||- Alan Caruba Thursday, April 12, 2012|
My father was a Certified Public Accountant and dinner time throughout my youth was filled with horror stories about the Internal Revenue Service (IRS) as he struggled to keep up with a tax code that just kept growing. According to Nina Olsen, the National Taxpayer Advocate for the IRS who heads a staff of 2,000, the American tax system is “a huge convoluted mess.” Despite efforts to determine its length, it is variously estimated to be between 65,000 and 70,000 pages. “We looked at how many changes in the tax law (that) had occurred in the last year alone,” said Olsen, “it was something like 579 changes.” No one can keep up with that volume of changes, not even Ms. Olsen’s
As this is being written, President Obama is dominating the news cycle with his message of tax “fairness”, attacking men like Mitt Romney, the presumptive Republican candidate, for being wealthy and citing men like Warren Buffett and other millionaires and multi-millionaires who say they should pay more. It is a longtime populist, progressive message and it is a false message.
Chris Edwards who studies tax policy at the Cato Institute, a libertarian think tank, says, “What happens when you raise taxes for higher-income people; they reduce their productive activities—like working and investing and starting businesses—and they increase their unproductive activities—like tax avoidance and tax evasion. So governments really shoot themselves in the foot if they raise rates too much.”
If it were not for “taxation without representation” Americans might still be “subjects” of the British Empire because, as any school child can tell you, the Revolution was fought over this issue and was kicked off in earnest by the Boston Tea Party when a tax on tea enraged the citizens of that time. There were, in fact, some ten other tea parties in the colonies.
The United States has the dubious honor of having the highest tax rate on corporations in the world. And some people still cannot understand why U.S. corporations are shipping jobs overseas and foreign corporations are reluctant to set up U.S. headquarters here.
In a recent opinion in The Wall Street Journal, Amity Shales, a former WSJ reporter and now the director of a George W. Bush Institute project on national economic growth, wrote that “The trouble is that lawmakers (especially at the federal level) insist on discussing fax reform in terms of fairness. Tax competition earns a mention from time to time, but only a mention.” She pointed out, as have others, that “states with no income tax grow faster than those with high income taxes.”
By framing the tax debate in terms of fairness and attacking Mitt Romney’s wealth, President Obama is pandering to his greatest constituency—the stupid among us. He was elected on the basis of a lot of gauzy, vague promises of hope and change, and with the adoring support of the mainstream media.[…]