It’s campaign season, so that also means that the public,
the media, the political parties, and a plethora of special-interest groups
will be striving to bring the electorate on board, to bait you with something
you want, to hook you with some attractive emotional lure. This is not unusual,
in fact, it is the very essence of a political campaign: trying to win over the
hearts and minds of the voters. So this season is like those that preceded it.
The politicians are trying out various forms of bait to find those that are
effective in getting nibbles from this years’ stock of voters. Fairness is a
recurring component in several of the newly refurbished lures.
Voters are attracted to an eclectic set of lures. Given the Family:
Voter, we can find a wide range of species and sub-species that appear to have various
genetically triggered compulsions for one particular type of lure while other species
are irresistibly drawn to different bright and shiny items. Among the lures
required by any candidate trolling the depths or shallows are the must-have
standards: foreign policy, healthcare, National Security, Jobs, the Economy,
and oh yes TAXES.
Not surprisingly we are seeing candidates’ Tax Plan
proposals being cast onto the scene in hopes of snagging a few voters. New tax approaches
to resolve the problem that has so cunningly evaded any effective or successful
strategy for decades. New creative ideas to excite the public so as to entice
taking a bite. Feeding on how their frenzied frustration, anger and disdain for
the current tax code and the IRS. Innovative plans that completely change the
cost of government to the public and to businesses.
Well, maybe not actually new, or creative, or innovative
ideas but at least they are plans so that’s something. It’s not really
important that the plans aren’t new solutions, because the salient issue is
whether our nation’s tax system can be improved. Isn’t that really what the
voters are looking for? A tax system that is “fairer”, that improves the
nation’s economy, that helps families afford a decent lifestyle, that promote
business and growth, and that delivers the government and government functions
required to sustain the nation. All the things that the public wants, and candidates
are solicitously promising, that their plan will achieve; particularly a “fairer”
way of taxing.
But is every plan able to deliver the same results? Because
if every plan can solve the problem then it must not have been that hard. Isn’t
one plan better than another? Because if they all provide for the same “fairness”
and the same value then does it matter whose plan you prefer (or which
candidate)? Are all plans at least better than the current tax system? How
would we know? Because if they’re not then aren’t we just going to be reeled in
to feed the system rather than being taught how to fish so we aren’t dependent
upon a ‘catch and release’ campaign returning us to the same pool?
I believe that there is a way to answer those questions. It
may seem a little strange and certainly it’s unusual, and it goes against every
rule of political campaigning; but maybe voters deserve a little more than they
are getting, just like they deserve a better tax code than the one they
currently have.
Every voter wants a “fair” tax code. Ok, almost all voters
do; or the majority do. Enough voters want a “fair” tax code to make having one
in your campaign important. And having “fairness” being a key element of the
new plan is the only way to bait the hook and satisfy them. So given how important
“fairness” is, what exactly would a “fair” tax plan be? What is “fair”?
Surely a “Fair” tax code in a democracy would treat everyone
equally. Now equally doesn’t mean everyone pays the same dollar amount in
taxes, no one is as moronic as to expect that. Equally means that there aren’t
special rules and circumstances that would advantage one person or group over
others; no special exemptions, deductions, loopholes, credits, incentives,
nothing that makes it un-“fair”. Except is a system that doesn’t recognize some
or any special rules and circumstances really “fair”? Is having no deductions
for children/dependents and taxing a family of four the same amount as an
individual or couple with no dependents dollar for dollar the same amount when
their incomes are the same “fair”? What about being blind? What about
deductions for home mortgage interest? Excessive medical expenses?
It is not self-evident that “fairness” is excluding all else
from consideration. In fact, if there isn’t any reason to take into account special
circumstances why is there a different tax rate for income versus capital
gains? Is it “fair” to tax one form of earnings less than another? We all know
the rationale used to treat the two forms of earning differently, but that
doesn’t explain why the two tax categories is “fair” just that there is a
reason (and we believe a benefit) for the unequal treatment.
Being realistic no one is expecting that the tax system will
be perfectly “fair” but we are looking to ‘fix’ the blatantly un-“fair” present
system that isn’t even close to “fair” or treating everyone equally.
Except does the present tax-code treat people unequally?
What if it actually treats everyone exactly the same? Now since it is a very
complex tax-code, and there are tons of exemptions and ‘this’-s and ‘that’-s;
let’s focus on the progressive rate method. That’s unfair right? As you make
more, we tax you at increasing rates. It’s like you’re being punished for
succeeding. But not actually, since the progressive rate method taxes everyone
exactly the same. Just like the “flat-tax” method, and just like the
four-tiered Trump plan, or the ‘this many/that many’ tiered plans. The
particular rate schedule method doesn’t tax you differently, so how many rates
you have is a red-herring. Don’t be distracted by the notion that the rate
makes the difference, it doesn’t. Under every plan, every one, you will never
pay more or less than anyone else for the same amount of earned income. Every
American pays the same tax on the first thousand dollars of taxable income, for
the first ten thousand, hundred thousand, million, ten million and billion.
What differs is that not everyone earns a million. But you and the millionaire
and the billionaire each paid exactly the same amount of taxes on that first
thousand dollars of taxable earned income.
The “fairness” isn’t in the rate table, or in the flatness
of the rate, or number of tiers, or the difficulty of the math. If that was where
the “fairness” really was then even our elected politicians could have solved
this problem long ago. And any of the candidates running today would be able to
solve the problem (unless they have done something really, really stupid with
their plan that would be just unexplainable). But the rate structure isn’t
where the unfairness is, the unfairness is in the complexity of the special
rules and circumstances that alter what is or isn’t counted as taxable earned
income.
To get to “fairness” the questions that need to be dealt
with are much more difficult than picking a rate. Those answers will require a
clear and understandable rationale for a tax policy and even a taxing rate
structure that addresses fundamental aspects of our nation, it’s economy, and
the preservation of our democracy. We will have a “fair” tax code when we have
agreed how to handle the needs of the people and the nation in a manner that
meets our responsibilities to our freedom.
