Saturday, April 15, 2006

This Day is Very Taxing to Me

I suppose I couldn't let April 15 go by without doing my almost-annual tax rant...but then again, it's also "Easter Eve" (although hardly anyone ever uses that term) and I'm in a good mood, so I think I'll let my 2003 rant (one of the very first posts on this blog) stand on its own (in a nutshell, I discuss how the self-employed get taken to the cleaners by the current system).

But since it is that day that nearly everyone dreads (even if, technically, it's on Monday this year, since the actual day falls on a weekend), I will toss something out to the readers: It's obvious that something ought to be done about our bloated, confusing (and maybe not fair-to-all) tax code, but what's the answer? I'm not sure that the flat tax would do the trick, but I'm a pretty big fan of a consumption tax...in other words, get rid of the current system completely and just have the government collect all its money by higher taxes on consumable goods.

I haven't crunched the numbers on this idea, but it sure seems like it could bring in a ton o' cash. Some have said that it would be unfair to poorer people, but I would respond...how? If you buy more stuff, you pay more tax. A Lamborghini would take in way more money than a bicycle. (In true fairness, food and medcine could still be exempt from this tax.) There would be a few things to work out, such as how charitable contributions might go into the mix, but it seems as though a consumption-based tax would get rid of a lot of questionable loopholes that people use now, and it would go a long way towards ending the problem of the underground economy that we all know exists already.

Is there anything I'm missing here? Talk to me! (UPDATE: I didn't end up finishing this post until the day after I started it, but everyone should have been enjoying their holiday weekend anyway instead of sitting around reading blogs...so go ahead, comment away; this post ain't stale yet.)

IN THE COMMENTS: A lot of people are pointing out that the government might get less money if a consumption-based tax were to go into effect. I'm not sure I agree with that, but what I do believe is that "starving" (i.e. downsizing) the federal government is not a bad idea at all...

Fun with taxes: Yes, that phrase is usually an oxymoron...except when you visit this page from snopes.com.

Someone's going to be bowled over by this: The winner of an upcoming bowling tournament in North Dakota will be awarded an unusual prize: the bowling alley itself.

6 comments:

Steven said...

It'll take a long while to get the upper echelons of government to rid the income based tax we have now. The reason it's in place now is because, duh, it offers more money to the government. Also,rich people on the average spend a smaller percentage of their income than middle and lower class people. If a consumable goods based system were in place, the government would actually be getting less from richer people and a bigger strife would lie on the majority, because they can't just tax luxury items. They would have to tax things everyone buys.

Gary P. said...

I think campaign contributions and aggressive lobbying from tax attorneys, financial planners, and tax preparation services will make the current system hard to get rid of. If a true simple flat tax system ever comes to pass, a lot of those folk are going to be looking for work. The same is true for IRS employees themselves.

Shawn said...

I am rather stupid at this, but isn't everything taxed anyways? Where does that go?

Kev said...

Steven--the very rich may well spend less of a percentage of their incomes on stuff, but the stuff that they buy...wow. Think of the sports stars and their five or six cars. I think they'd get their money all right, and if not...anyone argue that a smaller government is a bad idea?

Shawn--sales tax as it stands now goes only to state and local governments, not the feds.

Kev said...

" If a true simple flat tax system ever comes to pass, a lot of those folk are going to be looking for work. The same is true for IRS employees themselves."

And this is bad why??? ;-)

Steven said...

Even with the large expenditures by richer people, the government makes more money as is. But yeah, a big hunk of the problem could be fixed with smaller government. Quality over quantity I say. As well as better spending, blah blah worms everywhere blah blah...