Monday, September 24, 2007

Death and . . .

I was listening to NPR, which was offering a special discussion of tax reform, and possible plans for re-hauling the progressive income tax system. Most especially discussed was the fair tax plan, specifically the National Sales Tax -- a broader-based consumption tax of all products, including consumer goods, health care, and real estate -- which would be a lead to a 25%-38% tax rate, creating a mid-40% markup on products.

I am no economist in the remotest sense, but the NST seems to me to be an exercise in the typical political game of false advertising. Everyone on the political spectrum is guilty of this when it comes to taxes -- proposing a system that sounds fair, even though anyone seriously considering this knows that it would be unbearable to the economy and impossible to enforce. Such a thing would be possible if it grew organically with a society, but simply applying it one day to the world's most complex economic player is ludicrous.

Certainly, though, some kind of flat tax -- however it is managed -- could be applied to replace our progressive tax. But, like it or not, we are going to have to remain income-based. The question of whether or not to tax income or consumption is much less significant than the issue of progressive tax (besides the fact that most people seem confused as to which -- taxing income and investment, or taxing consumption -- most stimulates capitalistic growth).

The progressive system strikes at the heart of democratic principles -- taxation and representation. When combining that revenue system with the government who spends that revenue, we have something akin to 9 Nazis and 1 Jew developing a racial policy. We have 80% of the voters getting to determine what to do with the 20% group's money. It's not hard to see where that's going to go. And in the midst of it all, the 80% claims that they have it hard.

Progressive tax stifles incentives for the lower and middle classes, while creating the largest burdens on the biggest capital contributions to the whole economy. So the worst and most putrid limbs of capitalism -- consumerism -- are still fed, and the roots -- entrepreneurialism and growth -- are continually being hacked off short.

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