I am going to talk about everyone’s least favorite subject, not death, the other one.
At its best, taxation is how a citizenry funds the services it feels are be best provided by its elected government. Business and non-profits pick up the balance. Business charges for its free market goods and services while the charitable missions of non-profits are funded by donation. This trinity more or less fulfills the needs of a society.
Traditionally, government’s role has been to provide for national security and defense, free public education, the national transportation and communication infrastructure, funding of key scientific research, business and environmental regulation, law enforcement, and, in some enlightened countries, the preservation and support of national heritage and culture and a national healthcare safety net.
John Marshall wrote in 1819 that the “power to tax involves the power to destroy.” He was right in the sense that excessive taxation, either to enrich politicians or governments or to expand unnecessarily the role of government, destroys personal and business initiative. But, sadly, our hatred for and distrust of taxation runs so deep that our inclination is to euthanize it rather than to fix it.
Why? Because we know the code is inequitably tilted towards the wealthy. Warren Buffet, one of the wealthiest men in America, says so. Furthermore, at 17,000 pages, it’s incomprehensible. Finally, there is no trust that tax revenues are spent efficiently, as evidenced by the missing 200,000 weapons in Iraq or the $400B war itself.
The wealthy can afford to tax themselves through savings and investments and can thus assert their belief in personal responsibility. There are those, however, whom life does not treat easily and benevolent societies take them into account.
We also conveniently forget the societal benefits that taxes fund. Have you ever tried to ford a river in your Prius, or home school your three children while holding down a job, or catch the guy who tried to sell cocaine to your daughter? It’s easy to become disconnected from the value taxes, spent wisely, produce.
A tax code that derives from a State’s strategic plan and is sensitive to economic competition could actually discourage negative behaviors while encouraging good social and economic ones. Strategic taxation could give people some opportunity to control the amount of taxes they pay by behaving in a way that supports sustainable communities.
If, for example, we want to reduce waste and stimulate sales, tax packaging, not the goods they contain. If the creative economy is indeed a priority, offer businesses and individuals tax abatement for two years on income from intellectual property royalties, such as patent income from scientific innovation or copyright income from creative endeavor.
We shouldn’t lose our belief that taxes spent wisely are a good social and economic investment. Hating taxes is the easier, softer way. Redesigning them so that they contribute to the social and economic goals of Vermont is the duty and challenge of being a Vermont citizen.