I consider myself a fairly intelligent and well-informed person. However, I will admit to being confused, overwhelmed, and downright befuddled by both obama's and Romney's proposals to change the tax code. To me, this is a perfect opportunity for radical BPR. The federal tax code is an incestuous, unmanageable, and un-understadable tangle of complex, confusing, and contradictory regulations. It's time to toss the whole damn thing out and start over.
Scott Burns agrees with me.
He's lanky, white-haired, calm. Listen to him for a few minutes and you sense great patience, stunning analytical abilities, and a sustained passion, untainted by malice. His name is Leo Linbeck Jr. His company has built some of America's most striking buildings.Got that? 73,000+ pages of tax code! Who the hell can comprehend that much crap?
But I've come to talk about a different kind of construction, our tax system, which is broadly acknowledged to be one of the most wretched things ever built. I've come to Houston because Linbeck is a prime mover behind the idea of a national sales tax, one that would replace the entire 73,608-page tax code.
While our tax code has been called "an abomination," it is now clear that both political parties intend to do no more than tinker with the abomination, in different ways, to rebuild America to their vision. Neither party sees that our tax code is central to our current economic mess. Linbeck thinks differently. He says that to rebuild America, we need a brand-new tax system.Revising the existing abomination is the fiscal equivalent of arguing about how to rearrange the Titanic's deck chairs. Instead, let's concentrate on keeping the ship afloat.
When I asked how the idea came about, I was surprised by his answer. Nearly two decades ago, he was having lunch with two friends. One, the late Jack Trotter, suggested that the biggest single problem in America was its tax system. Businessmen all, they agreed and decided to do the research and development for a tax system that would work.How about that? A tax code that both businessmen and economists can agree on. And one that even liberals would have a hard time arguing isn't 'fair.'
That's where a lunch conversation ended and the heavy lifting began. Finding little academic work on differing tax systems, they selected 25 top economists and asked if they were interested. All 25 were. They narrowed the group to eight, including Martin Feldstein at the National Bureau of Economic Research, James Poterba at MIT, Laurence Kotlikoff at Boston University and Dale Jorgenson at Harvard.
The result was a bold idea: Replace the current mess with a national sales tax. Tax consumption and only consumption. Eliminate the income tax, the employment tax and the corporate income tax. Just tax consumption.
"It's very progressive, but on a discretionary basis," Linbeck said. "If you buy a Bentley and I buy a Ford, you'll have to pay about 20 times the taxes I pay. People that spend more money will pay more taxes."There's something else to think about. These people spent millions of dollars of their own money to come up with a way to improve our country - to make the tax system simpler and fairer. If that isn't the definition of public service I don't know what is. It damn sure beats the hell out of community organizing (whatever the hell that is).
Then they spent millions to test "the market" for the tax. Result? Not only would it work, but the name FairTax came out of one of the consumer panels as well. "All I want is a fair tax," one of the panelists said.
If the people liked the idea and understand it, I asked Linbeck, why isn't it the law? And that's where I learned, once again, that the problem lies in Washington.Amen to that, brother.
They tried to get the FairTax idea, as a piece of legislation, through the House Ways and Means Committee the usual Washington way.
After six months they gave that up, Linbeck said, and decided to follow a grass-roots path.
"I'm convinced that what we have for government is a contemporary form of feudalism," he told me.
"We have an elected elite, their staff, lobbyists, the academics. Perhaps 100,000 people. It's a relatively small number of people, well-educated, well-intentioned, not bad people. But they believe they ought to decide. They gravitate toward complexity, not simplicity" Linbeck said. "If you accept a simple idea - that complexity creates opportunities for manipulation - then you can immediately see that the largest single tool is our tax system."
Alas, the idea may make too much sense to go far in Washington.
Go here for more information about the Fair Tax.
And if you agree, contact your congresscritter and
My father used to say that if enough people beat their head against a wall, eventually the wall will fall down.
It can't hurt to try...
4 comments:
And the tax code is 73k pages of constantly changing rules. Here is a link to a document that lists the federal provisions that are expiring between 2010 and 2020.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." 16th Amendment
I guess they could figure out a way to "tax the income derived from the sale of wholesale and retail property". But I have a feeling that would leave the barn door very wide open, and the IRS in place, and really 'no change' to the Federal Register.
Now if we repeal the 16th Amendment first --as it's suicide not to-- and then try to pass another on a Federal Sales Tax, that should give us enough time to totally kill the Federal Budget long enough to reset the Debt back to 'Zero'. Right?;-)
"Article I, Section 8, Clause 1:
The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."
OK! This old clause might work. But 16's gotta' go, can't leave it in place! Then the big savings come in! "Sixteen Goes Or Fight!" "Sixteen Goes Or Fight!" Where's all those Tea Party folks?
Harper - "constantly changing rules"
Excellent point.
Pascvaks - I'd love to see the 16th amendment repealed. I'm not holding my breath, though.
There is a case pending before the Supreme Court, however,, that challenges the definition of "income."
The argument is that salaries and wages are the result of the mutual agreement among participants to exchange labor for money – and that’s not income.
Income, instead, is the increased value of an asset, such as interest on money in a bank account, which can be subjected to income tax.
It'll be interesting to see how that plays out, although again, I'm not holding my breath...
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