Tax System Is Necessary For Our Needs

My family’s taxes made it in on time this year.

I’ve already spent my family’s small refund on yard work.

Two stumps have been ground into sawdust. A pickup truck full of brush has been carted off. Eight lilac bushes are on the way.

The experience of paying taxes, while not as pleasant as, say, a double scoop of maple nut in a sugar cone, isn’t something that makes our family’s Top 10 list of worst things to do each year. Neighbors appreciated the upgrade of the yard, too.

So it came as a shock this week when Rep. George Nethercutt said the number one complaint on the mind of his constituents is the issue of taxes. “Dissatisfaction with the tax system is what my office most often hears about,” he said.

Nethercutt is not alone.

In Idaho, Rep. Helen Chenoweth and Rep. Mike Crapo criss-crossed the state all winter holding hearings on the terrible tax woes of Idahoans. The politicians railed against complexity, over-taxation, unfairness.

Bashing taxes plays well to the people.

But we’re a fickle bunch. Listen closely to businesses, educators and parents and you hear many voices asking for a piece of the tax pie.

People want Social Security. They want a deduction for their mortgage interest. They want any break in the tax law that is just for them.

And, despite what you might think, a poll released this week by Louis Harris & Associates showed few Americans have much of a beef with the IRS. A far greater number believe dishonest people are trying to cheat on their taxes than say they have been treated unfairly by the federal tax collectors.

This is not to suggest that everyone who was out protesting against taxes last week was also fudging the numbers on their 1040.

But please add a grain of salt to the rhetoric of the politicians and populists who pile onto the topic of unfair taxation this time of year.

Here are some of my favorite examples of tax myths vs. tax realities:

Our tax rates are unusually high.

Not true. Among the 29 most developed countries in the world, the U.S. tax rate ranks fourth from the bottom, behind all of Europe and Japan. People wanting lower tax rates can move to Korea, Mexico or Turkey.

We’re paying more in taxes all the time.

For most people, no. The 1997 Taxpayer Relief Act, while a complex web of 824 changes in the federal tax code, reduced the taxes paid by average individuals and small businesses. So far this year, the average refund going back to federal taxpayers is $1,306, up 4.1 percent since last year. And that doesn’t count any cuts in state and local taxes.

Simplifying the tax code would be more fair to everyone.

Not necessarily. “It is impossible to simplify the tax code without at the same time affecting the fairness of the tax code,” concludes a study of the federal tax structure by the Brookings Institution.

Everyone would benefit from lower taxes.

Debatable. Under the pay-as-you-go rules passed last year by Congress, any tax cut that adversely affects the national debt must be offset by program cuts or new revenue generation in federal programs. A big tax cut could lead to reductions in health programs, environmental restoration, or education funding.

At least most people would like a tax cut.

Hard to say. Surpluses could be given back to taxpayers at the rate of $100 or $200 per person. Would most people rather have the money or would they rather have surplus tax dollars used to fix highways, provide better day care, or offer incentives to those who buy energy efficient homes or cars? Some might even think of paying down the national debt for the benefit of our children.

Cutting taxes will ensure wasteful federal programs couldn’t continue.

Nice thought. However, the biggest increase in spending by the federal government between now and 2003 will be on such generally popular federal programs as Social Security, Medicare and Medicaid. National defense comes next.

This is the problem I have with the protesters who line up outside the post offices every April 15. Simplifying the tax code isn’t as simple as their signs suggest. The system we have, while complex, affords us a tremendous range of needed services that only a national government can provide: a national retirement fund, a medical safety net for old age and the disabled, national defense, the ability to pay off our nationally accumulated debts.

The system we have tries to compensate for the realities of our society. People, in fact, have different incomes, different life circumstances, different business conditions.

Like you, I look forward to May 10 when most of us working for wages will finally have a dollar that goes to our pockets and not the tax man’s.

Once Tax Freedom Day passes, though, that still leaves all summer, fall and winter for us to think about what we want our taxes to do and how we can make it best work for the good of the country.

That effort is worth our time and part of our money.