Wednesday, April 15, 2009

Yeah, It's Tax Day

Whether or not you're going to a tea party today (I am not, but I like the idea), taxes are due today. I just finished reading a bevy of tax-related articles and the more I read, the angrier I became. Articles penned by people of all sorts of different political bases continued to stoke the fire burning inside.

1) Federal taxation makes me sick. Why the heck is it so high? Part of this logic is based upon one's ideal government structure. Those of us that believe a top-down mentality is best and that Wizards of Oz can pull levers and push buttons to manipulate society into achieving the most ideal society yearn for taxation to be centralized. Think of it as government's form of economies of scale. Funnel all the money into the central entity, and that central entity is best able to delegate where and to whom that money goes. Put the smartest people together and they can make magic happen. On the other hand, those of us that believe a ground-up mentality is best and that some sort of Hayekian spontaneity is the best path yearn for taxation to be decentralized. Think of this path as one that promotes experimentation among different communities. Some communities might fall behind at first; some communities may thrive at first. But innovated government is made possible and it opens up the feedback loops desperately lagging in big government.

I'm in favor of the latter, the Hayekian spontaneity. I'd much prefer to see local taxation at 35% and federal taxation at 7%, meaning local communities and governments can control delegation of spending. Not only does dispersal of tax money let locals have more say in the appropriate allocation of said money, but it weakens the leviathan located in DC. In fact, this was one of the main intentions of the Framers of this great nation. Jefferson was well aware that a  large government monopoly poses a direct threat to individual liberty:
"The natural progress of things is for liberty to yeild, and government to gain ground."
The intrigue presented by pooling our money in a central location is understandable at first glance. But allowing that much monetary power to be placed in so few hands is dangerous. In the best case scenario, those in power are benevolent angels that truly have the public's interest at heart. But even then, if those angels make a mistake, it's an expensive mistake. No small group of technocrats can effectively dole out billions and trillions of funds as planned. The human brain is incapable of accomplishing this mighty task. But what if at the foci of government, instead of angels, we have humans, prone to the whims and desires and manipulation of others. Favors? Corruption? Where would it end?

These individual tea-parties taking place around the country will no doubt draw some attention from federal legislators. Republicans will surely use these tea parties as an tool to promote an agenda they failingly adhered to for the last ten years. Democrats will use them as a impetus for investing in long-term investments like health-care technology or something similarly silly. But thousands of people acting in collaboration around the US will likely have little direct impact on the federal government. If, however, power was localized, these tea parties would have much more impact on the spending patterns of government. And herein lies the catch, the Federal government has been set up to insulate itself from nation-wide criticism. Local politicians are held accountable for their actions much more so than those elected to go to Washington. The people of Connecticut may be fed up with Chris Dodd's nincompoopery, but the fact that he is such a prominent Senator with legitimate power, means that by voting him out, the people of Connecticut will lose a powerful voice in the Senate.

I can be convinced into pooling money for military spending, but education? farm subsidies? healthcare? creating green jobs? Let those decisions be made by the communities of America. If you don't like your community, it's a lot easier to move states than it is to move countries. It's a lot easier to disown New York than it is to disown the United States. In general, I think people are proud of their home states. I know New Mexicans are surprisingly stout defenders of the Land of Enchantment. But I think (for the most part) people are tremendously more proud to be from America than any one particular state. We can all live under the umbrella of legal statutes and awesomeness that is America, but let's give the states more power to spend their constituents money.

2) Ok, that first part turned out way longer than I anticipated. Let's chalk that one up to just how feverish the articles made me. I also want to talk about BHO's charity tax. Before hearing the details of the adjustment, I was a little worries. But then I listened to him address the issue at the inaugural White House Press Conference and I became a fan of the logic behind the change. Right now, the top brackets of income earners wishing to make a contribution to charity are able to deduct 35% of the donation from their taxes. Lower brackets are able to deduct only 28%. Quoting the Washington Post:
Obama said the change would help equalize the tax break for those donating to charity. "When I give $100, I'd get the same amount of deduction as when some -- a bus driver who's making $50,000 a year, or $40,000 a year -- give that same $100," he said, adding that the provision would affect about 1 percent of Americans.
The part that frustrates me is that Obama proposes lowering the tax break for that highest bracket. I know Obama is making this adjustment to increase federal revenues, but if you really want to make things more "fair" or "equalized" by changing this discrepancy, then why not give a bigger tax break to the other 99%? Move the tax deduction for all Americans to 35%. Now that's change I can believe in.

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