It’s more than a bit sordid to listen to all the verbal jockeying that goes on as a new tax bill is debated. Overcrowded and overtaxed liberal states like New York and California want to keep their state-income-tax deduction. Otherwise, we’re told, their part of the federal burden would be unfair. But wait… there’s another way of looking at this. You blue states have freely chosen to engage in an experiment in socialism, and to do so you had to load whopping taxes onto your highest earners. Naturally, unskilled blue-collar workers also swarmed across your boundaries to have access to all the free goodies; and a comparatively large proportion of these, by the way, were not even legal citizens. So now you’re in a situation where you hand out more free stuff than anyone else and to more eager hands than are reaching anywhere else. Quite a pickle. To cut your gainfully employed some slack, you remind them that they can deduct their hefty state taxes… except that now, perhaps, they cannot. Ouch!
But that’s a predicament of your own making. If we’re all supposed to be taxed federally on the same scale, but your citizens get bumped down on the scale because you’re already working them over, then those of my state have to pay comparatively more. Indirectly, we’re financing your idiotic experiment in socialism. You supply the ruinous idealism… we supply the cash. Shall we keep talking about fairness?
Or what about the other side of the aisle, and the anguish that its members are enduring over capping the deduction for mortgage payments at $500,000? I’m supposed to feel sorry for someone who takes out a mortgage on a half-a-million-dollar house and wants it deducted from his taxes? Don’t buy the damn house if you can’t afford it! If you’re living in California and half a mil buys you a thousand square feet of roach motel… get out of California! Why should I take some of the burden that should have been yours—why should any of us have to underwrite your costly California residency?
As for 401K’s… wow. Guess what? I only recently discovered myself (much to my shame) that the 401K is just a shell game. You don’t pay taxes today so that you may pay those taxes later, just as you’re quitting your job. Essentially, the government is trying to incentivize you to do something that you should be doing, anyway, if you’re a functional adult (i.e., save). And the incentive is also written on water in disappearing ink. Why is this a bone of contention?
I have long said that ALL taxes—local, state, and federal—should be raised from a universal sales tax. This would have the following immense advantages:
- There would be no tax fraud or evasion; every time you bought something, you would pay the requisite tax along with the item’s market price.
- Taxation “moralists” would have to content themselves with the tough but fair lesson that those with wealth may buy much and those in poverty must buy little; there is no “right” to live like a rich man on a poor man’s income.
- Those living beyond their means would be forced to grow up and become more frugal.
- Those of substantial means who chose to be stingy and save would not be punished by Super Nanny and would enrich the investment sector, creating more jobs for laborers.
- Everybody would contribute some little something to the national coffers and would hence partake of the sacrifice of being a full citizen.
- Those who were not legal citizens would have further reason to go back home and stay.
- Most importantly in my view, everybody would see just how outrageously expensive all our layers of bloated government are, and an angry electorate would demand change.
Naturally, none of this will ever happen.