| |
Efforts to halt the income tax in Massachusetts have been spearheaded by
the Committee for Small Government which has succeeded in placing the question on this year’s ballot.
Elimination of the Massachusetts income tax would supposedly give, on average,
a $3,600 tax refund to 3.4 million Massachusetts workers. The ballot question is binding, so if the majority
of Massachusetts residents vote in its favor, the tax relief would begin immediately, with a 50-percent
decrease in the income tax rate beginning on January 1st, 2009, and the remaining 50-percent abolished
one year later.
Despite opposition from legislative leaders, the income tax question was
added to the ballot after the Committee for Small Government collected 76,084 signatories certified by the
state Elections Division in 2007 and another 15,913 in 2008. The ballot question, if passed into law, would
decrease current state revenues by at least 40 percent.
I will be voting for the elimination of the state’s income tax for none of
the reasons cited by the Committee for Small Government. To think that Massachusetts will simply reduce it’s
spending by the amount normally collected in income taxes is foolishly naïve. Eliminate the income tax and the
politicians will replace the income with increases in sales taxes, property taxes, gasoline taxes, etc.
There will also be increases in fees and mandates. In the end, the politicians will find ways to collect
whatever amount they decide is necessary.
So why will I be voting to eliminate the income tax? I will vote to
eliminate the income tax in Massachusetts because I hope that it will be a lead-in to eliminating the
federal income tax.
The federal income tax is a waste of time, energy, and money. In addition,
and perhaps more importantly, I want to replace the income tax with a consumption tax.
The federal income tax is a waste of everyone’s time, energy, and money.
J. K. Lasser’s Your Income Tax 2008 is 816 pages long. In addition there is a multi-page supplement.
Each year I typically spend an estimated 120 hours to record tax related transactions throughout the year,
to read through the tax preparation instructions, and in actually preparing and submitting my tax returns.
Consider what all this means to each and every one of us. We, as a nation,
are wasting the time of taxpayers (that’s you and me), the resources that comprise the legal, accounting and
other tax preparation organizations, and the need for the bureaucracy that we call the Internal Revenue Service (IRS)
and other governmental organizations that are involved in tax collection (including preparing and updating the
tax codes, investigations of tax fraud, and prosecution, etc.). This waste of resources shows up in the cost of
goods and services produced (you and I pay these costs) and in the reduced competitive position of the goods
and services we export because of their higher prices to cover the costs of lawyers, accountants, and
government bureaucrats.
According to an article on page 33 of the April 15th 2005 Boston Herald,
it takes Americans some 6.6 billion hours to do the paperwork for our tax returns. According to the government’s
budget office, tax work “towers over the entire paperwork burden for the rest of the federal government.”
The income tax code is an incomprehensible, multi-thousand page maze of inane regulations. Even the IRS can’t
understand these regulations. As often as not, if you ask them for a ruling, they will give you an
incorrect interpretation.
The time has come to stop this madness! The solution? Do away with the income
tax and replace it with a consumption tax, such as a national sales tax or value added tax (VAT). Let’s face it.
The wealthy buy more than the poor. Therefore, they’ll pay more with a consumption tax than the poor.
The more a person makes, the more the person will spend and buy, and the more that person will pay in terms
of taxes. You and I will stop wasting our time preparing income tax returns. The lawyers and accountants can
turn their talents to more useful pursuits.
According to Howard Banks (Forbes, August 3, 1993), “in its purest form,
a tax on consumption would replace the income tax and would tax only the money that people (or companies)
actually spend. Left in the bank, money earned but not spent becomes a kind of universal IRA, tax-sheltered.”
But, remember, the money earned but not spent will actually be earning more money through investments that
fund businesses which create jobs, improve services and lead to more domestic production.
As Malcolm Forbes noted in 1993 (How to win the tax issue: flatten it,
July 13, 1993), “Whatever the variant, a flat tax would trigger a volcano-like economic boom. The prodigious
amount of brain power and time now spent on coping with our currently incomprehensible tax code would be
released for productive uses. This redirection alone would hugely stimulate the economy.
“The flat tax would largely eliminate a powerfully corrupting influence on our political life. Countless
millions of dollars are given for tax-code-related purposes – fending off destructive changes, pushing
special-interest amendments.
“Fairness would be enhanced: The more you make, the more you pay. Striking disparities in taxes owed on
similar incomes would end.”
As reported in Forbes (March 28, 2005, page 56), even Alan Greenspan
came out in favor of a consumption tax. According to Greenspan, one advantage of a consumption tax is that it
encourages personal savings, which in turn will help to reduce our foreign trade deficit.
Merrill Mathews Jr. of the Institute for Policy Innovation in late 2007 wrote
that, “Karl Marx’s vision of a socialist society included a progressive income tax, where higher income people
pay not just more tax, but higher rates on their income. Ironically, while the U.S. and Western Europe tend to
embrace capitalism, they adopted Marx’s progressive income tax. Yet nine of the East European and formerly
communist countries have abandoned it for a flat tax, where only one tax rate is applied to all income.
And now Bulgaria and the Czech Republic are considering joining the flat taxers with a single 10% rate.
Having spent decades under communist rule, formerly communist countries are ready to cast off Marxist
policies that stifle economic growth - like the progressive income tax. So, when will the capitalist
countries also abandon their Marxist policies?”
The time has long since passed when we should have got rid of the income
tax and replaced it with a spending tax. If the income tax is eliminated in Massachusetts, maybe, just maybe,
the federal income tax can also be eliminated. Let’s get rid of the thousands of pages in the current tax code
and let’s replace it with a streamlined and simplified set of rules that everyone, including the tax bureaucrats,
can understand and follow.
As Albert Einstein said, “The hardest thing in the world to understand is the income tax.”
|
|
