A statement we can all agree on: Taxes should be simple and transparent. The problem: Societies are not built according to plan.
Societies and institutions — from nations to schools to businesses — resemble forts built by grade schoolers.
You start with a hole in the ground, with a blanket in the bottom, then you put up walls and a floor above the makeshift basement, decorate it with sticks and flags and random colors of paint, maybe expand with a ladder up a nearby tree — and keep on going, up and out, like kudzu.
If you set out to plan an efficient government, it would look nothing like the mess we have today: a teetering, lopsided, anachronistic conglomeration of local, state and federal laws and taxes.
We have a foundation laid in 1788, with institutions, funding mechanisms, rules and laws added higgledy-piggledy over the ensuing 223 years.
What a tangled web we try to weave, ending up with a knotted, twisted, useless ball of yarn.
Back to the beginning: Taxation should be simple and transparent, but what we have today is unfair, inefficient, and overly complex.
The latest Minnesota Tax Incidence study was released recently, and the results were predictable: When you take all state taxes — income, sales, property, etc. — the rich pay less than the middle class and poor. The top percent (those making over $130,000) pay about 10.3 percent of their income. The bottom 90 pay an average of 12.3 percent.
The only reason the masses aren’t up in arms about it is because no one can see it. The reality is hidden in the complexity.
Most Americans are fine paying a little higher percentage of their income in tax than those who make less — as long as they’re paying less than those who make more.
The solution to our tax tangle is some form of graduated income tax based on ability to pay, with the elimination of sales taxes, itemized deductions, and the majority of property taxes.
Schools should be fully funded and operated by the state, and local referendums and school boards should be done away with.
Which brings us back to statement number two: Our society was not built according to plan.
To simplify the tax code and determine how much everyone should pay, we need a clear idea of what government should be doing, and at what level, and how much it should cost.
I’m pretty sure if you locked 100 non-partisan wonks and economists in a room, they could come up with a plan and a formula based on geography and population of jurisdictions ranging from townships, small cities and school districts on one end to the U.S. federal behemoth on the other.
Split the difference between high end and low end estimates of costs and revenues, and calculate tax rates accordingly. Make minor changes as the facts and economy dictate.
Every few years, you reassess based on long-term economic and social changes.
Problem solved. Except that you’ll have politicians on both ends of the spectrum who won’t support it, either because the taxes are too high or because some program can’t be saved. They don’t care about facts and figures. They care about ideology.
Which brings us back to the grade-schooler’s fort. Instead of tearing it down and starting from scratch, we’ll just add another story and slap on another coat of paint.
Which is known by another grade-school metaphor: kicking the can down the road.
Brett Larson is the editor of the Messenger.