Unmasking the Complexities of the Tax Burden
This Tax Day op-ed from Jason Briggeman
None of those regressive taxes has its own "day", and it's no wonder. If Americans had 24 hours to contemplate FICA, there might be a mass uprising against its sheer injustice; instead, we get the banal resignation of April 15. And note one further irony: Far from a day on which we rue the burden of all taxes, America's "Tax Day" is a nearly propagandistic device by which our consciousness of taxation is reduced almost entirely to one benign element--refund checks.
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Those who believe the government that governs best governs least have always sought to use April 15, recognized by Americans of all stripes as "Tax Day", as a rallying point for their cause.
One difficulty with this approach is that April 15 is not necessarily a day on which the cost of government is felt particularly sharply. Indeed, Tax Day for some is more readily identified with tax refunds than with tax payments -- few people are peeved at the prospect of getting a big check in the mail.
Some sensitive small-government proponents have attempted to redirect our attentions away from Tax Day to something called "Tax Freedom Day". Its premise is this: If a worker started out on January 1 to put his efforts solely into paying his taxes, he would have earned enough to make his tax payments for the entire year by Tax Freedom Day.
Tax Freedom Day isn't the same day every year, as changes in the law and economy affect the tax burden over time. Even for one particular year it doesn't fall on the same date for everyone, as tax rates vary across states, incomes, and many other variables. Furthermore, there is disagreement on how best to calculate the true tax burden.
So, Tax Freedom Day has to be explained every time it's mentioned, and no one knows when to celebrate. Yet it still remains true that Tax Day itself, while universally known and loathed, is little more than a due date for some (admittedly nasty) homework. What's a Libertarian marketer to do?
Perhaps the answer lies in a concept common both to Tax Day and Tax Freedom Day: the concept of complexity. One can't even place Tax Freedom Day on a calendar without performing great feats of mathematics, while only the lawyers, accountants, and manufacturers of pencil sharpeners can love Tax Day. If our free-market marketing genius can target a simple message to the rest of us, there could yet be hay to be made.
This simple message could be that the complexity of our tax burden conceals its true size and nature.
On one hand this seems like a familiar message, as advocates of a "flat tax" have hinted at it for years. However, these have typically proposed simplifying only the personal income tax - by removing its progressivity --leaving the grotesque remainder of the tax burden intact and safely in the dark.
What would the "flat tax" advocates have us ignore?
The hiding of the total tax burden starts with paycheck withholding. Employers pay not only the progressive personal income tax via withholding, but also an enormous payroll tax (over 14% of an employer's cost for hiring many employees). Employers also pay corporate income taxes, the scattershot effects of which fall on workers, consumers, and investors alike.
Beyond taxes on income, individuals and employers alike pay consumption taxes. Sales taxes are the most visible of these, but taxes are also levied on electricity, telephone service, and gasoline, among others. At one time each of these taxes was justified as a separate user fee, but with everyone now reliant on those goods and services (or, in the case of gasoline, upon goods transported with them), charging separate taxes only serves to hide some of the overall take.
Then there is inflation, "the cruelest tax": by weakening the currency, government claims a fraction of its value. Since the introduction of the Federal Reserve in 1913, the value of the dollar - which had remained roughly constant for many decades prior to 1913 - has fallen by 95% (and that's if one trusts the Consumer Price Index). In other words, 95% of the real value represented by the currency has, over a 92-year period, been transferred to the government via the slow machinations of the Fed. Like payroll taxes and consumption taxes, inflation hits the poor the hardest.
None of those regressive taxes has its own "day", and it's no wonder. If Americans had 24 hours to contemplate FICA, there might be a mass uprising against its sheer injustice; instead, we get the banal resignation of April 15. And note one further irony: Far from a day on which we rue the burden of all taxes, America's "Tax Day" is a nearly propagandistic device by which our consciousness of taxation is reduced almost entirely to one benign element--refund checks.
If liberty-loving marketers want to take back Tax Day, they would do well to force some of its light onto the total tax burden and its more painful elements of regressivity.
Jason Briggeman
Vice-Chair for Campaigns, Libertarian Party of Illinois
The Fair Tax is the way to go.
Posted by: cracker on Apr 16, 05 | 7:31 am
