Comments on: The tough road to sensible taxes Wed, 07 Oct 2015 17:23:32 +0000 hourly 1 By: OneOfTheSheep Thu, 02 Feb 2012 02:24:00 +0000 No one has “perfect vision” when it comes to improving complex systems with obvious flaws. I believe the medical caution would be appropriate here: “First, do no harm”.

Clearly any tax system should be “just”, but that is NOT it’s primary goal. The primary goal is always sufficient tax revenue to appropriately fund the needs of the government administering a given society.

It may be that once upon a time the people of this great nation were of such common mind that government “needs” did not need detailed analysis and further definition. Indeed, they did not until the twentieth century and increasing complexity posed by citizens of increasing number, literacy, “diversity of origins” and personal expectation.

From that time an increasingly rich and successful nation took upon itself the tasks of righting the wrongs that everyday life inflicts unequally. Our path since has been much like blazing a path through virgin forest whose ultimate destination is unknown, other than in the most idealistic and abstract terms. When it comes to justice, simplicity and efficiency in a tax system, many decisions must be made on the basis of “pick any two” because of inherent conflicts. The going has not been easy or steady. Why are we surprised? We are economic explorers!

The tax advantages created to advance the abstract ideal of universal home ownership illustrate well the law of unintended consequences. This caused expansion in the construction industry that would not have otherwise occurred, the explosion of the basic home into McMansions, and rampant real estate speculation based on the false premise that homes always appreciate everywhere. When these three legs of our economic stool collapsed, so did much of our existing financial system.

That system lives on, largely on the life support of Washington printing-press dollars. It’s culture remains substantially intact, unrepentant and unregulated. What we have seen in action is unrestrained incompetency in our government and our markets. It was NOT capitalism or a failure of capitalism . Indeed, we remain at undiminished risk of “same song, second verse” in the future if heads do not roll and jail cells close.

I disagree with the very suggestion that America is, or should be, a “social market economy”. The symbol of America is the eagle, not the sponge. Humans are much more predictably “hard wired” than governments or economies. It is incentive, the desire to improve our individual circumstance and that of our families, that is the universal and inexhaustible power capitalism harnesses.

You cannot utilize expectations or entitlements to drive an economy no matter how carefully you tailor the harness. It is no more possible to “make” people do what they would want to do voluntarily — if they were perfectly good that it is to accomplish something useful by pushing a rope or a chain. People cannot be compelled to do more than the absolute minimum. It is inspiration and leadership that make ordinary people capable of great things.

It is in our individual DNA to help those who help themselves. It need not be in our tax code, and taxes should not be used to guide social policy. We are, collectively the most generous nation this world has ever seen in times of need and disaster. Those who would exploit or enslave us have not fared well in history.

On the other hand, tax incentives and penalties are incredibly accurate and appropriate to guide commercial conduct to encourage or advance the adopted goals of our society. Ethics and conflict of interest constraints should assure that Boards of Directors are not control or materially influenced in setting executive pay. Given established salaries for our President and Congressional representatives and respective responsibilities, it may be time for our society to cap executive pay in the conspicuous absence of meaningful self restraint.

What workers are paid is properly determined initially by the law of supply and demand and ultimately by what each contributes to a company or department’s success, however measured. We are a meritocracy. Such decisions should NEVER be made by government fiat. Governments are not smart enough or flexible to “get it right” and “keep it right”. Only the dynamics of the marketplace can do that well over time.

It is a core government responsibility to it’s citizens that all have an opportunity to succeed. The education process should be an effective one such that all who successfully complete a chosen course of study leave with sufficient and appropriate skills, and that their numbers are not inconsistent with the needs of the businesses responsible for creating a given society’s wealth or within the proper functioning of said government. Those who stare out the window or otherwise waste their individual opportunities or drop out will have made a choice and choices have consequences, both good and bad. America owes no one success that is not earned.

The “trouble” with government grants to subsidize culture or some other public good is that grant money must be first taken from taxpayers. Far better to instead have society reach consensus as to, first, what they NEED government to do; and then what they would LIKE it to do if money is available.

Since ONLY those who produce and then pay taxes create “government wealth”, those ONLY should have a say in how it is spent. That virtually assures that government’s legitimate role will be limited to NEEDS and priorities, while people will individually decide the priority of their WANTS.

