Regarding the Odyssey of Taxation
The reason that we have a national government is to provide certain services to us. We should expect to pay for those services and indeed, we do pay. However, the way that we pay is odd. The Constitution assigns to Congress 17 powers and also provides the power to “lay and collect” taxes, etc. Incidentally, the power to tax precedes the listing of those 17 powers – maybe that is why there is little correlation between the rate of taxation and the benefits provided.
For example, for each pack of cigarettes sold a 50 cent excise tax is collected to fund the Children’s Health Insurance Program (CHIP). I don’t think that children should pay for their health insurance, but it doesn’t make sense to have smokers pay for it either. In some cases a correlation does exist. For instance, fuel taxes supporting road construction and maintenance. In most cases it is impossible to measure the value of the benefit received by each taxpayer – I don’t know how to quantify the amount of national defense that I consume. Thus, it is necessary to collect a general tax, such as an income tax. However, our current income tax law is full of provisions that distort any relationship that may exist between the taxes paid and benefits received.
Most obvious, currently the more that you pay your state for the services that they provide, the less you pay to the national government for the services that they provide. If you pay interest to a mortgage company then your income tax may be reduced. (There is a good argument that the interest that you pay is income to another who pays taxes on that income.) For each dependent that you have your taxes are decreased – even though those additional individuals may consume more government services. And Child Tax Credits – have a large family and not only get government services for them but have your bill from the government go down.
Perhaps the local electric utility will start billing based upon the miles that we drive or the number of pets that we have. Maybe our grocery bills should be calculated on the size of our houses. Yes, those are ridiculous, but why should the government seek to provide services that garner votes and collect taxes from the easiest sources?
Jim Henderson
Fallon
