About the time I was in high school, the song I’d Love To Change The World by Ten Years After was getting a lot of play on the radio. (You can find the song on the 1971 album A Space in Time.) You still hear the song on classic-rock stations now. Among the lyrics of that song is this gem:
Tax the rich, feed the poor
Until there are no rich no more
Even as a teenager, I remember listening to those lines and thinking, “that’s stupid – once you’ve done that, who’s going to feed the poor then?” And I was right – while “tax the rich” sounds good if you don’t think too hard about it, the problem is that there just aren’t enough of them to solve any real fiscal crisis, much less the doozy of the mess we’re in now.
There are two basic schools of thought in the United States right now as to the purposes of taxation. One group – myself among them – maintains that the purpose of taxation is to raise funds for necessary government functions. Another group maintains that the purpose of taxation is to ‘redistribute income’ among the citizenry. There is a degree of overlap between the two groups but, as a general rule, fiscal conservatives fall into the first group, fiscal liberals the second.
Notice how I append the word “fiscal.” There are plenty of self-identified conservatives who lack the financial savvy to pour piss out of a boot, while some fiscal conservatives, like myself, remain very libertarian on social issues. But today, I’m focusing only on the Federal checkbook and taxation. Notice further my use of scare quotes on ‘redistribute income,’ a term usually used by fiscal illiterates (like most members of Congress.) Income is not distributed. Income is earned. Income is the product of a voluntary exchange of effort for value, between consenting individuals.
Which brings us to today – tax day.
Spending by the Imperial Federal Government is now approaching 40% of GDP. The Federal debt is approaching 100% of GDP. The cost of government adds about 30% in cost to every dollar’s worth of service provided. And how does the government collect that money?
Go to the U.S. Government Printing Office and you can find Title 26 of the U.S. Code of Federal Regulations, all 600-some parts of it, which is published by the Internal Revenue Service – this is our tax code. The digital editions of this will cost you almost $900, so have your credit card ready. This code comprises about seven times the page count of the Bible.
How many wasted hours and dollars are poured into just trying to comply with this Byzantine mess of regulations? There is no hope of any one person understanding them. Mrs. Animal, with the patience of Job interspersed with an occasional flash of Scots-Irish temper, prepares our taxes every year. Since I’m self-employed and we run an LLC, that’s complicated – and our tax code actually punishes you if you choose to be self-employed. In spite of two MBAs Mrs. Animal has had occasion to call the IRS for advice, and has received contradictory answers more than once – not even the IRS can agree on what the code means!
It’s time, True Believers, to reform our tax code. I favor the Fair Tax, but any flattened tax scheme would do. Every taxpayer should be able to file their return on a postcard. And everyone should have some skin in the game; if you have any income, you should pay something. This would mean that a few legions of tax attorneys and accountants would have to find some honest work, but that’s a price well worth paying.
Then, maybe, we can address some of the more egregious stupidity in government spending next.