Wed, Dec 03 2008
|
|
Published December 16, 2006 10:15 pm - In the summer of 1984, I had the pleasure of testifying at the tax system hearings held by the U.S. Treasury Department and conducted at different locations across the United States. Richard LaNear: Tax system past, present and future By Dr. Richard LaNear
Globe columnist In the summer of 1984, I had the pleasure of testifying at the tax system hearings held by the U.S. Treasury Department and conducted at different locations across the United States. These hearings were chaired by then-Deputy Assistant Treasury Secretary Charles McLure, of whom great credit should be given for guiding the tax system through the last major reform in 1986. All testimony (with one exception) given at the hearing I attended, concluded that the present tax system was a mess! The one exception was testimony from a lawyer who teaches tax law at the University of Alabama. He felt the present system was fine — draw your own conclusions. My testimony, in brief, was that marginal tax rates were too high and that the tax base was too narrow. And after a long and arduous political struggle, the tax reform act of 1986 brought the lowest top rate on individual income seen in more than 50 years, 28 percent! What I had considered a political impossibility had become a reality. For many years, I have been studying the issue of what kind of tax system is conducive to a capitalistic economy. And since an economic system based on capitalism implies “incentive” as the basic motivating force, it is imperative that “marginal” tax rates not climb to high levels, since this would negate the incentive to earn more income, or would lead to a situation whereby these individuals who were being taxed at high rates, seek avoidance via tax shelters, tax exemptions or tax deductions. I have also observed the continued gradual decline for societal compliance with the tax system caused by the following factors: 1) Complexity — The tax code has become a Byzantine system requiring an army of professional help to interpret it. Wouldn’t this nation be better served if we could direct more attention and resources into the production of goods and services rather than tax shelters? Societies tend to stop obeying laws they don’t understand. 2) Fairness — Even though the actual number of wealthy individuals who pay no federal income tax is small, people lose faith in a system that has loopholes that allow this to happen (even on a limited scale). For example, more than 200 wealthy individuals paid no federal income tax in 1982 primarily because they were given “credits” against foreign income tax paid. Were they not U.S. citizens enjoying the freedom and right to private property that the greatest democracy in history has provided? When hard-working citizens of any society see other citizens (usually wealthier than they) not paying any tax, they tend to become skeptical of the whole system. Have we not forgotten the lesson taught by the French Revolution? Complete exemption of tax was enjoyed by the nobility, while the working and middle classes were heavily taxed. The wise government ministers, Colbert and Vauban, both advised the implementation of a flat 10 percent on all citizenry, but the “Sun King” would not listen — the story ends with another “Louis” losing his head. It is imperative that we instill a feeling in every member of our society of a sense of duty to pay some tax. Do we want to emulate Italy or France where not paying any tax has become a national pastime? But before examining the federal tax code since the revolutionary reform of 1986 (and the subsequent ill-advised tax increase of 1990), let us take a quick perusal at the evolution of our tax code. From 1776 to the Civil War, the primary means of raising federal revenues were via tariffs on foreign goods and excise taxes of “sinful” consumption i.e., whiskey, and tobacco. Keep in mind these were “consumption” taxes and “income” was not taxed — also remember that the only major expenditure by the federal government was for national defense. The first national income tax levied was initiated in 1862 to finance the Civil War (keep in mind that the U.S. then only included the “North”). The “South” irresponsibly decided to finance the war by printing money, with disastrous results. 
•
Click to discuss this story with other readers on our forums.
More from the Columns section
Mike Pound: Recital dancers may make playoffs Wally Kennedy: Intersection ready for spring work Zach Ewing: Some cures for your fall-sports hangover |
Print this story
E-mail this story
Post to del.icio.us
Discuss this story
 |
 |
 |
||||||||
|
||||||||
 |
The Joplin Globe Publishing Company 117 East Fourth Street, Joplin, MO 64801 Using our site is your agreement to the terms and conditions. News: news@joplinglobe.com • (417)623-3480 Advertise with the Joplin Globe Copyright © 2006 The Joplin Globe, Joplin, MO All rights reserved. |
Popular Business directory links - Joplin Apartments | Joplin Attorneys | Joplin Auto Dealers | Joplin Auto Parts | Joplin Auto Repair | Joplin Beauty Salons | Joplin Car Rental | Joplin Dentists | Joplin Doctors | Joplin Flowers | Joplin Hotels | Joplin Insurance | Joplin Loans | Joplin Mortgages | Joplin Movers | Joplin Pizza | Joplin Realtors | Joplin Restaurants | Joplin Storage | Joplin Tax Preparation | Joplin Travel | Joplin Featured | More...
|
|
Community Newspaper Holdings, Inc. • CNHI Classified Advertising Network • CNHI News Service |