Wednesday, May 05, 2010
Take up the cause of tax reform
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Donald A. Koop
Koop, a retired engineer, lives in Roanoke County. He is active in Roanoke Tea Party and Roanoke Area FairTax.
Apathy. That is the word I would use to describe the prevailing attitude in Roanoke and Southwest Virginia in the matter of federal tax reform. To be sure, there are dyed-in-the-wool activists and headnodding supporters. But, there are also quizzical-looking listeners, it'll-never-happen deniers, I-haven't-got-the-time spectators and I'm-not-interested wave-awayers.
I and a core group have volunteered more than five years of our lives to bring the FairTax to our area. We consider it the best example of tax reform and one that would be good for our people, our economy and our country. Without question, we have managed to produce a higher level of knowledge about the proposal.
What we have been unable to produce is a large, motivated group of citizens ready to come forward and create the level of public pressure necessary to move politicians to enact the pending FairTax legislation, H.R. 25.
Other reformers support some kind of flat tax, an entirely different version of tax reform. While the FairTax taxes consumption, the flat tax taxes income. The FairTax requires neither the completion of paperwork nor the presence of the IRS; the flat tax requires both. The FairTax provides progressivity by refunding the tax on basic goods and services; the flat tax does it by providing targeted exemptions. The FairTax is a single proposal; the flat tax takes numerous forms.
In spite of differences in approach, supporters of the FairTax and a flat tax share one goal: total replacement of the current system with a new one. Supporters of each plan must work together to promote reform.
Much as with the weather, almost everyone talks about hating the federal income tax, but almost no one is doing anything about it. We manage to find the time to devote to activities we believe in, but, in the matter of tax reform, few sense the urgency. If it's urgency you want, let me figuratively hand you a freshly lit, giant firecracker: the value-added tax.
The VAT is commonly used in Europe and is usually combined with high levels of government-provided services. It is the ultimate in hidden taxation that works by adding a tax at every stage in the development of a good or service for public consumption. All the levies are totaled and added to the usual cost of the item.
Most VATs start at low rates and proceed quickly and stealthily to high levels, on the order of 20 percent. This raises the price of everything by that amount and, in our country, would be enacted to supplement the income tax. The money that can be raised is huge and it would all come from our wallets.
For weeks, since the Obama administration's influential economic adviser Paul Volcker declared the VAT must be considered, political and economic commentators have been abuzz with the possibility of adding it to the income tax. Although the motive might be to reduce the deficit, history shows that spending will rise to match the new income.
Just think, all the pleasures of the current income tax plus an expensive sales tax on most everything we buy. And the VAT is such a mysterious tax that it can be increased at will, with the public hard-pressed to know what is going on. If the VAT is enacted, it could kill all other options for tax reform.
Only one thing can prevent Congress from introducing the VAT: an aroused public that makes clear its opposition and demands true reform. Roanoke Area FairTax and flat-tax supporters, tea partiers and reformers of all stripes need to unify to produce a loud, unmistakable message: The current tax code needs to go.
A good place to start is to support passage of Rep. Bob Goodlatte's Tax Code Termination Act (H.R. 982), which calls for termination of the income tax code by a date certain, with a replacement to be decided later.
A community that can muster only 40 people on a Saturday morning to view an excellent film on our current tax situation is clearly not a threat to balky legislators who are unwilling to take the lead on tax reform. The community holds the key. All it has to do is care, and make sure that Congress knows it cares. Make your tax reform voices heard.
