Monthly Archives: July 2011

Independence Day

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“Too often in recent history liberal governments
have been wrecked on rocks of loose fiscal policy.”

Here’s a revolutionary idea.

Independence Day commemorates our declaration of independence from the King of England. The revolution officially began two days earlier when the Second Continental Congress approved the legal separation of the American colonies from Great Britain, a resolution proposed by Richard Henry Lee of Virginia in June. After voting for independence on July 2, Congress debated and revised the Declaration itself for two whole days and approved it on July 4.

In the centuries since, only the 111th Congress has moved with anywhere near the speed of that first gathering, since the 111th Congress passed trillions of dollars of spending on millions of pages of bills in less than 100 days. And no one in Washington read any of them.

The Declaration of Independence fits on one page. Everyone in the Continental Congress read the whole thing.

In Peoria just one hundred fifty-seven years ago Rep. Abraham Lincoln said,

Nearly eighty years ago we began by declaring that all men are created equal; but now from that beginning we have run down to the other declaration, that for some men to enslave others is a “sacred right of self-government.” … Our republican robe is soiled and trailed in the dust. Let us repurify it. … Let us re-adopt the Declaration of Independence, and with it, the practices, and policy, which harmonize with it.

Lincoln spoke of the enslavement of persons. Today our republican robe is soiled and trailed in the dust by a government that would enslave We the Overtaxed People, taking more and more of our rights and our land and our life’s blood to its own purpose.

Just to rekindle our liberal friends, Franklin Delano Roosevelt made the “loose fiscal policy” quote.

The 112th Congress is back to its usual wiener roasts and Nero Claudius Caesar Augustus Germanicus is indeed still fiddling in Washington.

Two hundred thirty-three years ago today, General George Washington marked July 4 with a double ration of rum and an artillery salute for the soldiers who fought off the foreign monarchy that did enslave us. It is now time to mark July 4 with a double ration of electoral salute to those who would be the modern monarchy of government.



Much of our litigious life today grew out of English Common Law. We abandoned one really good idea in the first Revolution, though. We abandoned the No Confidence vote.

An earlier version of this column appeared in 2009.

FLAT-TAX

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Editor’s Note: This column is the second in my three-part series on taxes; it appeared in the Burlington Free Press in 1996. I have not updated the numbers.

I have met many people who think paying taxes is fair. I have met even more who think our current tax system is unfair.

Taxes on earned income are the most equitable way to raise revenue. Our income comes from our productivity: make a widget, sell the widget, get paid. Taxing land, cars, stock certificates, machinery, bank franchises, electric energy, and insurance is an artificial method to sneak money out of your wallet. Current tax laws do all that and more.

Politicians have made the flat tax this year’s buzz word. Unfortunately, these same representatives just passed the 12th “short term” spending resolution, instead of working on substantive tax reform.

I have long admired the flat tax in principle; in practice it has the potential for burdening the low income taxpayers who today pay little or no taxes and for hammering the middle class taxpayers who pay most of the bills.

We need four canons to make a flat tax work fairly:

  • Every wage earner pays a small percentage of his income as tax; income includes interest and capital gains but not dividends.

 

  • Every wage earner files an income tax return.

 

  • Every wage earner gets a substantial “personal deduction” and no other discounts.

 

  • Every wage earner pays a different percentage of any remaining income as tax.

Every citizen owns a piece of the federal government and each of us has a responsibility for its good operation. Let’s set a figure of 4% of income as the minimum cost of governance. Everybody pays that, regardless of their [dire or rosy] straits.

Obliterate the married/single/household head categories. That simplifies our calculations, eliminates all discussion of the “marriage penalty,” and assures we each file a return.

We ought not tax a wage earner for the cost of creating that income. That means we should exempt some common amount for basic shelter, food, and commuting costs but not spare any other expenses. Let us remember that the current tax code grew out of a fairly simple system. Once upon a time, our income tax taxed income; then the politicians and special interest groups changed the code to foster social change. Want everyone to buy a home? Grant a mortgage deduction. Need more babies to work the fields or factories? Create an exemption for kids. Need to work those oil wells? Concoct a depletion allowance. Make the personal deduction $21,500.

After deducting that $21,500 from your paycheck, pay an additional 24% percent on whatever is left.

If you earn less than $21,500, you owe 4% of what you made. Period. If you earn more, the flat tax percentage assures you will pay a little less than today’s tax schedule demands.

“But wait!” you say. “Gomer Gotrocks netted half a million last year. The tax table says he owes $145,072 but under your plan he’ll pay $29,372 less in taxes. He’ll save more than I make in a year!”

Reality check. Anyone clearing half a million a year can find $100,000 in effortless deductions today. With those “small” deductions, the tax table says Gomer now owes only $114,072. That’s a wee bit less than the expected $115,700 flat tax on his half million. Now imagine this dream in living color; Gomer can actually find a lot more than $100,000 to subtract today.

This plan gives folks earning under $8,800 a small financial stake in governance for the first time. It also makes taxpayers earning between $40,000 and $65,000 and those earning over $200,000 pay a little more.

We may have to fiddle with the percentages and deduction. My rates and deductible may not produce enough revenue to run Washington. If that’s true, we have two choices: (1) change the tax rate or the deductible, or (2) put Washington on a diet.