The Root of the Problem

A caller to today’s “Free Talk Live” show stated he had the solution to the problem.  “The Fair Tax,” he said.

The hosts respectfully disagreed and they discussed it a bit on the show after the caller hung up.  The appeal of the Fair Tax comes in the fact that it actually will reduce taxes.  That is, if the government really did limit taxes to just a “fair” sales tax.  Most who argue in favor of a Fair Tax suggest it will land between 18 and 30 percent.  This sounds like a lot until you consider how many taxes you actually pay (for help, see this tax calculator – although it happens to be for Washington County, Oregon it will give you an idea).  In my case, I pay approximately 37.5% in taxes.  It’s not uncommon for some places (such as Los Angeles or New York City) to have rates over 50%.  That’s half of the money you make each year going to the government!

Of course it’s not all in income taxes or sales taxes.  There’s actually no sales tax in Oregon so mine would easily be close to 50% if sales taxes were enacted here.  This is insanity! 40 to 50% in taxes and the government thinks they need to raise taxes to get out of the situation they’re in?

But I digress…

If the Fair Tax was passed and the government did in fact wipe out all other taxes there would be some positive results.  Prices would drop substantially because products would be suddenly cheaper to produce, ship, and sell.  Gas prices would drop 50 cents to a dollar, utility rates would decrease and because production and transportation prices would drop, so would the price of products.  And, yes, if all we had was a 25% Fair Tax it would mean many of us would pay less in taxes.  And those who currently have more children than annual income will pay more.  This assumes that people will actually continue to shop as they traditionally do in stores and not online or through the black market.

And still ignores the root of the problem.

As the hosts on the show pointed out: this ignores the true root of the problem.  They realize that in order for government to fund a program, ANY program, it must take money from some and give it to others.  Since people must be productive in order to produce taxes, and since government is unproductive and inefficient, taxation really does reward those who truly deserve it least.

I know that sounds harsh, but the truth often is.

The issue lies in thinking the solution to the problem is more of the same.  It’s not.  Band-aids don’t fix the problem.  Band-aids just postpone it.  And if you have a serious injury and don’t get medical attention, a Band-Aid will not only not fix you, it will make things worse as the infection grows underneath.

Same can be said about refusing to get to the root of the problem.