American politics aren’t doing too well right now. Wisconsin is in turmoil under provisions of a so-called emergency budget bill, our armed forces are still fighting in Afghanistan and Iraq as domestic and legitimate open discussion about important social issues like abortion and gay marriage are nowhere to be found on the floors of state and national congresses. It’s hard to stay involved and do our parts in a representative democracy when nothing good is happening. America needs quick and real results across the board to rejuvenate the hopes of having a working government. Those results and sub sequential hopes can come quickly with good tax reforms.
Tax reform isn’t a sexy political topic. It’s not one of the usual political platforms that get people involved in fiery debates or gives late-night pundits a bunch of one liners to take down their partisan rivals, but a public well-informed of the current tax problems can bring radical economic change with very little effort.
Unfortunately, the average American doesn’t understand the incredibly complex tax system. From everyday sales tax, to payroll taxes like social security and Medicare, ridiculous brackets and corporate taxes can make the most skilled CPA’s run and hide. Those aren’t including the state or municipal taxes.
Now this is the part where I say that our tax system needs to be simplified. Columnists from Forbes Magazine to the LA Times to small weekly papers in Podunk, USA have come out with pieces demanding that the extensive system that exploits the uneducated should be removed for a simpler tax form. Some, like President Obama said on his campaign trail in 2008, believe that the tax form should be whittled down to one page of information to make things as simple as possible. But that would make things much worse, for both the taxpayers and the economy.
What is needed now is not the removal of laws and exemptions, but to embrace the current laws ability to specialize our personal economic profiles and take that even further. Just like Henry Ford found out with the assembly line, individual specialization can lead to a more efficient production and output. As changes are made to the current system, more information can be used to calculate better tax numbers for each household. Those better numbers are just like the specialization of an assembling line, creating the product of a better economy.
The best way to improve specialization is based on three parts: respecting the liquidity of assets, so large amounts of money caught up in capital for small businesses don’t produce too high expenditures, more communication and cooperation between state and federal governments so they can set up an equilibrium price with different taxes instead of forcing states to add more burden on the taxpayers and to remove tax brackets for a ranking system, literally making a list from the lowest income household to the highest.
These changes are designed to do just one thing: fill the proverbial cracks that people fall through in our economy. It’s real easy to just say things get lost in the red tape, but the people that actually fall through the cracks have a completely different experience.
I fell through and it is absolute hell. Those cracks become canyons watching as fellow students get huge overage checks from their FAFSA and spend $200 a month on their bridge card, when just $25 for me would be a huge improvement in my overall diet. I ended up in the canyon crack because my family consistently rides the edge of a tax bracket. If I don’t work, my family would be on the side that gives me enough for tuition and health care, but because I do, I get nothing.
This is just a personal issue of how flawed the tax situation can be. Through rough times and high personal debt, I get by, but there are plenty of people that don’t. These are the people though that give a reason to change the system.
When the cracks are filled, money will be spent more wisely. It creates a more efficient economy. With the financial side of our government taken care of, other serious issues can be addressed as the country works towards a better system.