jeudi, mars 31, 2005

A Republican Proposal I Like, A George Will Column I Admire

I have spent a fair amount of time thinking about this proposal. After much thought, I have decided that, if nothing else, I prefer this proposal to our existing tax policy. I see it as a step in the right direction.

Why I support it:

Representative Linder’s proposal has a component to address the regressive nature of sales taxes (though I would exempt types of purchases (like groceries and non-luxury clothing) as we do in Minnesota instead of the proposed rebates).

The tax code is in desperate need of simplification. Opponents love to point out that the tax code is 55,000 pages long. Linder’s proposal would make the code fewer than 150 pages long.

The current code favors the rich and provides more loopholes and escape hatches for them than it does for the middle class and poorer classes.

The delta between what the IRS collects and what it should collect is “strong and getting stronger.” At present it is approximately $300 billion per year. That’s $6 billion per state that could be used for social programs, homeland security, public golf courses, etc.

A simplified tax code decreases opportunities for dastardly tax cheats.

A simplified tax code decreases the number of IRS agents that are needed to oversee the revenue services.

A simplified tax code, by decreasing opportunities for tax cheats, increases revenue, which could lead to more spending options or to a decreased tax burden.

Inequities in the current code (where the wealthiest – by virtue of laws that skew to their favor, sometimes do not pay federal income taxes at all) are reduced significantly.

You have the ability to choose what you buy, and therefore, citizens have more control over how much they spend which translates into some influence over the rate at which they are taxed by the federal government. For example, I might get the Saab 9-3 instead of the Saab 9-5. I may also get the Hybrid Accord.

It applies to corporations as well as individuals. Under this proposal, they will pay a larger share of what they owe. Corporations used to pay 24% of all taxes paid, they now pay 11%.

Mrs. Duf and I will no longer employ an accountant to prepare our taxes (yes, we employ an accountant to prepare our taxes - we did it once when Mrs. Duf was working as an independenct contractor, and it was so addictive, we never stopped).

What concerns me:

Though I like the bill, I worry about the impact of a 23% federal sales tax on the purchase of durable goods. Presumably, we keep more of our income (I pay approximately $700 in federal income tax per month) so that when I buy my Saab 9-5, I won’t mind paying $9,200 in federal sales tax.

The monthly rebate seems like it will require a lot of administrative support. The infrastructure to maintain it seems like it will be unnecessarily large.

I can already feel the black market developing and miscreant industries rising to “devalue goods” or create options for those who can afford to avail themselves of those cheater's exits.

Last, if corporate America used to represent 24% of taxes paid and now represents 11% of the taxes paid, why do I feel like they will transfer their 13% increased burden to the work force or to consumers instead of addressing the unreal problem with executive compensation?

We like our accountant and would miss visiting with him every February (he always seems so happy to see us).

All that notwithstanding, I like this idea and I hope it happens.