Another Essay on Tax and Fairness

Taxes… you can’t live with them, you can’t live without them.  Depending on how much money you made last year, you’re either dreading April 15 or trying to get your tax return filed just as soon as possible so you can get that much anticipated tax refund in your hands (which is probably already spent).  Am I right? 

If you want to light a fire under people, talk about taxes.  Before you know it, this idea of “paying your fair share” will raise its ugly head.  I heard it again this week from Mr. Al Sharpton… and everyone wants to see Mitt Romney’s tax returns and find out about his off shore accounts and tax loopholes.  More often than not, however, this idea of paying ones fair share only applies to a certain group of people… you know who they are --  the ones that make more money than you. 

Liberals love to pontificate on how the “rich” aren't paying their “fair share,” but have you ever heard a single one of them explain rationally what that even means? Define exactly what they believe is fair?  No. You haven't and you won't.  Because, as long as they can keep the argument vague, they can continue encouraging the class warfare that feeds their agenda of wealth redistribution.  This is great for stirring up the masses, however, if we choose instead to be rational people, we must define and understand the meaning of words.  

So let's talk about what we mean by a “fair share.”  Does “fairness” mean that a person who earns a very small living or none at all should be exempt from contributing to the social services from which they benefit, and the wealthier among us should have to bear all that cost?  No.  That is not fairness.  That is charity.  When the government does it, it is legalized robbery.  We don’t complain because we are so detached from the robbery that we don't recognize it.  We send in our taxes like good citizens and the government takes that money and gives it away as the politicians see fit. 

But what if the redistribution (robbery) was less disconnected?  What if your neighbor lost his job and went to the local department of human services to apply for welfare?  Then what if the welfare office handed your neighbor a $1,000 packet of cash and food stamps and sent YOU the bill?  You still have your job and make pretty good money.  You can afford it.  Then next month, what if your neighbor got sick and went to the doctor, and the doctor sent YOU the bill?  Now the redistribution of wealth hits closer to home.  But your neighbor is unemployed.  You can afford to pays his bills.  You have a good job, maybe even a little extra money.  What will your neighbor need next?  What will your neighbor demand will be his right to your money?  This is exactly what our progressive tax system accomplishes.

America has forgotten the proper function of government. As a population, we have been programmed over the last 80 years or so to believe that the government’s purpose is to take care of us – in our old age, when our pursuits fail, when we get sick, when disaster strikes. Seemingly gone is the concept of personal responsibility, of rustic individualism, of striving for our highest ideals, of picking ourselves up and starting over.  Now, those who do these things and succeed and become wealthy are somehow labeled as selfish, and the less fortunate cry out with one voice, “Raise their taxes, they can afford it!”

Our tax system is a mess for a lot of reasons, but one is that the higher that taxes climb, the harder the tax payer works to minimize the impact. We call this taking advantage of “tax loopholes”-- loopholes, by the way, that are invented by special interest groups and codified by Congress. What about you? Do you itemize if you can take advantage of a deduction for your mortgage interest? Of course you do. This is the epitome of common sense. Who willingly gives the fruit of his labor to the government? Every taxpayer, rich or not, will take advantage of every legal opportunity to minimize their tax burden. Roughly half of Americans pay no tax at all because of deductions allowed by the government.  No one HAS to take the deduction or tax credit allowed to them. But they do. You do. We all do. The problem isn't that people and corporations take advantage of loopholes; the problem is that those loopholes exist in the first place.  Don't hate people for trying to hang onto their property (yes, income is property).

If you still believe that this is an acceptable system, and that the rich should pay and the poor should not, so be it – that’s your right.  But be honest about it and stop pretending you believe in fairness.  The only FAIR income tax is one that every income-earner, large and small, pays equally. 

Here’s my solution.  Drop the “progressive” tax rate, put everyone on a single rate (10% is good enough for God, it should be good enough for the government), and eliminate credits and deductions for everyone.   Would it be enough to balance the budget? Certainly not by itself, but it would be a good start.  When everyone is finally paying their fair share, maybe then it will be a little easier to decide what we want to pay FOR and what we can do without.

I suppose I live in a dream world. If the federal government adopted my ideas, all those IRS employees would be out of work along with a good many CPAs and tax attorneys. Lobbyists would be out of work, too. Government would shrink and not grow. And, of course, all those not paying any tax right now would probably revolt.

But at least taxes would finally be fair.