August 27,1999 (Ira Pilgrim)
Any reasonable system of taxation should be based on the slogan "Soak the Rich."
Haywood Broun (1888-1939)
Republican candidate Steve Forbes says that he has a message. It is the same message that he had four years ago, and the same message that Jerry Brown had 8 years ago. Like a broken record, he keeps repeating flat tax, flat tax, flat tax, flat tax. Four years ago it was an 18% flat tax program. It is a simple solution to a complex problem.
Not that the tax structure of our country isn't unnecessarily complicated. It is so complicated that many people with modest incomes who used to do their own taxes now need a professional. The last "tax simplification" that congress passed and the president signed was referred to as "the tax accountant's full employment bill."
Taxes are a function of government and the larger and more complex the government, the more taxes are needed. If you go back to Europe in the eighteen hundreds and before, money was needed to support castles and armies and for all of the supplies needed for war; which was the major occupation of the nobility. In those days they also had what was called the corvee. All farmers were required to put in a certain number of days, some with horses, working for the lord of the castle. It was the rich taxing the rest of the population; except, of course, the clergy. Obviously the really destitute didn't have to pay taxes, although many were conscripted into the military. They didn't have anything to pay taxes with except their lives. Our national debt is mostly to pay for the hot and cold wars that we have fought in this century.
The idea of taxing those who have much, rather than those who have little is a relatively recent innovation. It is a consequence of a republican form of government in which everyone has a vote and those who govern are elected by a majority vote of the adult population.
A property tax, that is apportioned according to the value of the property, taxes those who have. A parcel tax which levies the same tax on a piece of property regardless of its value taxes those who have little, more than it does those who have a lot. A graduated income tax also taxes those who have more. The more you make the higher your taxes although the maximum tax rate is a piddling 32%. Why do I say piddling? Because a person who makes 150 million gets to keep about 2/3 of what he makes, which is about 100 million. I think that anyone should be able to manage on, say a paltry five million bucks per year.
Bank robber Willy Sutton, when asked why he robbed banks, replied, "because that's where the money is." It is obvious that you can't get money from people who don't have any. However, those who have a lot of money want to keep as much as they can. Since people with big bucks have big power, they manage to do just that. It is nothing new to have the rich get richer and the poor get poorer. During the roaring twenties, that is exactly what happened. It was followed by the great depression; a direct consequence of the great boom.
Our country is fabulously wealthy. There has never been so much wealth in the world. The consequence is that even those who earn little, earn more than they would have at any time in history.
People talk about a tax being "fair." It is a meaningless
phrase, because it depends on who is defining the word "fair."
A reasonable objective of government is to get as much money is
needed to do what has to be done. Since those who have money are
reluctant to part with any of it, this poses a problem. With a
national debt of between 6 and 7 trillion bucks, that is growing
and whose interest is an immense burden to everyone, much more
tax money is needed now than has ever been needed in the history
of any nation at any time in the past.
Almost everyone has a stake in our having a stable financial structure. This means having a government income that is roughly the same as it spends. It is even desirable to have a small surplus to cover emergencies. Some borrowing makes sense, but what we have now is idiotic.
To pay off the immense debt, we need income. Where should it come from? Where can it come from? One obvious solution would be to sell our assets to the Japanese and Saudis. What do you think we could get for Yellowstone Park? Yosemite should bring in a nice piece of change. I doubt that anyone would want to buy the monuments in Washington, but maybe we could rent them out to people who will charge admission. The Smithsonian should be worth money as a Washington Disneyland.
We could have a national lottery, although the states would object to our cutting in on their take. A lottery has been called a tax on fools and, since there are an immense number of fools, it should bring in a lot of money. Taxing wisdom would be a waste of time; there isn't enough around to make it worth taxing.
Taxing property would be a good idea. The problem is that property taxes have traditionally been the bailiwick of states, counties and municipalities, which used the revenue to support schools, roads etc.
So who will end up being heavily taxed, even with a flat tax? It will probably be those who have have some money, but not enough to buy power. Those are the people who make less money than congressmen.
Return to the Economics Home Page
Return to Ira's Home Page