11

Aug

by Moonage

Bush: Sales tax in, income tax out?
President says replacing current system with sales tax is an idea we should ‘explore seriously.’August 11, 2004: 8:38 AM EDT

…..Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income.

I am in the camp of the opponents. I also realize politically this is an issue that will go nowhere any time soon. However, I don’t use the “opponents’ logic. It’s deeper than that.

Presidents and Congress use the tax code to set social agendas. Want to encourage marriage? Give a tax break for the married. Want to discourage marriage? Make taxes cheaper for individuals than as a couple filing together. Want to encourage people having kids? Give head of household tax breaks and deductions for every single child. Want to discourage having kids? Eliminate head of household and child tax credits. Want to encourage development of alternative fuels? Give tax breaks for corporations spending money developing alternative fuel technology. Wanna keep burning coal and oil? No tax breaks for alternative fuels.

Get the picture? It will be a cold day in hell before Congress cedes the ability to set social agendas. This power is more deeply ingrained than any other function of Congress. Pork is the individual lawmaker’s tool for setting local social agendas, the tax code is collective lawmaking body’s tool.

It is also the tool that needs to be in place when Congress sees a need to enforce a social agenda the public is unwilling to enforce itself. The general public is in absolutely no hurry at all to do what is necessary to rid ourselves of our dependence on foreign oil. It is up to Congress to do that for us. It’s a good start with Bush’s EPA policies giving tax credits to companies developing hydrogen and other alternative fuels. It would be even better to pass a tax credit for people buying hybrid autos. It would be even better, right now, to pass taxes penalizing gas-guzzling non-commercial vehicles. These three steps IMO would do a lot towards pushing this country to becoming less dependent on foreign oil.

None of these would be possible with only a national sales tax.

The math of how it would penalize the poor is a totally seperate issue.

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Side note: This post made me reflect on the very, very, heated debates me and Ken Meyer of The Motley Fool ( Foolishlyfree or JohnGaltII ) used to have on this topic.

Here’s classic Ken :

If the government can tax people because they drive the “wrong” kind of car, then they can tax people because they have the “wrong” kind of house (not enough insulation, wrong compressor, does he really need that air conditioner?), the “wrong” kind of landscaping (water flows through your yard into a creek which eventually empties into the ocean so it is a wet land), the “wrong” kind job (you want to design SUV’s?!?), eat the “wrong” kind of food (that Big Mac has too much fat, $50 sin tax), wear the “wrong” kind of clothes (leather? You want to kill an animal for you shoes?), etc.The government should not be in the role of making decisions for us. Whenever it does, it is one-size-fits-all, and one size NEVER fits all. Just because you put a smaller value on SUVs and a larger value on conservation does not mean that I should be coerced through taxes or forced through an outright ban to go along with it. I might decide that safety is more important than fuel efficiency. Who are you to tell me (via government coercion) I’m wrong? If spending more on gas is worth the added safety to me and not to you, why should you get your way and not me? Why should your code of values reign supreme? (Hint: it shouldn’t)If you don’t want me to buy an SUV, and it is worth more to you for me not to drive one than it is worth to me to drive one, then pay me not to drive it. You pay me. Keep the government out of it. If a lot of you want to get together and start paying others not to buy SUVs and form a non-profit to negotiate and pay us the money, I have no problem with that, either. Then let the market decide.

Ken died in a car wreck within two weeks of that post. I still miss our debates.

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