The Political History of Tax Reform

[Aristotle]

I read this article today and it contains a very non-partisan summary of the political history of tax reform. Democrats and Republicans both get praise and criticism in this article.

http://www.townhall.com/columnists/b...20040914.shtml

I think his final conclusion is apt and also quite serious:

I think Kerry has missed an opportunity to score some points against Bush by making tax reform a campaign issue. It would be helpful to have a national debate on this topic during a presidential campaign, for only when the voters are engaged can we expect congressional action.

The only aspect of taxation that ever gets any press is the overly simplistic concept of raising or lowering taxes. The issue is far more complex than that, and it is easy to actually turn a tax cut into a tax increase (or vice versa) depending on how you manipulate other factors.

The whole system needs to be dramatically revamped and THAT is what we need to be talking about.

It is a shame that it gets ignored every election in lieu of deceptive, class-warfare demagoguery.

[Rosuav]

I wonder has either American party looked at what we did in Australia, eliminating some of the taxes and replacing them with a 10% GST - Goods and Services Tax.

The theory was to have a straight tax of a simple percentage, applied to all purchases of goods or services. So far, so good. Then politicking cut in.

"We must encourage exporting." Loophole. As long as you can show an overseas address, and you take it out of the country within (I think) 3 months, you don't have to pay GST.

"We can't tax basic food." Horrid, horrid loophole. What's basic food? Is anything edible tax-free? So it's decided that anything ready-to-eat is taxable, anything that needs to be prepared isn't. Which means that certain types of expensive fish (luxury food, definitely) slip in GST-free, and yet some much more 'basic' foods, since they don't need any preparation, attract a tax.

And so we have quite a mess. Do you want to have a new system in America that is actually clean and easy to use? Lobby for a simple tax with NO special reservations. NONE. But will pollies do it? Not likely. They want to be able to make tax breaks to buy votes. So we have to show them that ANY tax break will lose them votes. And I wish you luck persuading people of this...

[Aristotle]

My favorite tax reform plan is a national sales tax.

I do, however, think ALL food, medical costs, and all primary residence housing should be exempt. That's it.

With a national sales tax, people can choose how much tax burden they want to bear by controlling their consumption.

This also guarantees that wealthy trust fund babies who don't earn much, but spend tons, pay plenty of taxes.

It also means tourists share quite handsomely in shouldering our tax burden. I like that too.

[Rosuav]

Wonderful idea, in theory. But rest assured that, while we have mortal men in control of it, your few exceptions will be stretched to whatever-the-politions-think-will-buy-the-most-votes, and whatever-the-fraudsters-are-buying-today. However, that shouldn't stop people constructing nice theories