"There are two certainties in this world: death and taxes"
Nobody likes paying taxes. Everyone wishes they could pay less in taxes. Americans work hard for their money and, as such, wish to maintain as much of those hard earned dollars as they can.
In order for us to really discuss taxes in America- the good, the bad, and the ugly- we must first establish a philosophy:
- Why do we have taxes?
- What are taxes for?
- Should we have taxes?
- If so, how should people be taxed?
The "why" and "what" questions are linked together. Taxes allow society to function. They allow us to take care of each other. Taxes are collected to fund programs, to build and maintain infrastructure, to provide goods and services, and overall give back to the whole by taking a little from each individual part. Social Security is paid via taxes, Medicare is paid via taxes, roads and bridges are paid via taxes, police officers are paid via taxes, fire fighters are paid via taxes, our military is funded via taxes, public transportation, social workers, judges, school teachers, and more are all possible (for the most part) because of taxes at the local, state, and federal government levels. All of these things and more are paid for to the benefit of society by collecting money from everyone.
Our initial debate begins with the question "should we have taxes?" Some people say no. They feel their money is theirs and they want every last dime. Any amount of taxation, especially by the federal government, is akin to theft in their minds. George Washington, our first President, respectfully disagreed. You might recall the Whiskey Rebellion in 1790's Pennsylvania.1 A number of folks felt that America's independence was supposed to free them from British taxation. The resistance to taxation grew to the point where folks in western Pennsylvania began threatening and then getting violent with the tax collectors. President Washington felt the need to meet the violence with a show of force. A militia was raised of some 13,000 men and Washington personally led them to western Pennsylvania to quash the rebellion. By the time they arrived, things calmed down with the rebels submitting to the taxation. The nation as a whole approved. Society thus bowed to the national laws, knowing the newly created federal government had the power to enforce their laws.
Like our first President, I respectfully disagree with the notion that taxes should not be collected. Unless people want to fund public infrastructure, schools, healthcare, our military (active/veterans), and more with their own dollars, somehow those aspects of society have to be paid for. We are not self-sufficient to the point where everyone can spend their entire life in a bubble without a care for the outside world. We do not all grow our own crops, we do not all have the capacity to protect our homes, we are helpless against large house fires and wild fires, we are unable to build and maintain a modern military, we cannot pay for modern medicine all by ourselves, and much more. Only the 1% can afford some of that and only at huge costs. The industrial revolution kickstarted modern society and with it came greater interdependence.
I would go so far as to say that taxes are the reason the United States exists today. Without taxes, there would be no real federal government. Enforcing law would be insanely difficult. Corporations that didn't leave for another continent and the 50 states would morph into mini-countries of their own, building their own science fiction utopian societies to keep their own interests safe. Someone has to pay for our roads, for social security, for Medicare, for public education, for our military, for clean air testing, clean water testing, enforcing regulation and more. Without taxes, America can't fund anything. We wouldn't be able to borrow money because we'd have no good revenue source to pay it back. Other nations would pounce in a heartbeat. No taxes would lead to civil unrest and war.
I bring up this lack of taxation due to Grover Norquist's Taxpayer Protection Pledge that many Republicans have signed.2 This pledge says that the signer will oppose any and all efforts to increase the marginal tax rates for individuals and/or businesses while also opposing any net reduction or elimination of deductions/credits unless matched dollar for dollar by reduced tax rates.3 This pledge, to me, acts as an affront to the Constitution. Article I, Section 8 clearly states that Congress shall have the power to collect taxes, etc. to pay for debts, provide for the common defense and the general welfare.4 Under the taxpayer protection pledge, it becomes more and more difficult- if not impossible- for Congress to do its job as the years roll by. When you want to pay for crumbling infrastructure, cover medical expenses, provide social security benefits, or even finance a war, the money has to come from somewhere. The more you whittle away incoming revenue to the federal government, the more difficult it is to pay for- or pay back- any of that.
Without modifying taxes in a way acceptable to pledge signers, you have four main options that I can think of: reallocate federal budget spending, eliminate the federal program(s) in question, print more money, or borrow money. Printing money can give rise to inflation, making that a bad idea. Eliminating the federal program(s) in question would potentially harm millions of Americans who depend on federal programs for health and security. Borrowing money creates more debt to external entities- a very unpopular idea right now. Reallocating federal budget could work, but do you really want to tell millions of Americans that they won't get Medicare this year because that budget is being used to fund military excursions in the Mid East?
The Pledge makes any increase in taxes a roadblock. This further widens the income inequality gap. Everyone knows that it's a lot easier to make money when you have money. The rich get richer while the poor and middle class only see nominal bumps in wages. The Taxpayer Protection Pledge is a promise by members of Congress to not fix tax loopholes unless taxes go down. Logically speaking, I don't follow this ideology numerous Republicans (and non-Republicans) seem to possess:
- Our federal debt and deficit are too large
- We must whittle down the debt/deficit
- Doing this requires more income than outlays
- The Pledge prevents raising taxes
- We could eliminate loopholes, but the Pledge requires also reducing taxes in proportion, resulting in a net increase of $0.00
- No one wants to borrow more money as that would raise the deficit
- Federal budget is under control, with a surplus to boot!
Logically speaking, that makes no sense. Logically speaking, the best option for ??? is elimination of expenditures. The outlays of Social Security and Medicare account for 87% of all FY2015 mandatory spending.4 The next largest outlay is military spending, coming in at $598 billion or 54% of all discretionary spending.5 No one wants to cut funding for any of these three critical aspects of our society. When we try to logically follow the above argument, there is no good way via taxing/budget maneuvers to arrive at the conclusion. Someone gets screwed because the Pledge prevents Congress from properly doing its job, even if there is moral reason to eliminate loopholes while not also reducing tax rates in proportion.
I will never sign that Pledge. It is a crux on our nation and should be torn up by all signers. The only people who should adhere to it are those who want to see the federal government have a budget of $0.00. That appears to be the end goal, after all. An incredibly idiotic, short-sighted, oppressive, and un-American end goal... but an end goal none-the-less.
What I propose instead are a number of tax reforms that will allow us to keep or improve upon our social care programs, provide tax relieve for the vast majority of Americans, eliminate loopholes without dollar-for-dollar tax rate decreases, and fairly go about bridging the income inequality gap. If you're expecting a return to tax rates on the wealthy last seen in the 1950's, I'm sorry but those were really high, too high for today's global economy. Instead, the plans I want to put forth reward corporate hiring and wage increases, provide help and security to startups that are responsible for American job creation, and allow millions of Americans the opportunity to invest and save.
I've broken out my tax discussion into two sections for better understanding:
The section on Entitlement discusses this "entitlement mentality" that is perceived to exist among some Americans, especially the poor and struggling. It's important to discuss that first because entitlement is more than the "welfare state;" entitlement is a philosophical attitude, a cultural phenomenon that needs to be brought to the forefront of awareness if we're to combat it. Then, with an understanding of that, my Tax Reforms section lays out plans to fix the current system in a somewhat comprehensive way.
(1) See Whiskey Rebellion on Wikipedia.
(2) See Federal Taxpayer Protection Pledge by Americans for Tax Reform.