Friday, October 02, 2009

When Taxes hurt, Government is more Accountable

Recently I received a pitch on a guest who argued that we could have "life and government without taxes." It was a slow news day and the thesis was interesting, so I thought, "why not?" After the show I could name several reasons. In essence this guest took my audience through a maze that was evasive when it came to the question of where revenue would come from. He indicated that it came from sources that "would typically to to the employees of the company" or "consumers in lower prices." So, there were taxes, just the type of taxes that people or business would not "feel." These are the worst kind of taxes.

The government has been striving to develop ways of taxing people, without us realizing it. Two examples of this are inflation and taxes on business.

The first, inflation, is obvious. Inflation is not just "high prices," as we have been taught in high school economics, but "too much money chasing too few goods." Inflation does not mean "expanding prices," but means "growing money supply." Why does the government do it? Ostensibly to encourage economic activity in a stagnant economy. Some times that happens since it is politically popular and most people do not understand the larger consequences. The real reason is far more sinister. It took over 180 years for the federal government to reach a national debt of $1 trillion. Obama is raising it that amount annually for the next ten years. These have to be paid for and the United States has taken a chapter out of Zimbabwe's playbook by pumping $1.2 trillion into the money supply in an attempt to pay off its bills. Many Americans have (rightly) been alarmed by the more than $1.5 trillion we have seen in bailouts. According to the Washington Post, these inflationary efforts have the potential of being much more far reaching, noting that "combined with the billions already deployed by the Fed, the new money dwarfs even the biggest government bailouts of financial companies." Inflation is a hidden tax that takes value from every dollar out there without a vote of a Member of Congress.

The other is business taxes. Populists love these type of taxes, done in the spirt of the late Sen. Russell Long, "Don't tax you, don't tax me, tax the fellow behind the tree." That "fellow" is the business, which is such an easy target for government because it does not vote (lobby, yes, but does not vote). The thing that government does not admit is that businesses do not pay taxes, but are merely tax collectors. Businesses do not pay taxes any more than they pay rent, for employees, transportation, or any other cost of doing business. Businesses do not pay taxes, but collect them. When those taxes become too high, businesses move to places that have lower taxes. The US now has the second highest tax rate of any industrialized country in the world and over twenty countries have simple flat tax rates that are considerably less than ours. This has led to the exporting of both jobs and businesses.

The best taxes hurt those that vote and should be seen frequently. That is why I would eliminate all taxes on wealth creation (including business tax) and replace it with a consumption tax that would hurt every time someone makes a purchase. Furthermore, it would allow us to collect money from illegals and criminals that slip under the radar screen. For every painful purchase we would have one more reminder of the need to vote and to put those who are fiscally responsible in power.
Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Labels: , , , ,


Post a Comment

<< Home