And I do not advocate replacing the federal income tax with a tax on sales, which is what most people who object to the income tax seem to see as our only (and therefore their best) option. (They call it the "FairTax" but I can't figure out who it is fair to. It is certainly favorable to our highest income people, but I don't think it is fair to anyone -- or good for our economy.)
Who among you fills out his or her own income tax forms with simply pencil and paper and calculator? Who among you does a relative's tax filing that way?
When people who are completely able -- and very motivated! -- to hire the very best tax accountants cannot manage to file a complete and accurate tax return, it is clearly time to simplify our tax code. That is the right first step, and ought to happen rather quickly, with the understanding that the replacement will be a temporary one.
There is a far better tax base available to us, and we ought to be moving rapidly to adopting it. No, not the so-called FairTax -- that's the last thing the bottom 95% of us, or our economy, need.
What ought we to tax? Let's eliminate the things we ought not to tax. When we tax something created by humans, we get less of it. That's the law of supply and demand at work.
We shouldn't tax labor. We shouldn't tax activities which create jobs. We shouldn't tax buildings. We shouldn't tax sales. We shouldn't, for that matter, place the costs of healthcare on employers. What's the line ... no good deed will go unpunished?
Adam Smith provided us wise guidelines in how to judge a tax. How many of our legislators know them? (How many legislators think that the more important guideline is what best suits their largest contributors?) How many of our taxpayers, even those who were economics majors -- or government or political science members, for that matter -- know them? His guidelines were known as the Canons of Taxation. You can read about them at http://www.wealthandwant.com/themes/Canons.html
We ought not to be discussing tax policy without a full discussion of each option in light of this perspective.
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