How About a Major Tax Policy Overhaul that Could Actually Work?

Published August 20, 2012 | By Iowadawg

This is an interesting take on taxes. May work, may not work. One thing holding it back? There is no one in congress nor will there be, from the president on down regardless of party affiliation who would even want something like this come to a vote. Think of the power that would disappear from the federal government? But I present the whole thing here for you to make up your own mind.

Taken from the Flopping Aces. Again, do go there to support him and do read everything there.

Introducing the Neutral Tax [Reader Post]

I have a confession to make – I’ve been a bit of a hypocrite on one issue. I like to rib my lefty pals for their inability to offer any realistic, constructive solutions to the problems that they want to solve. There is no energy source we can use that won’t have a leftist opposing its construction, and none of them are willing to offer any kind of realistic policy for satisfying our energy needs. On the federal budget, they love to call for raising taxes that nobody will pay to balance the budget, while oblivious to the fact that we’re beyond the point where tax increases can have any meaningful impact. To some degree I’ve weighed in on taxes, and I didn’t give the conservatives much better treatment than the leftists when I had to explain that conservatives are the reason we’re never going to see a flat tax or a fair tax. Sure, I’ve weighed in with some proposals for tax increases to support our military by taxing the free riders (as in the rest of the world), and I’ve also called for tax increases designed to curb areas that hurt economic activity (politicians, lobbyists and trial lawyers). While my last two ideas would help raise revenues and modify some behaviors, in the larger scheme of things they would not have a huge impact given how ridiculously complex our tax situation is. And neither of my last two proposals have any chance of even being considered politically. So I’ve been guilty of the same accusation I so often throw out about not having any ideas that are both constructive and realistic.

Until now.

After a local Tea Party meeting one of my fellow attendees reached out to me and asked me to look over a proposal he had for tax reform. Given that this city has no shortage of people with grand ideas I was naturally skeptical. But then I read his proposal for the Neutral Tax, and when I was done reading I had just one thought… “What on Earth did this guy just say?” So I read it again, and it started to make sense. I didn’t share my initial reaction to disparage the Neutral Tax – it’s just that it’s such a different idea from anything I had read before that it didn’t sink in on the first reading. Think back to when you were in school and the first time you saw something like “Se habla Espanol?”, or “(x + 2)(y + 3) =20″, or your first Supply and Demand curve. Looking back you know that none of these concepts are complicated, but the first time you saw them it took a brief recalibration of your brain to comprehend what you’re looking at. If the first time you read the white paper (it’s an easily digestible four pages) it sounds like a foreign language read it again. It’s not a difficult concept; in fact it’s so simple it could actually work. Here is a quick summary:

The federal government stops taxing citizens directly, and instead applies a flat tax that is assessed against each individual state. It is then up to each state to decide how it wants to tax its residents. From there the state still keeps its cut for its own obligations while sending the feds their share.

That’s it, as simple as that. Really.

Changing over to a Neutral Tax system has a number of advantages:

It cuts away a massive level of federal bureaucracy. Yes, this will mean more tax bureaucrats at the state level but we are simplifying by building on existing systems while taking away an additional, complex (federal) system.
It allows states to compete for residents by offering different incentives. We already see this now:
- Delaware uses a high personal income tax and no sales tax to encourage cross-border consumer spending to stimulate extra business.
- Florida wants to encourage retirees and high income earners to move to their state by having no income tax. They use a higher sales tax, paid heavily by its strong tourism.
- California wants to drive out its generally Republican voting middle class to retain a strong voting block of leftist interest groups of the extremely wealthy, very poor, and state union employees via a complex and punitive regulatory and taxation environment. Although this policy has the state heading off of a fiscal cliff, it has achieved its demographic goals quite nicely.
Taking away the power of the IRS also makes it far more difficult for our federally elected officials to use the tax code to peddle influence. Yes, this corruption will migrate to the state level, but being closer to its constituents will give greater accountability.

Are there flaws? Absolutely, as I just stated in my last bullet point. Are there obstacles to getting this passed? There certainly are, as the status quo will always guard its interests in staying put. But do we need to start thinking seriously about making real reforms to our tax code? You better believe we do.

The main reason I support this plan is that it satisfies my two basic criteria: Is it practical financially, and is it realistic politically? Financially, I say it is. While there are no revenue projections in the concept, that’s not the point right now. The feds can decide how high or low they want taxes to be and the states can decide what is the most efficient way to raise or lower the needed tax rates. Government spending levels is a separate issue, but since nobody else’s tax plans address that issue the Neutral Tax does not need to either at this time. And this has not even started to evaluate the stimulative effect of simplifying the tax code.

As for being politically feasible, I honestly think that the Neutral Tax is. It will be a major battle to make it a reality, but I think it has enough elements that many will find appealing combined with few enough negative aspects that would be used against the idea.

Anyone who’s been following my blog knows that I’m about as cynical as they come when it comes to our government’s actions and big ideas from people living inside the beltway (at least I think he does). But if a four page white paper can get approval from this ultimate cynic it’s certainly worth five minutes of your time to read.

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Obama Must Not Read Our Stuff

From Cato@Liberty:

The topic of this weekend’s weekly presidential radio address was education. The message? You guessed it: The federal government needs to “invest” more in education — as do other levels of government — but instead they are making cuts.

