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Monday, April 11, 2011

Tax equality for all, not just ‘tax the wealthy’

This morning, I had a great conversation with a friend in Portland via chat. We agree about quite a bit, but differ along some lines, just as friends should do. Where we differ is this:  When I think tax equality, I think that means that everyone should pay the same rate regardless of who you are, where you're from, your religion, color or creed, and regardless of your income. I believe in a national sales tax which would replace ALL other taxes. 
The way I have this envisioned is this:  First, we would have a star-chamber panel of non-politically-aligned experts...that is to say not politicians...who would pore over each and every part of the Federal budget, as well as similar individual panels for each state, in order to assure that any waste in government that could possibly be eliminated would be, and that duplication of services, offices, and programs would be erased.  Then, we would remove all other taxes, whether we call them taxes or not - if you pay it to the government...ANY government whether Federal, state or's a tax - and replace them all with a national sales tax.  Built into this system would be the ability to adjust the rate up or down as needed, quarterly or yearly. We may find it necessary to have a sliding scale built in so that luxury items would be taxed at a higher rate than standard items; a Mercedes taxed at 50% vs a Chevy at 40%. If those rates sound high, then consider that in 2007, MSN Money stated that the average median tax rate was 40.3% across all income groups. They took into consideration the same principles I set forth here that all taxes were considered - Federal, state, and local, sales taxes, income taxes, property taxes, et cetera. The advantage of having a luxury rate, and the equality, is that if Joe SixPack happens to score a lottery win and buys himself a Jaguar, then he still pays the luxury rate for it, just like a regular buyer of that car would. Equality.  Also, this would encourage saving more money than we currently do, which would have the long-term benefit of people having enough money set aside to make large purchases rather than borrowing money on which they would have to pay interest as in the current system.  And that means a higher standard of living.
But the other side of the coin is what's really on my mind, this morning. I notice when I talk to people, especially those of lower income groups, that they want tax parity for the wealthy. But at the same time, they'll tell you that they think that working families with children shouldn't have to pay taxes, or should be taxed at a lower rate. If that were done, or if these people were allowed to have their taxes rebated, even the sales taxes, then this breaks tax equality out of the gate.  It's not tax EQUALITY if lower income groups pay LESS.  The only way that it's e-q-u-a-l-i-t-y is if every income group pays the same for the same items. Again, luxury items could be taxed at a higher rate, but all income groups, that means any buyer from any group, pay the same amount of tax on that item. 
I have the fortune ("fortune" being defined as hard work, ingenuity, and an entrepreneurial spirit) to have hoisted myself out of the lower and middle income groups. While I had help polishing the ideas I dreamed of, it was my own determination that put me into an upper income group. I state this for one reason:  I know what it's like to grow up poor.  My parents worked hard to pay for me and didn't take handouts.  But like every other average parent, they received help in the form of a free education for me.  My healthcare, dental, and vision needs were paid for by them, not by a government agency.  They clothed me.  They fed me.  We got no WIC or food stamps.  But we also didn't take lavish vacations or drive cars that were priced beyond our means; we ate well and dressed modestly, too.  In sum, we lived within our means.  
And there lies the rub.  Americans have come to expect to live beyond their means.  At first, that meant driving a nicer car and wearing designer clothes, but it's come to mean buying more house than we could afford and having others pay for our kids...or ourselves.  The wealthy are justified in their anger at having to pay for others when those others are the recipients of handouts, regardless of whether we call them handouts or not.  BUT...the wealthy are NOT  justified when they shirk their tax obligations.  And that happens far too often.  Some of my wealthy friends tell me that they feel justified paying no or little income tax because they pay so much in sales taxes for the many things they buy.  I understand that.  But I also know that many of them shop exclusively online or in states with no sales tax (yes, those exist, in fact Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax, but they compensate with higher income and/or property taxes).  So in a sense, even the wealthy are living beyond their means, or at least beyond their desire to pay their fair share of taxes.
What we have is a national tax-disassociative disorder.  We're fraught with debt and don't have the national will to pay it down because we're so used to living beyond our means.  We have politicians tell us every day that we need to lower taxes in order to stimulate growth, but what they don't tell us is the pain that will follow.  And it WILL follow.  Except for the super rich.  
Don't get me wrong, I believe in, and actually do, pay my full tax rate. Honestly.  I take no deductions.  At all.  Why?  Because I believe that the tax money I pay goes to fund programs that I have used to my advantage, and many that I continue to use.  In a sense, I'm just paying the system back for that I "borrowed".  And it's important to remember that we have the luxury of having a national freeway system, not a national toll-road system.  We have a national park system that is the match of any.  We have institutions of higher learning that are subsidized by our tax payments that provide education for those who wouldn't be able to pay the rate that for-profit, private institutions charge.  We have a Coast Guard that keeps our nation's shoreline safe from invasion, and rescues us when we tip over our boats or our cruise goes awry, not to mention the heroic work they do for the fishermen of our oceans.  We have a military that keeps us as safe as they possibly can from foreign invasion and whose clandestine work often goes unheralded, and unappreciated; but not for certain military units dismantling terrorist cells worldwide BEFORE they can reach our shores, bombings and other acts of terrorism would be as common place here in America as in parts of the Middle East, if not more so.  
But, we have rancor and dissent, too.  We have a new political faction that feels that taxes are evil and should be repealed, eliding the fact that many of the services they take for granted would simply vanish without them.  We also have a segment which believes that government should provide for them cradle-to-grave, despite the fact that we have a national debt that's staggering and not one, but two political party entities which purport to represent the will of an America that wishes them gone, dead, divorced from the marriage of our union.  
So, what path do we take out of our morass?  I know no one  with a crystal ball who can provide that answer.  But I do know this for certain:  If we do not address, civilly, all of the issues which plague our nation then we can expect that divorce to happen sooner rather than later.  It would not surprise me to see the new South attempt secession again.  I could foresee the Midwest going along with them.  But I also have faith in our ability to weather even this perfect storm.  Perfect shit storm, would be more like it.  And it's all of our own making.  
Failing to have a real leader with real, prudent ideas...not a Ronald Reagan whose trumped-up legacy is as much a fiction as any children's fairy tale...means that we'll continue to stagnate and will take our places as a has-been along with Britain, France, Spain, and Portugal.  What we need is an FDR, a George Washington, or an Abraham Lincoln.  We need someone with the clarity of mind, the willpower, and the charisma to lead us to a new place, a new road at the least, one that would take us to a common goal of respect for our fellows, civility in politics, and concern for our fellow planetary citizens.  What we don't need is one of the loony tunes nut-fudge-fringe candidates put forth by some, today.  We don't need leaders who seek to serve only their benefactors.  We don't need leaders who seek to lead by division like so many in our current situation.  We need someone who will lead us firmly together while respecting our differences, but like a good nanny or school teacher, one who will glance sternly at the offending parties to quieten them to maintain order while never stopping, slowing, or looking over her shoulder to see if the kids are following; she will know they are because they're holding hands, not pushing and shoving and trying each to run his own way. 
And perhaps that's the real problem:  We've forgotten as adults what we were taught in kindergarten - how to be nice to one another, share and share alike, and that everyone has to do her and his part to make the project work, whether it's the kid who came to school chauffeured in luxury or the poor kid with the hand-me-down wardrobe who rode the bus.  Everyone.  Together.  "...One nation, indivisible, with liberty and justice for all".