I’m not saying that the accomplishment of these steps in proper sequence is easy, but only that I see no honest good faith alternate plan with as much “going for it”.

By: FredFlintstone Thu, 02 Feb 2012 00:08:13 +0000 I’d quibble that no flat tax can ever be just. Taxing someone who makes $10,000 a year at 20% is very different than taxing at 20% someone who makes a million a year. The former suffers far more than the latter, for no socially useful purpose.

My simple tax would be to set up brackets based on income level, maybe 5-6 levels, with only a few giveaways like the mortgage deduction (but only on the theory that creating stable communities is worth the deduction). And I would tax the top group at 100%, maybe dollars above $20 million earned in a year.

Ultimately, however, the problem with your piece is that it is sensible and rational about a debate that is neither.

And any broad political consensus appears absent at the moment. If you talk reforming corporate taxes, for example, the Republicans will insist on 1% or maybe 5%. Given that businesses cannot exist without taxpayer subsidized infrastructure like roads, bridges, court houses to enforce legal contracts, any tax less than 15% (?) probably is too low.

By: matthewslyman Wed, 01 Feb 2012 20:53:45 +0000 I just realised… I’m suggesting for companies to be forced to do something that is radically different from present-day culture, whilst protesting for the right to voluntarily “do the right thing”. Perhaps my position is justified by present circumstance [yawning gaps between information-rich cash-rich and information-poor, cash-poor, almost chronically abused workers]… But on second thoughts, perhaps it would be better instead, to kickstart this revolution with a voluntary “code of good practice”, or, with an effort similar to Warren Buffett’s and Bill Gates’s good work with their “giving pledge”? Give people the chance, from the outset, to exercise moral courage and do the right thing voluntarily?

By: matthewslyman Wed, 01 Feb 2012 20:24:27 +0000 U.S. tax law is the best defense against immigration. But it is selective in a way that is most unhelpful to the United States…
Anyone intelligent enough to know how far they fall short of understanding the U.S. tax code would be most reluctant to make themselves subject to it!

“a Save American Jobs tax benefit”… This in itself is a convoluted effort to sidestep the political issues of the WTO. It’s nothing more than a generalised, unfocused countervailing tariff under a different name.

One word for Pope Benedict XVI. I’m probably still a long way from being “perfectly good”, but I don’t need to be forced to pay my taxes: even a very sinful man can muster an honest tax without having his hand forced, and having the opportunity for exercising moral courage taken away from him! I pay taxes honestly and willingly. While paying slightly more tax than I’m supposed to, it’s satisfying knowing I haven’t stretched any definitions or retrospectively reclassified any transactions to qualify for deductions that wouldn’t apply under the original intent of the law.

> “If bosses are paid too much, it is better to pay them less than to tax them more. If ordinary wages are too low to support families, raise the pay rather than cut the taxes.”
– Excellent points – it’s too easy to get hedged up in the Republicans’ favorite debate about taxation, but looking at taxation without seriously examining wages gives an inherent and unfair advantage to Republican propaganda, as it allows them to dishonestly reduce the debate to,
“Republicans want lower taxes, whereas the Democrats want higher taxes…”
I must partially dissent from your view here that taxes are “too crude and indirect to be effective for that”… Taxation CAN effectively increase the relative competitiveness of companies with a more equitable wage culture. But I do agree that what REALLY needs to change is the CULTURE. Give us more complete wage transparency, including ALL directors on personal line-items, and histograms & aggregate statistics of the other staff members (subdivided into types and skill-grades of work). Force all companies to publish these figures, free of charge, to all workers and their unions. And bring back a sense of shame for those taking more than their fair share, by “virtue” of being in control of the purse-strings, or by “virtue” of having secret knowledge about how the system works…

Let’s have the Social Market (the German model) that you mentioned in a previous post! Why is Germany succeeding while laissez-faire “free markets” sink into the abyss? Just look at the relative culture of equality and meritocracy amongst the “Mitarbeitern” of German cottage industries and industrial giants, and compare that to what we have in the UK or USA now… Just look at German fiscal balance, which favours both employment/ manufacturing & export, and the purchasing power of German citizens: they strike the perfect balance. Compare that with the short-term, casino capitalism, “strong dollar policy” and accompanying propaganda that we get force-fed in the West.