October 13, 2005

While you and I go about our daily business, a Presidential Advisory Panel is at work. Actually, I doubt there’s been a time in recent memory when one wasn’t formed or meeting or in-the-process-of doing one presidential thing or another.

It’s classic politics when you haven’t a clue, to put together an advisory panel. A blue-ribbon committee is another vehicle. I’m not sure if a presidential advisory panel outranks a blue-ribbon committee or not. This one was called by President Bush 'to examine large-scale alternatives to the tax code.' Large-scale was not defined and perhaps should have been.

Expenses paid, nice hotels and damn fine restaurants, it's a pretty good gig.

This is a bi-partisan no-obligation advisory panel, whose advice the president is invited to accept or reject or simply sweep under the Oval Office rug. Those are the best kind. Polls show that presidents prefer them twenty to one over panels they have to do something about.

But this one suggests as a breakthrough ‘large-scale-alternative’ to take an aspirin and call them in the morning. Pretty much the same advice doctors have been giving hypochondriacs for years. Something, anything to send them home and get them out of the office.

The panel’s Bayer-advice is to ‘reduce the amount of mortgage debt for which interest is deductible’ and ‘cap the amount of health insurance premiums an employer can deduct at $11,000.’

Well, those are pretty amazing and astounding breakthroughs. These recommendations surely comprise a couple of truly ‘large scale’ alternatives to the tax code. I’m stunned by the reckless abandon with which these bipartisans ripped into the heart of the 55,000 page document.

Rounding up the usual suspects, the members recommended additional tax breaks for charitable donations, removing the alternative minimum tax and on and on. Fiddling. Rome isn't burning yet, but it's getting warmer and they're fiddling . . . fiddling.

Face it, bipartisanites, the income tax is a broken leg and the country has been hobbling around on it, hopping from one unfairness to another for ninety-two years . . . long enough. Certainly too long to be given another aspirin or to be treated for hypochondria.

The sickness of off-shore wealth, millionaires paying no tax, billionaires paying damned little, homeowners pocketing a public contribution to their home ownership, as well as the widespread perception of unjust application is evidence of serious disease.

77% of the American public agrees that the Tax Code needs major reform or complete overhaul.

And yet we are overwhelmingly supportive of taxes, as we should be. But you and I and our neighbors didn’t expand and manipulate and mess with the 1913 law that took 1% of all net income above $3,000. Lobbyists wrote those 55,000 pages. Special interest groups sprung up over night like mushrooms on the forest floor, each with their own manipulation, until the code grew to the point that it is undecipherable. It contradicts itself unendingly.

It has become a tool so murky that government no longer has to prove you at fault, they merely declare it and you are required to prove your innocence.

The Internal Revenue Service needs to be abolished. Dump it, burn it, blow it up. Get rid of personal and corporate income taxes, do away with payroll and self-employment taxes, scuttle the capital gains, gift and estate tax, shrug off the alternative minimum tax and earned income tax credit.

That low rumble you hear in the background is all the attorneys and tax-preparers and accountants beating their heads against their walls in protest of that idea.

Many of them would have to find honest work, tilling the soil or flipping burgers. This is one idea the acceptance of which could not be attributed to harming the economy. The economy would positively take off, producing jobs and prosperity beyond our wildest of dreams and we have among us some pretty wild dreamers.

Think about this: A very large proportion of personal income taxes are collected and paid through payroll deduction. But corporations do not pay the income taxes of their employees, they collect them from consumers through prices.

Thus automobiles and refrigerators, books and bras and underwear manufacturers are all charging you and I the cost of employee deductions. Not only that, they charge us the cost of charging us; it costs business over $500 billion yearly to collect taxes. It costs small-business $724 to collect and send off $100 in taxes to Washington. How much sense does that make?

Immediately after the Second World War, corporations paid more than a third of all tax, now they pay less than 11% because they are voluntary taxpayers. That's a tricky word. Voluntary doesn’t mean you can pay or not, it means you can take advantage of the law to not pay. Guess how that happened? Lobbyists for big business made it happen.

Unlike 1945, today’s business world is largely without borders and big companies, like wealthy individuals, are more and more ‘residents’ of off shore tax havens. Oh sure, the have a Park Avenue duplex or a corporate headquarters in New York, but they actually live in a dusty back-alley in Grand Cayman. Yeah! Getting rid of the income tax would bring $6 trillion back home.

Getting rid of the tax code would make us competitive again.

Get out of the Archives and read what Jim's writing today