Let's talk taxes.........................................

It can be difficult to ask good questions without exposing your own bias.  Friend Bilbo poses ten questions he would like debate participants, and candidates at large, to answer.  Even though his slant seems obvious, I'd like to hear the answers too. And maybe even offer one or two.  Let's start with this question:

2. Do you believe the current tax code is fair to all Americans? Would you consider changes to the tax code which close loopholes or raise taxes on corporations and the wealthy in order to even out the average tax burden? If so, give some concrete examples of loopholes you would close or taxes you would raise.

Important questions defy easy answers.  The current rage of sound-bite politics seems to penalize thoughtfulness.  Regardless, here is one attempt to respond to the question:

To answer the question fairly, one must first ask a few questions.  What does "fair to all Americans" mean"?  While statistics can be misleading, if you ask the Oracle Google how many Americans, who were required to file a federal income tax return, paid zero tax, the answer will come back that, in 2013, 43%  paid zero tax.  

Next, what does "even out the average tax burden" mean?  If you ask the Wall Street Journal, maybe not an unbiased source but one we will use until a better source is found, 84% of the federal tax collections from individual returns in 2014 come from the top 20% of earners.   Now that you mention it and if you check the chart below, it does seem pretty uneven.  Probably not in the vein the question implies, however.

Before we go much farther, it should be noted that the the current system is fairly effective at raising revenue.  The first chart shows that generation of actual dollars to the federal government has never been higher.  The second chart shows the growth in revenue as a percentage of GDP.  The money seems to be flowing in quite nicely.

Some context:  Federal income taxes were non-existent, and not constitutionally justified, prior to 1913, when the 16th Amendment to the Constitution was ratified.  As a side note, this amendment, depending on whose history books you are reading, was enacted in large measure due to the influence of the alcohol prohibitionists.  In 1900, 60% of the internal revenue collection in the United States came from alcohol excise taxes.  Prohibition was impossible without first replacing that revenue.  The 16th Amendment, allowing the federal government to directly tax individual income, was a significant response to that problem.

In the early days of  the income tax, its main purpose was to raise revenue for the government.  Eventually though, Congress figured out that fiddling with the tax code was an easy and painless way to do a bit of "social engineering."  A deduction here, a credit there, and tax-payer behavior could be modified.  (Not saying this a terrible thing mind you.  Personally, I like the preservation of historic buildings and have undertaken some of that.  Each time, we were rewarded by a tax credit. Also, I've noticed that the mortgage interest deduction is fairly popular with much of the real estate industry.)  The problem with such fiddling is that the current tax code is now largely impenetrable for the layman, being more than 74,000 pages.

Maybe thirty years ago or so, if seems like Congress's "social engineering" via the tax code morphed into something more dangerous.  Congress discovered that corporations, interest groups, and their numberless lobbyists  were willing to make serious campaign contributions - with the understanding that they were gaining access to the "ear" of the the congressperson in exchange.  More often than not, access to the "ear" meant whispering about some important tax break that benefited the whisperer.  At the risk of impugning men and women of integrity, the potential for fiddling with the tax code seems to have become a major source of campaign fundraising for Congress.  For people seeking special pleading, the complexity of the Code is one of its best features.  It has become a fairly simple proposition to slip an innocuous seeming amendment to some legislation that yields a special tax benefit to our special pleader.

As long as this is so, "tax reform" is hopeless.  Our friends on the left side of the political spectrum often cavil about "money in politics" and about the rich and corporations "not paying their fair share."
There is a solution, although I don't think they will like it - a flat tax.

Congress will never pass such a thing, but.........

Consider this:  a constitutional amendment setting forth that the sole purpose of the tax on income is fund raising for the Federal Government.  All net income, from any source, gets taxed.  No deductions, no credits, no loopholes.  To retain the ever-popular "progressive" nature of the Code, Congress would have the ability to set rates within four or five narrow bands based on total net income, say setting a minimum rate of 2% and a maximum rate of 20%.   (I am very aware that the debate over the meaning of the word "net" could be interesting and intense.)

Here are a few benefits:  Everybody is treated fairly and granted the dignity of participating in feeding the "goose that lays the golden eggs";  the wealthy and corporations will actually pay more once all the special tax treatments are removed from the code, evening out the average tax burden;  accountants and tax attorneys can find more a productive line of work than devising intricate loopholes and fencing with the IRS; a major reason for the wealthy and corporations to fund politicians and their election campaigns will disappear; and finally, everything becomes more transparent.  What could be more fair than all of that?

Anyway, although nobody asked, that is my answer to question #2.  A guy can dream, can't he?