At this point I don’t know what more can be said to show how nonexistent is the connection between federal spending and actual education. As we at Cato’s Center for Educational Freedom have pointed out on countless occasions, federal and overall spending on public schooling has skyrocketed for decades as test scores have laid motionless; staffing has ballooned at the same time; Head Start has almost no lasting benefits; and federal higher ed spending largely enables massive price inflation and encourages people to enter college but not finish.

The evidence, frankly, is overwhelming that federal education “investment” is really just flushing precious money down the toilet. Which makes me think that maybe President Obama doesn’t read our stuff. Or maybe he just doesn’t care.

More Cato here.

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The Man with No Plan

From Mark Steyn at NRO:

Americans, according to a Winston Churchill quote of uncertain provenance, always do the right thing after they’ve exhausted all other possibilities. More verifiably, Sir Winston, upon being asked if he had any criticism of the United States, replied tersely: “Toilet paper too thin, newspapers too fat.”

But that was then. Today America is a land of two-ply toilet paper and one-ply newspapers. Being made of sterner stuff than Churchill’s posterior, the eco-Left want to ban two-ply bathroom tissue on environmental grounds, which would devastate the economy of Canada, whence comes most American bathroom tissue, at least until the Canadians, being the House of Saud of toilet paper, start shipping it to China, as they’re now doing with their oil ever since Obama told them to go lay pipe somewhere else.

As for those once-fat newspapers, they’re now so thin that they’ve only got room for the very mostest important news, like whether 30-year-old law-school coeds have sufficient access to federally-mandated contraception and (breaking!) the dog Mitt Romney put on the roof of his car in the early Eighties. You have to be able to prioritize.

That’s the genius of Romney’s vice-presidential pick: It explicitly invites Americans to “do the right thing.” Insofar as he’s known to the electorate at all, Paul Ryan is the man with the plan — the guy who understands that multi-trillion-dollar spendaholic government cannot continue. On that subject, Obama is the man with no plan, and no plans to get any plan. Yet the mere selection of Ryan has already improved the quality of the Obama campaign: Two weeks ago, they were denouncing Romney for killing a woman by cunningly giving her cancer five years after laying off her husband. Now they’re denouncing Ryan for killing off Medicare. The former is the opening scene from the straight-to-video Carcinogenic Zombie Mormon Venture Capitalist Apocalypse; the latter has a very very teensy-weensy gossamer thread of connection to the issues facing the United States. So we should congratulate the Democrats on a modest re-acquaintance with reality. With Ryan on the ticket, the central question facing America can’t be ducked.

As for the other half of that Churchill line — exhausting all the other possibilities — last week a man called Floyd Corkins shot another man called Leo Johnson, the security guard at the Family Research Council, a “conservative” group, according to the muted media coverage, or a “hate group,” according to the Southern Poverty Law Center, who spray that term around like champagne on a NASCAR podium. Mr. Corkins, an “LGBT volunteer,” told his victim, “I don’t like your politics.” In his backpack, he had one box of ammunition and 15 Chick-fil-A sandwiches. Had he had one Chick-fil-A sandwich and 15 boxes of ammunition, he might have done more damage. Or then again perhaps not, given that, as bloggers Kathy Shaidle and “the Phantom” pointed out, he reached his target and then started “monologuing,” as they say in The Incredibles.

Be that as it may, Mr. Corkins decided to shoot people because of a chicken-sandwich-chain owner’s position on same-sex marriage. That’s what Floyd Corkins thinks is the most pressing issue facing the United States. Perhaps he saw himself as the Gavrilo Princip of our time. Like Floyd Corkins, young Princip was not the sharpest knife in the transgender clinic — the cyanide pill he took after the assassination was past its sell-by date; to evade capture, his co-conspirator jumped into the River Miljacka, but it was only five inches deep, and a man standing up to his ankles in the middle of a river in a large city tends to attract attention. Nevertheless, Princip’s assassination of the Archduke Franz Ferdinand plunged Europe into war and brought down the Austrian, German, Russian, and Turkish empires with consequences that plague us to this day (not least the post-Ottoman Middle East). History does not record whether Princip embarked on his mission with 15 pieces of wienerschnitzel or Sachertorte in his backpack, but he changed the course of history. Perhaps Floyd Corkins had similar dreams: He would be the flamer that lit the fuse to liberate a continent from the oppressiveness of homophobic waffle fries.

I’m not blaming Floyd Corkins’s actions on the bullying twerps at the Southern Poverty Law Center or those thug Democrat mayors who tried to run Chick-fil-A out of Boston and Chicago. But I do think he’s the apotheosis of narcissistic leftist myopia. He symbolizes that exhaustion of the other possibilities — the dwindling down of latter-day liberalism to ever more self-indulgent distractions from the hard truths of a broke and ruined landscape. Our elites have sunk into a boutique decadence of moral preening entirely disconnected from reality: A non-homophobic chicken in every pot, an abortifacient dispenser in every Catholic university, a high-speed-rail corridor between every two bankrupt California municipalities . . .

No sane man could compete on this turf. Romney declined to come out for Chick-fil-A Appreciation Day, but the other week he did come out in favor of gay scoutmasters — whether just for scouts or for the rest of us too was unclear. But it doesn’t matter. He could announce he was in favor of closing Gitmo and retraining every detainee as a gay scoutmaster, he could declare an amnesty for every undocumented gay scoutmaster north of the Rio Grande — and it still wouldn’t be enough. He’s still Mitt Romney and he’ll put your dog on the roof, your wife in the ground, and your Negro houseboy in the cotton field out back — or, as the vice president of the United States told a mostly black crowd in Virginia the other day, “he gonna put y’all back in chains.”

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