Searching for taxation sanity 

Evidently President Obama’s chief economic advisor Lawrence Summers believes skinny people are skinny because fat people took their food. At least that’s akin to the story he tells trying to justify his position on tax reform, lamely lamenting that poor people effectively send money to the rich each year. Curious.

But tax reform is upon us as it is clear this President is bent on reshaping our tax structure, and our economic system. And it may well be time for both. What troubles me is that Obama in Bushian economic fashion seems to think we can spend and borrow our way out of debt. And now his tax “reforms” will likely punish those who make money and create jobs, and reward those who do not. Curiouser.

The real problem with taxation is that we have no idea what or how to tax. We tax property, which has no real value – it only has assessed or market value which can sway in the wind. We tax income, which makes some sense except the more we make the higher level we are taxed. That is backwards. And we tax sales, which actually makes some sense. Let’s look at these.

In a nation and on a continent abundant with land taxing it may seem wise. But understanding our roots and history one of the draws that brought our diverse melting-pot cultures and peoples here was the promise of free land. Claim it and it’s yours. Homestead it and make improvements and contribute to growth and it’s yours. That is in our very national DNA.

Today of course we have land barons and slum dwellers. Lawrence Summers would have us believe Ted Turner took his Montana ranch from the “walk-up” ghetto dwellers in Detroit. Not so. But continually taxing and retaxing our property is just wrong. We should pay point-of-transaction taxes on it once just as we do a television or pair of shoes.

Then comes income tax. If we are to tax our earnings the only “fair” scale is no scale at all. Everyone pays the same percentage, no deductions, end of story. The rich would indeed pay more dollars, but an equally fair percentage as the poor, who would fairly pay fewer dollars.

Penalizing those who earn more, create jobs and spend more makes no logical sense. Imagine that philosophy in sport – a basketball player averaging more than 30 points a game has a percentage of his points taken away and given to the other team. Not even curious, absurd, and a disincentive to achieving excellence.

And finally sales, or point-of-transaction taxes. One national percentage, one state percentage, and one local percentage. Even if it totaled 25-50 percent of every purchase we could pay it because we would have no property tax and no income taxes. All underground income would ultimately be taxed through purchases made, no hidden drug or sweatshop economies avoiding the tax. We could easily exempt food and medicine, and then purchases become mostly choice – cheap or expensive, buy it or not. Now there is some sanity, and some change I could believe in.

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