Taxes
Start with two premises:
1. Taxes are the price we pay for living in a society.
2. Nobody likes to pay taxes.
That being said, there are some kinds of taxes that are OK, and some that are awful.
The concept of the Income Tax is good - it falls on citizens who have the ability to pay, and those who earn more, pay more - but the execution is terrible, with the exclusions, credits and deductions, and the incomprehensible Alternative Minimum Tax.
The gasoline tax is an OK tax, especially when the revenues from the tax are earmarked for transportation.
The sales tax a good tax in that its simple and easy to collect, but its bad because it falls disproportionately on the poor - the more of your income you spend, the more tax you pay. The income you save escapes tax. Pennsylvania mitigates the regressive nature of the tax by exempting food and clothing from sales tax, but this has the effect of complicating the tax (bread and lunchmeat are not taxed, but a sandwich is.) And, of course, nobody's figured out an easy way to collect sales tax on internet transactions.
One of the worst taxes is the Social Security Tax, which is collected under the fraudulently named the "Federal Insurance Contribution Act". Its a flat tax, it applies on your first dollar of wages, without any deductions; the fact that employers pay an equal tax on the wages it pays is a drag on job creation; it disappears for high wage earners; and does not apply to any other source of income, such as interest, dividends and capital gains. (Why do we tax income from our "labor" and not income from our "capital"?) The biggest problem in trying to fix Social Security is that the program was sold as an "insurance" program. Credit the President for educating the public on the pending collapse of this Ponzi Scheme, but he has yet to explain how taking money out of the system to fund private accounts will solve the problem.
To my mind, the Estate Tax is the opposite of the Income Tax - the concept is troubling (you're going to tax somebody because he died?), but the execution is pretty good. It falls only on larger estates, if there's a liquidity problem, the tax can be paid over time, and the assets of the estate go to the heirs valued, for tax purposes, as of the date of death. That means there's no income tax on the asset's appreciation while it was held by the decedant.
The taxes I like the best are those voluntary taxes, like cigarette taxes and the lottery. For the most part, I volunteer not to pay them.
1. Taxes are the price we pay for living in a society.
2. Nobody likes to pay taxes.
That being said, there are some kinds of taxes that are OK, and some that are awful.
The concept of the Income Tax is good - it falls on citizens who have the ability to pay, and those who earn more, pay more - but the execution is terrible, with the exclusions, credits and deductions, and the incomprehensible Alternative Minimum Tax.
The gasoline tax is an OK tax, especially when the revenues from the tax are earmarked for transportation.
The sales tax a good tax in that its simple and easy to collect, but its bad because it falls disproportionately on the poor - the more of your income you spend, the more tax you pay. The income you save escapes tax. Pennsylvania mitigates the regressive nature of the tax by exempting food and clothing from sales tax, but this has the effect of complicating the tax (bread and lunchmeat are not taxed, but a sandwich is.) And, of course, nobody's figured out an easy way to collect sales tax on internet transactions.
One of the worst taxes is the Social Security Tax, which is collected under the fraudulently named the "Federal Insurance Contribution Act". Its a flat tax, it applies on your first dollar of wages, without any deductions; the fact that employers pay an equal tax on the wages it pays is a drag on job creation; it disappears for high wage earners; and does not apply to any other source of income, such as interest, dividends and capital gains. (Why do we tax income from our "labor" and not income from our "capital"?) The biggest problem in trying to fix Social Security is that the program was sold as an "insurance" program. Credit the President for educating the public on the pending collapse of this Ponzi Scheme, but he has yet to explain how taking money out of the system to fund private accounts will solve the problem.
To my mind, the Estate Tax is the opposite of the Income Tax - the concept is troubling (you're going to tax somebody because he died?), but the execution is pretty good. It falls only on larger estates, if there's a liquidity problem, the tax can be paid over time, and the assets of the estate go to the heirs valued, for tax purposes, as of the date of death. That means there's no income tax on the asset's appreciation while it was held by the decedant.
The taxes I like the best are those voluntary taxes, like cigarette taxes and the lottery. For the most part, I volunteer not to pay them.
posted by Crotchety Old Fart at 3:32 PM
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