously declare they don’t want to pay any more in taxes, but then will pressure their representatives to enact, expand or retain programs that will require more funding. They are supportive as long as “the other guy” pays for it.
But we can’t go on this way.
There is little hope in changing human nature. But if we are ever going to get out of this governmental financial quagmire we need to start with some universal truths.
Truth No. 1: No one likes to pay taxes, no matter how much they make or how little they pay.
Truth No. 2: For the government to provide services of any kind it must have money.
Truth No. 3: Taxation is required to fund government.
Let’s add one more truth: If you were designing a fair and equitable taxation system from scratch, you would not set it up the way it is now.
This truth is the one the public and federal, state, county and city governments should work to correct.
It won’t be easy, because what one person sees as a tax loophole or unnecessary deduction will be seen by another person as a necessity. (Don’t believe it? Float the idea of eliminating deductions for mortgages, for example, and watch individuals and lobbyists for contractors, credit lenders and real estate agents go crazy.)
These patches on loopholes are simply Band-Aids on a leaking dike. For every leak you cover, another one springs up. It is treating the symptom not the cause.
The time has come to push the taxation system over the cliff and start fresh.
The discussion should start with: What is a person’s or company’s “fair share” for paying for government services? How do you set up a system that adheres to this?
These discussions will not be easy as most people already believe they pay too much, but you have to start with a consensus on defining a “fair share.” Is that 10 percent of gross income? Twenty? More? Does this mean a flat tax, a modified flat tax or some other method? That’s what needs to be decided.
Once “fair share” is determined, governments would have a better idea of the funds they have to work with. Add a requirement for a balanced budget and a reserve fund, and then governments — and the public — would have to go through the painful but essential task of prioritizing.
This is identical to what individuals must do. Figure out how much money you have. Prioritize expenses into “needs” and “wants.” Insist on saving before spending on “wants.” Understand that one-time expenses on “wants” are more easily managed than continuing expenses. Exercise restraint even in flush times.
What does this accomplish? It creates a less complex tax system based on everyone paying their fair share. It provides a consistent flow of dollars to government to fund services. It requires a prioritization of services and a fiscally responsible approach to spending.
Isn’t that what everyone really wants?