Imagine for a moment what it is like to have to merely choose where to sleep. Will you choose to sleep near other houseless, or by yourself in isolation? Will you sleep facing a wall with your back exposed or facing outwards where other people know you are sleeping because they can see that your eyes are closed? Either position imbeds an extraordinary lack of security. Now imagine, a train, or car, or passerby waking you up every two hours. You have to walk around the block. Go back to sleep. Imagine trying to hold a steady job under these conditions.
The current tax code has become a convoluted knot of deductions and credits. In Tennessee this week, President Obama hinted at his interest in seeing that code change. The President’s attention to the issue immediately drew a hailstorm of debate in Washington over tax reform.
The biggest problem with our tax code is that it has been used and abused by politicians for political agendas rather than as a simple method for raising the basic revenue for the function of our state. Along this line, politicians are able to solidify their constituency by carving out exemptions for the business interests that support their candidacies. Additional deductions, credits and rebates have added to the size of our nation’s operating costs for reviewing increasingly complex tax returns.
This is one place where our system is broken. President Obama and Congress are offering only more of the same. Conventional attitudes have proposed that any future solution must address income tax reform separately from corporate tax reform. In order to mediate a solution between Democrats and Republicans, tax reform must be dealt with as a whole. Parsing through the code in a piecemeal approach will render a piecemeal solution – not a holistic solution.
Any tax reform solution must occur at the highest level with a complete overhaul of both income and corporate taxes.
Currently, our society has awarded size of institutions rather than innovative, low-impact operations that encourage accountability. Because of the deduction maze, overweight entities can hire a legal tax team to navigate the tax return process, find loopholes, and increase profit margins. These tasks are disproportionately expensive for smaller businesses. The problem with overweight corporations, their ownership over the federal government, and their propensity to promote wealth inequality and waste may be solved through a proper corporate regressive tax.
A corporate progressive tax would tax revenue, not profit, such that the tax would be more akin to an income tax. Moreover, the tax percentage would increase as a corporation expanded revenue. There are a multitude of reasons why corporations deserve a progressive tax.
Corporations are considered by law to be fictitious persons. However, persons cannot balloon to the size of the moon; corporations can. A progressive tax ensures that as corporations expand, their exponential use of resources, amplification of waste, and propensity to marginalize labor comes with a higher price tag to be paid to society. As shareholders in our nation’s resources, we should all be paid when a corporation is able to capitalize clear-cutting a copse that provides us air, shade, food, and a nice view. It should not be allowed to deduct its way out of this cost.
Finally, a corporate progressive tax would be a treatment for the problem of growing wealth inequality in our nation. A large corporation or bank would not have the luxury of paying a windfall to its board and officers, particularly when such an entity is provided an incentive to remain smaller and more nimble.
Income taxes, however, should be flat. Unlike corporations, human beings have a maximum capacity for productivity and waste.
The answer to tax reform is simplicity. Deductions and credits create complicated arrangements where certain industries are rewarded and certain industries are punished – often for little reason other than politics. Simple solutions with simple revenue projections will make the function of our federal government more clear and concise.
And ultimately, to prevent politicians from usurping the tax code once again for their own political gain, Lawrence Lessig and David Segal’s suggestion to convene a modern-era Constitutional Convention would have to occur. Short of that, we would only see more of the same.
Only one quarter of Americans believe they are living the American Dream. The American Dream is the essence and tranquility of freedom to pursue one’s happiness. We are each endowed with the talent and ability to pursue this happiness and we are further blessed to live in a country that values the education of its citizens such that we fund each and every individual’s access to this primary asset. Until the end of twelfth grade.
For more than a half century, we have been sold the idea that education must come in the form of a box that is packaged and shipped. We only understand its essence and tranquility from the format of our forebears and thus we continue on a path towards degree after degree to ripen ourselves for the moment we will become truly capable of providing this earth a service worthy of our being. However, as the top 1 percent’s income has risen over 11 percent while the bottom 99 percent’s income has fallen .4 percent during this recession we continue to find undergraduate and graduate education ever more unattainable.
The younger folks of our society seem to be keen as to these facts and are pursuing routes less cumbersome on budgets. These days, a student might go to a community college for two years and transfer to graduate a full-fledged Gator, Long-Horn, or Sage-Hen. Trade schools are becoming more common endeavors as the younger generation realizes the debt, both in money and time, that undergraduate and graduate degrees entail. Organizations such as The Oregon Idea are promoting a forty percent graduation rate from community colleges by 2025. Student debt is born by a lifetime of indentured servitude and an inability to file for bankruptcy when the system these students have materially relied upon does not provide adequate compensation for repayment of their debt to society. Unpaid student debt is passed on to the next generation because these loans are backed by the government.
Senator Elizabeth Warren of Massachusetts issued her first piece of legislation that would allow students to take out student loans at the same rate that large banks pay to borrow from the federal government – roughly .75 percent. Senator Warren’s work towards the achievement of equality in this nation should be commended. At the least, her legislation points out an absurdity to prove crony capitalism is convincingly alive and, at most, her legislation will pave the way towards phasing out a policy that has encumbered our nation’s future.
Tuition is skyrocketing. Students are carving alternative educational paths. Yet degrees still hold society’s political clout. Phasing out the $40,000 per year undergraduate education has already begun as companies like Intel are treating free online educational degrees as substitute equivalency. Again, the winners have been the banks who need not worry about students failing to make payments as loans are backed by the federal government. Our government providing assistance for the $40,000 per year education system will only prolong the status quo. This is yet another incidence of our government bailing out banks at the expense of our future. The foremost was in 2008.
Our Senators and Congress men and women must act as conduits of power, not possessors of power. Relinquishing the promise of backing private banks on educational loans must occur. Such a backing is a Ponsi scheme that serves no purpose other than to defraud our future. For once let us give a gift to our future rather than perform a theft. We must pay for what we are able to in the present.