Vail Daily column: Nine, Nine, Nine? Nein! Nein! Nein!
OK, fair disclosure first – I am not an economist and this column has little, if anything, to do with law. And unlike Herman Cain and the other presidential hopefuls, I don’t have a team of advisors. With my sons in college – and one in law school – mostly it’s just me, my wife, a couple of contemptible cats, and my ruminations. On the other hand, as that great economist, Bob Dylan, once observed, “You don’t need a weatherman to know which way the wind blows.”
First, and perhaps foremost, there must be tax reform. The present system is as perplexing and convoluted as the folds and ridges of Einstein’s brain. And would take an Einstein to make sense of it. The federal tax code – Title 26 of the U.S. Code – is thicker than the dunderheads who fitted the infuriating mishmash of rules, regulations, loopholes and exceptions into its present bloated chimerical existence. The King James Bible – depending on the font and printer – runs about 550 pages. Title 26, by comparison, runs almost 17,000. God raised the land and the seas, populated the earth, breathed life into the beasts, detailed the complex genealogy of man, and laid down the rules for living in 1/30 the space? And he still had time left over to kick up his heels on the Sabbath. Am I the only one who thinks this might just be a little nuts?
Second, tax reform must be spelled “simplification.” Even the earnest armies of IRS agents cannot agree just what it says. They, themselves, more often than not, can’t make heads or tails of it. There are too many carve-outs, exceptions, hyperlinks, qualifications, deductions and outright “dodges.” Trying to figure it all out strains both credulity and the limits of human imagination.
Third, every American – with the exception of the truly poor and legitimately profoundly disabled – must have an oar in the water. Even if it’s a tiny oar. As a college rower, one thing I know for certain is if everyone in the boat is not rowing in the same direction, the best you can hope for is fitful progress. And the worst is that the boat will pull in circles. You make the call which best reflects the current mess. What I do know is that we must all be in this together. We must all be invested in our collective future.
Forty-seven percent of potential U.S. taxpayers pay no federal tax at all. Yes, most pay other taxes – state taxes, sales taxes, fuel taxes and the rest. But it seems axiomatic to me at least that if half pay and half do not, it is a recipe for the kind of gridlock that is quickly becoming institutionalized in Washington and is reflected in the “Occupied” streets stretching from New York to Oakland.
Fourth, some kind of flat tax makes sense. Nine, nine, nine? Probably not. But maybe something like it. What about a 10 percent flat tax for individuals with only four deductions: dependent children, dependent live-in elderly parents, extraordinary medical expenses, and home mortgages (to some reasonable upper limit for primary residences only)?
While federal corporate tax rates vary from 15 to 35 percent, the average U.S. corporate income tax is, in fact, one percentage point below the median effective rate of their peers in the Organization For Economic Cooperation and Development, OECD. It is arguable, however, that in this teetering economy a little “incentive” by way of corporate tax relief might very well go a long way. But reducing corporate rates to a flat 9 percent is folly. We could make ourselves more competitive by reducing corporate rates to something on the order of a flat 12.5 percent. Eh-hem, and no deductions, loopholes or other means of avoidance. Twelve point five percent would mean 12.5 percent. Period.
There are those who would argue that an individual flat tax is repressive and penalizes the middle class. I say not. But to address those concerns, let’s “equalize” the playing field where it would in fact do some good. The largest part of most high earners’ “income” is in capital gains rather than in wages anyway. So, in the spirit of compromise, let’s do away with the Bush capital gains tax cut rate of 15 percent and up the rate modestly to 17.5 percent.
In addition, we should adopt what is known in many other countries as a Value Added Tax or VAT. But this should be tweaked in a very American way. I propose a federal sales tax in the range of 10-12 percent on “non-essential” items. While the details would have to be worked out (I know, I know … this would require some unavoidable bureaucratic arm wrestling), “essentials” would include many foods (not caviar, booze or cigarettes), basic transportation (not a Maserati or Bugatti), basic services like gasoline and electric (but not enough to fuel your private Gulfstream or warm every last cockle of your manse), and other similar necessities of life. What would be subject to this tax, then, would be “luxuries” which would have the effect of a “graduated” tax affecting the well-heeled should they elect to spend. Should they not elect to spend, then they could pile their lucre to the skies like gleeful Cratchits.
Sixth, no more earmarks, pork, or entitlements. Duh! Not only is their existence anti-democratic, but they fosters coziness and corruption. Stop it.
Seventh, and as slowly as I have come to this conclusion, there must be electoral reform. Either, there must be public funding of elections (although, admittedly, that creates its own issues – like who, exactly should be funded; should for example, Rick Santorum who is polling 1 percent, be on the public teat?), or else there must be term limits. One way or another, financial incentives must be removed from our electoral process. If not, our representatives must (as they do now) pander to the special interests that keep the campaign funding spigots open.
I admittedly don’t have all the answers. You might, in fairness, argue that, in fact, I don’t have any at all. Hey, it ain’t a think tank here! What I am certain of, however, is that the system isn’t working, that we have lost faith in our institutions, and that a nation weakened by corruption, apathy, malaise and economic uncertainty, is the equal of one lacking military might.
We must as a nation and as a people resolve to fix it rather than to merely complain. These are my thoughts. I welcome yours.
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley. His practice areas include business and commercial transactions, real estate and development, homeowners’ associations, family law and divorce and civil litigation. He may be heard on Wednesdays at 7 p.m. on KZYR radio (97.7 FM) and seen on ECOTV 18 as host of “Community Focus.” Robbins may be reached at 970-926-4461 or at his email address, email@example.com.