Monday, February 13, 2012

Taxes, can't govern without them, can't govern because of them

Taxes, who should pay them and how much? And so many misconceptions and distortions abound in any assertions about them. I almost wrote "discussions" instead of "assertions", but few listen well enough to have any meaningful discussions about taxes. Legislatures have almost ground to a halt because of the rigid stances of those who say "taxes are too high" and of those who say "the rich should pay their fair share".

We have those who claim taxes are holding businesses back from investing. But why was there such much investment when taxes were a lot higher?

We have those who claim that taxes are job killers. But how is taxing at a lower rate the sale of stock on the open market a job killer? The companies whose stocks are sold see nothing of the money. The jobs involved in buying and selling of stock have already been killed, by computers!

Actually, a complicated tax system is a job creator. Many people depend on accountants and tax preparation companies like H&R Block to prepare their taxes. Of course, computers are killing those jobs thanks to TurboTax and other tax programs.

It is ironic that today's Tea Party is anti-tax. The Boston Tea Party was an action against a private corporation with a government monopoly. One of the rallying cries of the Revolutionary times was not "No new taxes" but "No taxation without representation".

On the other hand, we have those calling for all to "pay a fair share". Just what is this fair share besides just more? It is almost an unanswerable question. Fair in what sense? Fair because those who have more are able to pay more? Fair because those who have more depend more on the public infra-structure for their earnings?

Just how do you measure the effect of infra-structure on earnings?

Certainly we can say Zigi Wilf does need a stadium to get any money with a football team? He also needs roads or public transportation to get fans to the games. Do we determine his fair share on the profits he derives from this infra-structure? Or do we determine his fair share on how much he can afford to pay?

Many corporations (and CEOs) depend on educated skilled workers. Many corporations now do little unsubsidized in-house training. Is their fair share based on the profits they derive from employees educated at the employees' own or at public expense? Or is their fair share based on how much they can afford to pay?

Finally, it is ironic that the headquarters of Fortune 500 companies tend to be located more in "high-tax" states than in "low-tax" states. In other words, these companies have been grown based on the public investments made in these "high-tax" states. Besides, the CEOs prefer the quality of life offered in "high-tax" states. See "The fallacy of ranking states by 'tax burden'".