Debating with readers over taxes

A number of readers wrote me about my column last week regarding the ban on Internet access taxes that an overwhelming majority of Congress passed last month. Members of Congress argued rightly that preventing state, local, and federal taxes of up to 25 percent on services that access the worldwide web would allow more people – including the poor and small businesses – to get online, and doing so would create even more economic activity and opportunity for all America.

I took the point even further and argued that if they were truly interested in making basic services more affordable to all of us, and they thought that lower prices for these services were good for the economy, then members of Congress should use the same logic to ban the excessively high 23% combined taxes and fees on phone bills, the 38 cent per gallon tax on gasoline, taxes on food and clothing, and property taxes on homes. These are all more important and basic needs than Internet access, and eliminating taxes on all of them could do more to stimulate the economy than banning one measly tax on Internet access.

I received a number of positive responses from readers, including Grover Norquist, one of the most influential free market conservatives in the country, who worked on grassroots support for the tax ban. Mr. Norquist is president of the powerful group Americans for Tax Reform, and was the author of 1994’s Republican Contract with America.

To say the least, I was flattered to hear from him. He backed up my argument and said that the next step of banning phone taxes is just what the Democrats and moderates feared when they got on board with the Internet tax ban.

In addition, reader John Hansen made a terrific point about the tax ban: “Isn't it amusing that the government is so sure of its inherent right to tax everything that it thinks it needs to pass a special law to NOT tax something? What a country!”

My more left-leaning readers were a bit less pleased with my logic.

Many argued that if we went to the full extent of my anti-tax libertarian bent, it would mean we would have to get rid of things like Social Security, government-funded schools and libraries, public transportation, and government-run nursing homes and hospitals.

They’re right. I would privatize them all.

Private business, charities, community groups and churches could do all of the above a lot more cheaply, and a lot more responsively to the people than government ever could. Many of those private organizations already exist and provide shining examples of success.

Look at the many successful privately run 401(k)’s and other corporate retirement plans that allow people to retire wealthy. Look at Shriners' hospitals that don’t charge for their services, and hospitals owned by private companies and foundations (Carilion and Lewis-Gale, to name a couple). Look at private schools that also let in less fortunate kids through scholarships, such as Roanoke Catholic.

If we already have "free" retirement for all, and "free" schools for all, as my liberal readers advocate, then I ask, why don't we have free groceries for all, and free housing for all, and free clothes for all? Certainly, food, clothing, and shelter are more basic needs than retirement and education, yet the government doesn't provide those.

Natural market forces of profit motive, supply and demand, and competition drive many private organizations – and a sense of civic duty or compassion drives others – to create terrific goods and services that people need and want.

Government is not subject to market forces, and therefore is not driven to necessarily produce what people want or need, or to improve poorly functioning or costly goods and services, or to do them efficiently. Sometimes you may get a good administrator or others in government who want to and have the ability to improve government functions, but that is the exception rather that the rule because there is rarely an incentive to do so.

A company or a charity will go out of business if it doesn’t efficiently deliver what people want or need, but a government won’t go out of business – it will just tax more to get the money it needs to keep running.

Sure, there are bad companies and organizations in the private sector that mismanage programs, but they are few in number compared to those that do it right. If private companies and organizations don't fulfill their responsibilities to their customers, and if market forces don’t push them to take responsibility, ultimately they can be taken to criminal or civil court – unlike when governments run shoddy programs, they are usually immune to lawsuits and their bureaucrats are immune to jail time. With government programs that don’t work, you are stuck with the terrible bureaucratic nightmare you have, and often the program funding continues.

For those that think the government hasn't cooked its own books as much or more than Enron has, think about the reports of the U. S. General Accounting Office not being able to find billions of dollars of government money, congressional check-kiting scandals, the projections of the Social Security “trust fund” going bankrupt in 30-50 years, and the IRS reporting that many on Capitol Hill haven't paid their taxes, yet they continue to pass laws to raise ours.

The only functions of governments that shouldn’t be privatized are the police, the courts and the military. They are legitimate functions of government used to protect the rights of all in a free society. Funds for these functions can come from import tariffs, user fees, and possibly a small national sales tax in place of all other taxes and fees.

Today, it is just a far off dream that our government would return to its small roots, its Jeffersonian principles, and its original Constitutional functions. With Social Security, social welfare programs, public education, and government money being thrown at this group and that group, the politicians have done a great job of encouraging too many citizens to be recipients at the public trough, and they are unlikely to vote to cut themselves off any time soon.