“The only difference between death and taxes is that death doesn’t get worse every time congress meets.”
– Will Rogers
In a wacky election year, a major disappointment is that none of the tax policies being discussed are original, fresh or even thought provoking. The same old ideas get hashed and rehashed without much progress or thought as to what is the purpose of the tax code.
Every tax is a disincentive and any tax cut or credit is an incentive. As long as we are talking about the same basic structure of the tax code, adjustments to rates have no impact on the inherent disincentives and incentives in our current tax code. Given that no one is happy with the growth prospects in our current system, we should be looking at a system that creates new disincentives and incentives geared towards getting us growing in a healthy fashion.
In Plan to Not Pay Taxes, I identify strategies to take advantage of the incentives that Congress has laid out there for us to address our own looming retirement crisis. This is grounded in the 5Ps, Prior Preparation Prevents Poor Performance.
Many of our existing taxes, cuts, credits and government payments are based on a world that no longer exists. One example are the fees paid for grazing, timber and mining rights on Federal Land were set over a hundred years ago – my bet is that a market based system might spur more productive use of these resources. Why do some farmers receive significant payments to grow or not grow certain crops while others are left out of the system altogether? Why do some companies receive marketing support while others are left to fend for themselves? Why are we subsidizing 20th century businesses instead of incentivizing 21st century businesses? We should have a tax code that provides incentives for modern growth opportunities and disincentives for 20th Century policy objectives. I would like to hear from you as to existing taxes, cuts, credits and government payments that you think are superfluous in our current environment.
An idea that always makes me chuckle was brought up to me by a friend in Greece as they grapple with introducing a modern tax code to incentivize people to pay their taxes. In order to provide a greater incentive for people to pay taxes, why not give someone an entry for every dollar in taxes paid in a weekly $1 million lottery. For the cost of $52 million dollars a year the government would dramatically increase their tax collections and people would have a little more enjoyment when they pay their taxes. That’s called tax humor – not very funny but at least worth a chuckle. N.B. We actually spend over a billion dollars per week on lotteries in the US – more than movies, books, sports and other entertainment combined.
Remember, what the government gives, it must first take away.