TheOneLaw Politics - Article 3: Better Taxation
No one feels that they are fairly treated by the current tax system. There are taxes and government fees of so many types on everything that you earn, purchase, or use. The purpose of taxation is to fund government but taxes are also used by politicians to reward supporters and to punish enemies. Politicians also attempt to use taxation to control behavior by placing extra taxation on products and services that the politician does not like and by providing subsidies (negative taxation) to companies that the politician does like. Oil companies are a favorite of politicians to target for extra taxation (i.e. windfall profits tax) and for subsidies (i.e. alternative energy research); does it make sense to tax and subsidize the same company even though the net effect will just be passed on to the consumer hidden in the price of gasoline. In the end all taxes, no matter where they are collected in the process, are paid by the retail consumer but because of the complexity and tax layering these taxes are not evenly distributed and are hidden from the consumer.
Libertarians believe that all citizens receive the benefits (and consequences) of government and therefore all citizens should pay taxes for those benefits and that NO citizen should be exempt from taxation. Government revenue can only be derived from the taxation of Income/Production (compensation for work), Spending/Sales (consumption of products and personal services), and/or Property. The Local, State, and Federal governments currently use all of these methods of taxation in creative and complicated ways to raise revenue for government operations and attempt to make the citizen feel that everyone else is actually paying more taxes.
Income taxes currently provide about two thirds of revenue for the Federal and most State governments. The Federal Income tax code is over 60,000 pages and is specifically written to exclude taxes on “low income” citizens and to provide tax returns to some citizens that do not pay income taxes. Almost no revenue is collected from the lower half of income earners. The complex Federal tax code also allows exclusions and deductions that tax lawyers and attorneys can use to reduce tax liability for those who can afford their services. This leaves the middle class to pay an unfair share of Income taxes. Taxes, by their nature, are a form of punishment and Income taxes punish and deter hard work. Punishing work is stupid and counterproductive to any society and should be eliminated.
Every State also taxes Property; most states tax the total Real Estate value of a property (square footage) and improvements (houses/buildings) and some States also tax some types of personal property such as cars and boats. States and Local communities also tax retail sales for revenue but these taxes are not usually not equally applied with exceptions for certain products like food and medicine and extra taxation (sin taxes) on products like alcohol and tobacco.
No citizen knows how much they actually pay in taxes and it would be impossible to determine because of the complex nature of the tax system. This leaves all citizens feeling unfairly treated by the government; it does not need to be this hard. The current system could be replaced by a simple taxation system that treats all citizens --- rich, poor, and middle class --- fairly and equally.
All State and Federal government revenue should be derived from an equal rate Personal Consumption Tax (PCT). The Personal Consumption Tax would be included in the final sale price all new products and personal services and paid by the individual making the purchase. The tax on products and personal services purchased by an employee in the course of business (expenses) may be paid either by the company or by the employee at the discretion of the company. This method of taxation would ensure that the tax would only be paid once and only at the point of consumption (cannot be resold at the same or higher price) by the individual making the purchase and consuming the product or service.
All Local government revenue should be derived from on an equal rate taxation of the un-improved property value. This would tax property based on the value of the acreage being used by that property owner and that could not be used by the community for other purposes. Adjacent properties within a community would have relatively equal value per acre and would be appropriate for the location. The current method of property taxation also taxes the improved value of the property which punishes improvement of the property and double taxes because taxes would have already been paid on the materials and services used in the improvement.
In future articles I will continue to develop how better government is possible. In the next newsletter the topic will be Article 4: Better Election and Personal Law. I am very interested in your feedback but I ask that your criticism be constructive and non-personal. Please recommend any issues or topics about politics and government that you would like to be discussed in future articles.