To level the playing field

Here are a few embarrassing questions for many of us: What are taxes for? Why do we tax anybody?

These embarrass because they spur many of us to answer “To level the playing field.” Or “To make the rich pay their fair share.”

If this is what taxes are for, then let us not call them taxes. Let us call them penalties.

Some old-fashioned people cling to a stupid idea: Taxes are for raising money to run a government.

“Oh, sure, that’s what taxes are for. But at the same time we want to level the playing field, make the rich pay their fair share.”

Right.

The truth is that millions of folks do not see that taxes’ first job is to bring in money. Money to run and do what government runs and does. Instead, they see the tax system as a social waterboarding. They think its role is to take from those who have more. So government can “spread the wealth around.” Per President Obama’s remark in the campaign.



The President carries the flag for those who follow this line of thinking. He recently admitted that he felt the purpose of raising taxes on capital gains was not to increase revenue for government. He said the purpose was to “ensure fairness”.

His remarks are part of an endless national debate. We the people argue about who we should target for punishment. Who we should take from. Who we should ease off from. This is not a debate about taxes. It is about punishment.

Suppose you and I ran a supermarket. I start pricing products according to who is buying. Mrs. Johnson has low income. For her I charge five cents per head of lettuce. Mr. Fitch earns a million every year. For him, ten bucks per head.

I suspect you might put a stop to this. You might tell me that we are in business to at least break even. And better, to make profit on what we sell. “Business is business. It is not fair to overcharge Mr. Fitch so that you can help out Mrs. Johnson. If you want to help Mrs. Johnson, donate to her from your pocket.”

Some dummies see government and taxes in this light. They tell us we can raise the most money for government by making tax-paying really simple. If you make up to $20,000 you pay 5%.  From $20,000 to $50,000 you pay 10%.  From $50,000 up you pay 15%. A simple system like this will absolutely bring in enough money to run government.

Ahhh but millions of us won’t support this. It does not exact enough punishment on the rich. And so we are lumbered with a monstrous tax code. It contains ten thousand thumb screws. Along with thousands of absolutions for certain groups. Paid for by those groups. With bribes in the form of campaign contributions.

Someone said that during communism if a Russian saw a new car in his neighbor’s driveway he tried to get the guy investigated. This comes to mind when I hear folks discuss our tax rates. They basically say “Let’s squeeze the guy with the Mercedes for more of his money. We’ll use our tax code to do it. That’s what it’s there for, isn’t it?”

From Tom ... as in Morgan.                  

For more columns, for Tom’s radio shows (and to write to Tom): tomasinmorgan.com. For his new TV show, go to ynn.com and click on “Business.”

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