Tax week

I heard on Larry Kudlow's show the other night that John McCain has joined the mortgage bailout team, at least to a limited extent. I'll have to look into it more but it sounds right. That's how it goes in Washington: Democrats propose something outrageously idiotic, the Republicans take a strong stand against, then capitulate a few weeks later with something a little less idiotic. The idea that I may have to give up some more of my money to bail out irresponsible lenders and borrowers makes my blood boil. According to the geniuses on Capitol Hill, if you live by the rules, pay your bills in full and on time, work hard, and prosper, you are simply not worthy of consideration. In fact, you have to pay for those who violate the rules. I've just finished doing my taxes (hence the grumpiness) and once again I am appalled: I cannot take out a Roth IRA, some of my deductions get chiseled away, my capital gains are not indexed for inflation, interest on my savings is taxed as income. These are all outrages and a true free-market politician would do something about them. But are there any true free-marketers left? The tax code as we know it is not only baroque and filled with disincentives that defy common sense, it is immoral. It is immoral to tax one person a different rate that another, immoral to take money out of one person's pocket and place it in another's. It is also, in my view, unconstitutional, a violation of the 14th amendment's guarantee of equal protection under the law, i,e, Congress shall not make laws that treat one person different from another.

If I were king for a day it would all end. I would institute a flat tax in which the first $20,000 or $30,000 dollars of income earned would be tax-free. After that, income would be taxed at a flat rate, somewhere between 15-20%. I would abolish all deductions except two: mortgage interest, since property, i.e. home ownership, is perhaps the most important element of a free-people in a free-society and should be encouraged; and charity, the goal being to encourage more private charity to ultimately replace government bureaucracies. Capital gains and dividends would not be taxable. Interest on savings would not be taxable. I would abolish business taxation, since those costs are simply passed on to consumer.

Further, I would get rid of Social Security and replace it with something akin to the current federal 401k TSP plan, where, rather than being forced by the government to put their money into some black hole at minimal return, people could invest a portion of their incomes in the market for retirement purposes, if they so choose. This would be entirely voluntary. Anyone would be free to opt out, with the proviso that they are entirely on their own - don't come begging to the government in your old age if your alternative plan doesn't work out.

But, of course, this is just a dream. There is zero chance that even part of my plan could be implemented in the current atmosphere. Washington is filled with buffoons, charlatans, and other sundry dishonorable characters. They constitute an elected elite which operates for the benefit of itself and quite often the detriment of those whom they've been elected to serve. Their primary goal is to stay in power for as long as possible; their secondary goal is to expand their power in whatever area possible. The idea that we are living under true republican government in such an atmosphere is simply silly; we have in Washington now a non-hereditary semi-monarchy, an elite establishment whose every action is motivated to ensure its own survival.

Thus ends my annual mid-April lament.