Tuesday, November 09, 2004

Taxing Sanity: Republicans were re-elected to win the War on Terrorism, and now they're talking about overhauling the tax code. That's fine, we can discuss it. But I don't imagine anything beneficial will come from this.

Conservatives talk about getting rid of the IRS and instituting a flat tax. But why would we do that? A flat tax would mean no tax deductions for charitable contributions, mortgages, education costs, medical costs, and a host of other targeted tax breaks. We have those tax breaks now because they're popular, and people need them.

If you think the tax code is too complicated, don't make any deductions, or don't ask for a refund. It's simple, and accomplishes the same as a flat tax. (The same can be said for all you people who don't like Bush's tax cuts. You're more than welcome to offer more of your money to the federal government. Go ahead.)

Another proposal is for a national sales tax. But that could easily become a national nightmare. Consumption taxes, such a sales tax, are notoriously regressive, meaning they hurt the poor harder than the rich. Poor people spend a greater percentage of their income than rich people do. (A person making $30,000 per year will likely spend at least $29,000, or 96-percent, to live. Whereas a person making $400,000 per year would likely only spend $300,000, or 75-percent, to live.) That would also dissuade rich people from buying things, which hurts the economy. You'll never be able to stop people from wanting to make more money, but it's easy to give them second thoughts about wanting to spend it.

And in practical terms, I would dread a national sales tax. It's frustrating enough while shopping to calculate in your head what an additional 5- or 8-percent tax will bring the final cost to. I don't want to figure out 15- or 18-percent tax. I became a writer for a reason -- I hate math. Now, if stores would include the tax when listing prices, that would make things easier. In fact, why don't they?

Anyhow, we can have a discussion about this. But with so many competing interests out there, don't expect to see any substantive changes.