A friend recently sent me this link:
http://newyork.craigslist.com/mnh/rnr/84047209.html
It's an allegory of 10 guys who go to dinner, and how much each of them pays, in order to illustrate the fairness of our current tax system in America. Here's my reply:
"Interesting way of illustrating a very screwed up tax system, Brian. Thanks for the link. Looking at a tax system as a reflection of the moral values of a people is in intriguing exercise.
The whole problem with the way of thinking and taxing illustrated by the allegory in your link is that we are taxing income instead of personal consumption. When a society becomes as wealthy as Americans have, and has so much spendable (otherwise investable) income, the wrong-headed incentives built into our tax system start to become glaringly obvious. Our tax structure turns into a powerful incentive to consume instead of to save and invest. It doesn't matter what we do with our money, we'll get taxed the same amount anyway. May as well have all the fun we can with it. Hey, you only go around once, etc., etc.
The result is a far greater proportion of our earnings going into real estate than into productive capital investment. The result is borrowing from the future, even from our grandchildren yet unborn. The result is Americans borrowing everything they can out of their houses to blow it on 'stuff,' instead of saving it or investing it, because the only tax break we get on spending is by buying personal residential estate. The result is that our national economy is now hostage to foreign Central Banks like those of the Chinese and Japanese, who own the majority of our debt.
This tax break drives more home buying and higher prices from all the tax-driven demand, so as incomes increase we begin to get bubble conditions in housing, out of which people are pulling all the money they can for pretty much no other reason than to blow it so they can feel good. The Wall Street Journal even makes excuses for and exalts this kind of personal profligacy in its editorial pages. They exalt killing innocent children in Iraq also, so not much surprise there. Consider the source. So it shouldn't be much of a surprise to anyone that their houses now make up most of Americans' personal net worth.
The result of our distorted up tax system is Americans with the lowest savings rate in the civilized world, personal net worth built mostly on borrowing and on asset inflation (a very dangerous way to live, indeed!), baby boomers who aren't prepared for retirement, and a population that is extraordinarily vulnerable to any financial conditions unfavorable to asset inflation.
The result of our tax system is a morality driven by borrowing and consumption, not by saving up money for what we need. The result is a morality that's driven by money, and by how much stuff we can display as an indicator of social status, not how much we are actually worth as an indicator of thrift, intelligence and personal responsibility. The result is greater pollution and bigger garbage dumps from so much consumption, and a resistance to the merits and morality of thrift taught by every religion on the planet.
Yeah, it's their own damn fault, but government incentives push everyone powerfully, over decades, in the wrong direction as well, for them personally, and for our economy. I hate to say it, but most people are so shallow that tax incentives trump their religious teachings and beliefs any day. Just look at all the expensive new SUVs at any mega-expensive suburbanite mega-church on a Sunday morning. The follow them home to see where they live. Jesus would weep.
After 9-11, Bush's reaction was to buck up everyone by telling them to go out and do some shopping! That tells us a lot about the quality of our leadership in this country, and what we think is important in our lives.
I'm betting that if those diners in your parable were taxed on what they spent, they would never have beaten up the tenth guy, never would have had an argument about who got treated fairly and who didn't, and the big spenders wouldn't need to leave the country to avoid taxes, because how much they pay in taxes is to a large degree within their control. The money would have been invested in productive capital instead of tax shelters, big homes and expensive meals, and everyone would have been earning more as a result. And if osmeone wanted a more expensive meal, he would have had to pay more in taxes and no one else to blame but himself.
A lot of conservatives actually support a tax system based on how much we consume instead of how much we earn, supported by the morality of thrift and productive investment, instead of personal consumption, but don't hold your breath, with the biggest bunch of spendthrifts in U.S. history running the country into the ground.
In case you are wondering, I used to be a part of everything I am criticizing, make the same excuses, do the same dumb things, and in many cases still do. I'm learning better, but it's taking me a long time, so I don't expect everyone else to get religion right this instant just because I have, but I do think it's a discussion we should stimulate in this country.
Conservatives are an endangered species in the U.S. today, I'm sorry to say.
Fun debate! I hope all is well with you at your new firm!
Robert
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