The Tax Reform Obstacle

Almost everyone says that they want the Tax System in the United States fixed.  It is true that we don’t like doing all of the convoluted paperwork.  But the problem is that we don’t really want it fixed if it means that our favorite “tricks” disappear.  And by “tricks” I mean the methods that we personally use to lower our own taxes.

A lot is said about how Special Interest groups wield too much power.  They use their money to get special tax breaks and other privileges for their groups that are not available to the rest of us.  This is certainly true, and a massive problem.  But we as individuals do the same thing.  And by not being willing to let go, collectively, of the tax breaks that we get, we doom ourselves to never seeing true tax reform.

The home mortgage deduction is a good case in point.  We get to pay less in taxes when we pay interest on our home mortgage.  If we aren’t paying down a mortgage, we don’t get this deduction.  So people who either own their home debt free, but even more so, those that cannot afford a home, are paying MORE on their taxes as a result.  This means that the less wealthy are SUBSIDIZING the home purchases of the more affluent.  Of course, this tax deduction is defended by the Realtors (a special interest group), who want this deduction to stay, so that people have more incentive to buy a home.  But because we, collectively, don’t want this tax deduction to go away, it doesn’t.

No one is willing to give up the deductions that they have become used to.  Another is the deduction for state and local income taxes.  This deduction is currently under attack by the currently proposed tax reforms.  What this deduction does is force people in States/cities with lower local taxes to pay MORE on Federal taxes to subsidize the outrageous tax rates in the big cities and left leaning states.  Again, those getting a deduction are subsidized by those that don’t get it.

It applies to having large families as well.  Those with more children get to pay less in taxes thanks to the standard deductions given for dependents.  After all, it does cost a lot of money to have more children.  But why should others have to pay more to support the life and family choices of others.

One of the ways that the current complex tax code is rationalized is that those in power say they can use it to influence certain behaviors.  The behaviors that they say they want.  They might say, for example, they want incentives for people to own homes.  But then there are huge tax breaks for growing corn or sugar.  WHY?  Frankly, it’s not about incentivizing behavior, it is literally a way to buy votes, using money (subsidies) that come from you and I.

What to Do

The only way to get to true and lasting tax reform is with a Flat Tax.  Under such a system, there are no deductions, for anybody for anything or any purpose.  You are taxed on your gain, your profit, your “increase”.  This way, the ability of Special Interest Groups is severely curtailed.  This way, congress members and presidential candidates could not use our money to buy votes.

Frankly, a Flat Tax is the way God himself does it, according to the Bible.  He says to pay tithing, which is 10% of your gain.  Nowhere in the description of tithing does it say you get to pay less because you own a home or you have more kids.

If we want a better system, we have to acknowledge our own part in the mess.  We have to be willing to give up the few deductions that we have in order to get a better system.  And in the end we would ALL be better off.

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