Let me tell you about a very conflicted young man named Theo Hillman. Theo is conflicted for a lot of reasons, but one of his biggest issues is reconciling his upbringing in a life of privilege to the suffering of those at the other extreme of the socio-economic spectrum.
Theo’s solution to his guilt complex is to distance himself from his family, and force wealth redistribution from those disinclined to distribute it themselves.
In other words, he robs them.
Theo’s upbringing isn’t the only thing that makes him unusual among thieves. What baffles his partners in crime is that he doesn’t keep what he steals. He’s a modern Robin Hood in the sense that he steals from those whose gains have been most dishonorably obtained and distributes the loot to those he believes are neediest.
If you haven’t already guessed, Theo’s a fictional character. I’ve created him for the novel I’m working on. But as I work on this novel what’s in the back of my mind is taxation and spending. After the stalemate in Washington in recent weeks and now with the deficit panel about to tackle the goal of reducing the deficit by $1.5 trillion over the next ten years, it’s top of mind for many of us.
Warren Buffett raised one issue yesterday in his New York Times Op-Ed piece. But there’s a lot more to our tax problem than whether or not the mega-rich pay a fair share. I wonder if the system fundamentally does what the voters want it to.
I don’t think there’s anything objectionable about taking some amount from the rich (those earning enough to be subject to taxation) and giving it to the poor (in the form of Welfare, Medicare, food subsidies, child support, etc.)—or applying those taxes to a host of other purposes for the common good. But the tax code goes well beyond assisting the underprivileged and otherwise supporting the needs of society. It manages what activity gets taxed and how much, the choice of what offsets tax in the form of tax credits, the selection of what’s deductible and to what degree, and how shelters are devised and exploited. All this creates a system that through bypassed tax opportunities rewards behavior we’re supposed to like and through increased taxes penalizes others. That’s more social engineering than revenue creation.
Is that bad? My answer: It depends.
I’ll tackle that later.
For now, here’s my top 10 list of tax topics. What’s your hot button? Is it:
- How and whom the code rewards and penalizes?
- The prosperity-based system itself?
- The complexity of the system?
- How the system fails to bring in enough money in depressions/recessions when we need it most?
- The level of tax rate progression as income rises?
- Individual versus corporate rates?
- How the US code compares to those of other advanced countries and how that impacts our competitiveness and ability to retain a domestic corporate tax base?
- Congress’s process of enacting taxes?
- The conglomeration of federal, state, local, sales, payroll and other taxes?
- Inefficient and unwise spending?
All of the above? Something not on that list?
Let me know what you think. When you post, remember our Rules of Engagement, listed to the right.
But at the moment, Theo and his new girlfriend Ysabel are waiting for me to get back to their story so they can tell me what happens next.