Doctor Eclectic

Doctor Eclectic
Doctor Eclectic

Thursday, August 22, 2013

Tax Reform

Congress is about to return to session and one of the big issues that will likely be considered and postponed is Tax Reform.  I believe this is partially due to the fact that they make tax law too complicated in an effort to provide stimulus and protect the turf each member of Congress considers theirs.

WD PEO Calendar
Recently Mary was involved in a fundraiser for a charity that provides college scholarships to needy women.  It was tied to a calendar of events of the organization to call attention to what was happening in the month as well as raise a modest amount of money to support the college fund.  The hook was you were assessed for certain possessions.

Brilliant!

If we structured the tax code in a similar manner we could create stimulus, redistribute wealth, encourage good health and education, and return Social Security to what it was intended to do.

Here’s how it would work.

Every tax payer who makes any amount of money declares that income and offsets it only by legitimate business expenses.  There would be no exclusions for property, or education, or gas: just paper and pens and pencils and stuff.  Oh, and I guess rent if you are working someplace other than your residence.

Then there would be a series of thresholds to establish poverty level and upward gradients thereof.  Initially (each year) you would pay a small portion of the remainder as a base tax.  So, if you netted $23,500 (considered the US level for a family of four in 2012). You would pay nothing, but for every $10,000 above that your base tax would be 20% of that. So, if you made $223,500 your base tax would be $40,000.  And you couldn’t shelter your dividends as some lesser income.

Adam Smith
As a side note the concept of a poverty level came to this country when Adam Smith wrote Wealth of Nations in 1776.  He felt that a family of four or five not only had the right for adequate money to (purchase) not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without”.  Interestingly that now includes what has been termed  the “Obama Smart Phone” (with service).

But that’s just the start!  Here is where the calendar idea comes in: everyone would pay something for each pair of shoes in their closet made in another country.  Everyone would pay something for each hour spent watching TV or sitting at the computer (encouraging exercise).  Similarly each automobile you have would cost you something.  Cell phones wouldn’t cost you much, nor would personal emails or text messages, but tobacco, alcohol, marijuana and vices, like prostitution, wagering (even March Madness), traffic tickets and other misdemeanors could bring in a lot of loot.

And we could give percentage credits for things we would encourage; for example, we could issue everyone a pedometer tied to a massive iCloud database and credit a certain percent for every 100 miles, or photos of cookbooks with preparation stains on them might get you something.  You could get credit for the number of gallons of milk consumed, or even the number of American Flags you own. 

Don Novello
The Evangelicals could lobby for credit for church attendance or bring back some credit for charities (those with the lowest Administration costs would have the highest credit.  And while my initial thinking is that you should pay for the number of years you WENT to college, you might get credit if you were ATTENDING college or trade school.

Father Guido Sarcucci
This concept was captured in 1980 very well by Don Novello when as Father Guido Sarducci, he described Life is a Job. Where, when you die you get paid for every day you lived but then have to repay for each of your sins.  It is six minutes of humorous revelation.

I had so much fun in a recent post on Burt Bacharach that I think I’ll do one on another favorite who recently passed away: Elmore Leonard.  Hope to see you there.

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