[Homestead] The myth of a "simple" sales tax., and myth of a crushing tax rate

tvoivozhd tvoivozd at infionline.net
Wed Feb 9 14:12:06 EST 2005



The absence of public clamor for tax reform is partly explained by the 
fact that federal tax revenue as a percentage of gross domestic product 
is at the lowest level -- 16.2 percent -- since 1959


Consider Mack's Florida.

It is one of seven states without Satan's fingerprint -- an income tax. 
But it has a sales tax that raises $18.3 billion annually. That tax 
would raise $26.5 billion were it not for the approximately 440 
exemptions that are the reason why only 57 percent of transactions are 
taxed. Tattooing, body piercing, tanning services and lap dances are not 
taxed. Neither are ostrich and racehorse feed, although dog and cat feed 
are taxed. Lawn mowers are taxed but lawn services are not. Pool 
services are not but chemicals to clean pools are. Charter fishing boat 
services are not, fishing rods are.




	

*washingtonpost.com* <http://www.washingtonpost.com/>
*A Taxing Challenge*

By George F. Will

Sunday, February 6, 2005; Page B07

Asked, when he was near death, to name things he regretted not doing, 
Andrew Jackson said: "I didn't shoot Henry Clay, and I didn't hang John 
C. Calhoun." President Bush, who seems determined to leave office with 
/nothing /undone -- except, maybe, horsewhipping Harry Reid -- vows to 
transform not only Social Security but the hydra-headed tax code.

He chose wisely when he asked former senator Connie Mack, a Florida 
Republican, to chair the President's Advisory Panel on Federal Tax 
Reform, which will make recommendations by July 31. While in the Senate, 
Mack served on the Finance and Joint Economic committees -- and he has 
lived with Florida's baroque sales tax.

The executive order establishing the panel lists three objectives for 
tax reform. The third is to promote economic growth. The second is to 
achieve fairness. The objective listed first, however, is to simplify 
the code to reduce compliance costs -- including wear and tear on 
taxpayers' patience. Woodrow Wilson, with his obnoxious penchant for 
drenching everything with moralism, said paying taxes is a "glorious 
privilege." Perhaps. But simplicity might make the privilege even more 
glorious and also might, Mack thinks, get the public interested in reform.

The absence of public clamor for tax reform is partly explained by the 
fact that federal tax revenue as a percentage of gross domestic product 
is at the lowest level -- 16.2 percent -- since 1959. Perhaps the 
promise of simplicity, a code "easy to understand," as the president 
said Wednesday in his State of the Union address, can stir the interest 
of taxpayers. Campaign finance laws are now such a mare's-nest of 
ill-defined or undefined terms that no candidate can be confident that 
he or she is not breaking the law. The tax code, too, is like that for 
many of the 87 percent of tax filers -- 114 million of them -- who do 
not use the short form. Furthermore, it is offensive that performing the 
civic duty of paying taxes is so daunting that the percentage of people 
relying on professional help to perform it is at an all-time high.

Mack, who served three terms in the House and two in the Senate, 
understands the political class's metabolic urge to use tax codes to 
implement social policies and dispense of favors. Consider Mack's Florida.

It is one of seven states without Satan's fingerprint -- an income tax. 
But it has a sales tax that raises $18.3 billion annually. That tax 
would raise $26.5 billion were it not for the approximately 440 
exemptions that are the reason why only 57 percent of transactions are 
taxed. Tattooing, body piercing, tanning services and lap dances are not 
taxed. Neither are ostrich and racehorse feed, although dog and cat feed 
are taxed. Lawn mowers are taxed but lawn services are not. Pool 
services are not but chemicals to clean pools are. Charter fishing boat 
services are not, fishing rods are.

In the federal tax code, as in Florida's, almost every wrinkle is there 
because a muscular interest group arranged to have it put there. Other 
wrinkles, just by existing, have summoned into existence interest groups 
that have learned how to benefit from them and now will die in the last 
ditch defending them. Which is why radical reform of the code involves 
picking one or more fights with almost everyone.

But that is one reason why the fights are worth picking. Tax 
simplification would be political reform, reducing the influence of the 
Washington-based lawyer-lobbyist complex that exists to wrinkle the 
code. Unfortunately, even rhetorical simplifiers are operational 
complicators. At last summer's Republican convention, Bush described the 
tax code as "a complicated mess -- filled with special-interest 
loopholes" and vowed to "simplify" it. Well.

The Weekly Standard's Andrew Ferguson notes that Bush's nomination 
acceptance speech also included promises to make America "less dependent 
on foreign sources of energy," and to provide "opportunity zones" to 
attract businesses to poor communities. Bush also promised to "give 
workers the security of insurance against major illness," to encourage 
the construction of 7 million "affordable homes" in 10 years and to make 
it easier for everyone to go to college. Sure as God made little green 
apples, these promises would, as Ferguson says, involve adorning the tax 
code with more exemptions, credits and deferrals.

In the great -- or so it then seemed -- 1986 turn toward simplification, 
the reduction of rates was paid for by reducing exemptions and other 
complexities. However, Congress, having had its fling with 
simplification, soon reverted to form: Since then the tax code has been 
amended more than 6,000 times. Such is the tide Mack and his panel must 
try to turn.

/georgewill at washpost.com/ <mailto:georgewill at washpost.com>

© 2005 The Washington Post Company






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