LTTE: Taxing Morality

Dear Editor,
I have finished up my annual exercise in filing tax forms, which gives me an opportunity to ponder how this task affects our lives.  The obvious answer to this is the budget cycle, in which our federal and state leaders decide how to pay for the services we want, collect the revenue and then appropriate the money to various programs.  Sounds simple enought, like making a pie.  The problem is that they committ to a larger pie than they have ingredients for, so they go to the neighbors to borrow some eggs, milk, flour, apples, butter, spices, etc.  Some day the neighbors are going to want their favors repaid.
I think a more subtle affect the the tax system is how politician can use taxes to either discourage or encourage certain behaviors.  Various ways of generating income can be discouraged by how the laws define income.  That is that long list of items beyond what is on our W-2 forms: interest, dividends, capitol gains, farm income, retirement income, alimony, unemployment income, gambling winnings, and several things I have never figured out what they are. Some of these are taxed at different rates from other, encouraging earning money certain ways. For most of us, we do not make our income this way anyway, or would need an accountant to know how to take advantage of those options. 

Then there is the list of deductions. This is where the government attempts to encourage certain behaviors by reducing one’s income and thereby taxes.  Starting with dependents, you can expect to get a write off for having more children or other people relying on you to care for them.  Next with the Schedule A, you can write off interest on home loans, medical expenses, charitable contributions, some work expenses, etc. With the new emphasis on going green, you can get credits for purchasing high gas milage cars and renewable energy systems (solar hot water heater, photovoltaic and wind electric generators, etc.). Again, the list of items for which someone can reduce their income baffles me, especially when the forms get into mining credits and equipment depreciation.  

I can understand the idea that people generate income from many places other than a paycheck.  I am a little skeptical about why the government should reward behaviors ranging from having (more) children to buying a (bigger) home loan to donating money to causes. To me this pushes us to the edge of the cliff of legislating morality. People should make decisions about family size, house size, and helping each other based on their beliefs and resources, without consideration of whether they would get a bigger return (or smaller tax bill) by April 15th. To me legislating morality is an affront to liberty. Anyway, those most likely to know how to take advantage of all those deductions are probably those with the most income to start with. 
When I completed my graduate degree at NYU, I was required to write an essay to demonstrate my ability to communicate. To yank this liberal institution’s chain, I wrote an essay on abolishing the National Endowment for the Arts in order to promote artistic freedom. That did not go over too well either, though they could not argue about my ability to write.
Moorefield Examiner, March 30, 2011

About hermitsdoor

Up here in the mountains, we have a saying, "You can't get there from here", which really means "We wouldn't go the trouble to do that". Another concept is that "If you don't know, we ain't telling." For the rest, you'll have to read between the lines.
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2 Responses to LTTE: Taxing Morality

  1. The Vicar says:

    Taxing tabacco in order to reduce consumption could ultimately lead to less money for government funded schools. Going green with alternative energy vehicles could reduce revenues from gas taxes which would contribute to a crumbling infrastructure. Simplifying the tax code could devastate the accounting profession, not to mention the guys dressed up like the Statue of Liberty waving the arrow on a street corner. Changing the system as it currently exists will not be painless.

    There is a beauty in simplicity that is missed by our consumer driven culture. It’s bad enough that the individual is driven to believe they must have in order to be satisfied (envy, coveting). This is nothing new, Esau sold his birthright to Jacob for a meal. Our institutions are manifestations of the individuals that comprise them, with less accountability. We borrow with no intent to pay back for what we must have now. We mortgage our liberty for instant gratification. Hey, is there a way to tax instant gratification?

    Perhaps Psalm 37:21 should be required reading in all governmental bodies at the beginning of each day before they get about their business. “The wicked borrow and do not repay, but the righteous give generously.”

    • hermitsdoor says:

      I’m with you in your assessment of our economy’s and government’s funding viscous cycle problems. I hear the latest social trend is “conspicuous conservation”, such as buying a hybrid car or putting up solar panels on the north side of ones house in order for the outdoorsy neighbors to see: high social status value without real regard for how our consumption affects our living environment. Anyway, I’m pessimistic about getting out of our financial doom until we begin to review what services and products provide value and people start doing these jobs. Sounds like another LTTE in the future…

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