Government, in order to do the people’s business, must pay for itself. Currently, we achieve this by a myriad of taxes such as:
- Income taxes, which I would argue are a penalty for success.
- Sin taxes (or social engineering taxes) on things like alcohol and tobacco, that are over and above normal sales tax, which are designed to deincentivize people to buy these products because somehow, that’s government’s business?
- Estate taxes, because now that you’re dead, you don’t need that money, and you’re family certainly doesn’t deserve it more than government.
- Fuel taxes like those on gasoline which also go over and above normal sales, which are designed to drive certain markets in favor of others.
- Property taxes, because just buying the property shouldn’t make it yours to keep.
This list is by no means complete.
In a previous post, I wrote that I supported a consumption tax like that proposed at Fairtax.org. Something that is simple and easy to understand for people and corporations alike, then get rid of all this other nonsense. After that, use fees as much as possible, such as when you buy a driver’s license or plates to shift government income to fees for what they do instead of taxing everyone for something not everyone benefits from. But why do I believe this is important?
Because government has its tentacles in everything, it can often hide disturbing practices in an over-complicated tax code and regulatory structure.
For instance; subsidies for an industry that can clearly survive on its own which are conveniently hidden in tax write-offs. Or a federal law that serves one locality greater than another. Why should people in Florida pay for a bridge in California for instance?
Between the taxes one is required to pay, the write-offs one needs to know about in order to keep as much as possible of what they’ve earned, and the regulations they must abide by, this creates expenses that destroy businesses, stress households, and wreak havoc on our economy.
As a former small business owner, I can tell you that the idea of borrowing/investing nearly $100k was infinitely scary. But at the early stages of 2007, the economy seemed quite strong, and I decided to go for it. Bad luck for me, the economy collapsed within months after I started and long before I was stable enough to weather such a tough downturn. Sadly, my business failed within 2-1/2 years as a result.
So what makes a business fail? We can debate about certain principles, but the one inarguable truth is that their income was lower than their expenses, and this was my experience.
The problem with our tax structure isn’t just the taxes themselves, it’s the complexity with which it is administered that add additional costs over and above the taxes themselves. If I didn’t have to file for licenses and worry about massive regulatory compliance issues, I could have saved myself a lawyer’s fee. If I didn’t have a myriad of tax codes and write-offs to deal with, maybe I don’t need to hire an accountant.
On a personal level, you and I pay taxes, but then at the end of the year, many of us are forced to hire an accountant for this as well, and this is in essence, a tax on a tax.
These are thousands of dollars I’m talking about, and I was the sole employee of my tiny corporation.
Would it had saved me? Maybe not. But I was close to surviving, and coupled with a lower tax burden, there’s a good chance it very well could have.
A Fortune 500 sized company however spends millions on lawyers and accountants for compliance and tax purposes. This is money that could be used to hire other people and produce more products at a lower cost. While I’m not insulting tax accountants and lawyers as if they aren’t jobs in their own right, both are noble professions, but the fact is they don’t produce anything for the business.
If my company makes widgets, the lawyers and tax accountants do nothing to increase my widget output nor even assist with customer service or sales of them. They simply make sure I understand an overcomplicated legal structure and tax code that if done properly by government, I would understand without their help.
As always, I understand that the intentions from Democrats and Republicans alike are often altruistic when they pass laws, but laws were supposed to be about one thing; protecting rights. Not social engineering or market influence.
I should generally be entrusted to understand that throughout the course of doing business, I am or am not infringing on someone’s rights without needing a lawyer and an accountant to explain it to me.
A simplified tax code and a federal register that hasn’t ballooned from a mere 11 pages in 1935 when it was the Federal Register Act was enacted, to an astounding 79,435 pages in 2008 would do wonders to help reduce the intimidation of starting a small business, and help those struggling to make it work on a shoe-string budget. I would bet 99% of these laws violate the tenth amendment alone.
Can we really call ourselves a free nation with 80,000 pages of laws on the federal books? I don’t know about you, but the thought of it doesn’t make me feel very free. I suspect I’m a criminal already and don’t even know it.