taxes_and_taxation

Taxes and Taxation

(Topics: The Economy | Back to Home)

Where to begin? Taxes may be the least understood and most broken part of the entirety of modern life. And there are three big problems: first, we don't like paying taxes, second, taxes are ridiculously complicated, and finally, taxes are archaic anyhow.

Taxes: Who Wants to Pay Them?

It's an open question as to whether or not it's patriotic to pay your taxes [1]. But I think no one complains about tax cuts, just like no one complains when their favorite things go on sale. Taxes are weird in this way: we want the benefits of taxes, but most of those are indirect and rare. Because for so much of what you pay in taxes it's basically insurance. For example: you're very unlikely to be rescued at sea by the Coast Guard, but it's part of what you pay for [2].

And it gets worse due to harsh reality: we'd all prefer to pay less in taxes, but the richer you are the more you can afford to figure out how to legally pay less. Think of it this way:

Imagine you go into a restaurant to order some dinner. Of course there are prices on the menu, which explains what everything costs. But you have a secret weapon that's not available to most diners, a special access card that lets you get massive discounts. The only reason you have this is because you got it specially made for you by a team of lawyers and accountants and other experts. Because you're rich (relatively speaking) you don't have to pay full price.

This is how taxes work. The costs, like the prices on the menu, are well-defined. But the more money someone has, the less those rules apply to them.

Most everyone wants taxes to be “fair”, but making taxes “fair” is effectively impossible. This is the truth we all need to acknowledge to start this conversation. Because no matter whether you're talking about sales tax, or income tax, or property tax, or the tax on cigarettes, taxes are not applied consistently. There are almost always ways around them. There are almost always loopholes—some of which cannot be closed [3].

This is problem number one with the entire concept of taxation. We want it to be something that everyone pays, but there is no good way to make everyone pay for something. There are too many of us and too much going on in the economy, and plus having lots of money equips you with the power to avoid paying taxes.

Taxes: So Very Complicated

Forthcoming

Taxes: Probably an Out of Date Idea Anyway

Forthcoming


[1] In 2008 Joe Biden said yes, as does Mark Cuban and one letter to the editor in the New York Times. A think tank says avoiding taxes is patriotic as does columnist after columnist. And one blogger says it's both

[2] In 2019 the U.S. Coast Guard saved 4,335 lives in imminent danger.

[3] And when they are, they open other loopholes (or make things worse in general.)


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