Monday, December 5, 2005

Great Reasons to Entirely Get Rid of the Income Tax, #1

Microsoft, Bill Gates’ company that everyone loves to hate, lightens its tax bill in all the ways that are legal and available to corporations. They’d be idiots not to and stockholders would quite reasonably and correctly complain.


IrsTheir latest entirely legal modus operandi has to do with offshoring intellectual property, a neat trick. According to the Wall Street Journal, Microsoft axed more than $500 million from its annual tax bill by putting a small subsidiary in Dublin (Ireland, not Ohio) in charge of $16 billion of its intellectual assets. Thus, income from all this great stuff they invented in America is realized in Ireland. The land of potato-famines-past has made of itself the healthiest economy in Europe by creating the Emerald Tax Haven.


The Emerald Isle just wasn’t working as a business plan.


Well, I say good-on for the Irish. It’s about time that much-abused island nation came into its own and, amazingly, they have done it in the cutting-edge world of computer science and applications. Bless ‘em. All that kissing of the Blarney Stone finally paid off.


TaxpayerThere are no losers in this arrangement, unless you consider the American taxpayer and no one considers the American taxpayer other than as complete idiots who don’t have the good sense to find a loophole or a haven. Better yet, a haven with a loophole, or several, if several is what serves your need.


Ordinary Joe Doakes (or is it Dokes?) just bank what’s left of their wages (after someone else gets through payroll deducting) and struggle on. Microsoft’s perfectly legal and above-board maneuver is a trifle anyway. $2 (each year) for every man, woman and child that is a citizen of America. $24 for a family of six. Of course that's only one of Microsoft's ways to reduce their tax burden.


Chump-change, if it weren’t for the fact that you and I are the designated chumps.


Sixty years ago, corporations paid more than one-third of the nation’s tax bill. Now it’s down to 11% and falling. An estimated $6 trillion in offshore business assets would come back home except for the tax code. Tax issues that are so complicated not even the IRS can agree on what they are. This is a tax code that encourages corporations to get out of the country and exempts the super-wealthy because they control Congress.


That pretty well leaves you and me to pick up the tab for government. And our grand-kids. Government is a big time credit-abuser with the National Master Card in its sweaty little hand and our kid's kids will pay off those bills. Democrats got a bum rap for decades as the tax-and-spend party. But Republicans put a new twist on it by cutting taxes while they spend like sailors on shore-leave.


So, what to do? Off-shore businesses and tax haven private wealth won’t just come home and pay taxes. Who can blame them? Meanwhile, regardless of what the latest presidential commission on tax reform recomends, there will be no substantial headway. The Tax Accountant’s Lobby and the Corporate Aircraft Lobby, the Real Estate Lobby and the Charitable Foundations Lobby, plus a thousand-and-one other special tax interests will all keep us from fixing what’s taken eighty years to break.


So, let’s not fix it. Let’s get rid of it. Entirely and completely do away with the damnable thing, cut off its Medusa’s heads, stuff it back in the box it came in and drop it in the deepest part of the ocean, bound in chains. Allow the states to keep and maintain and enlarge and get creative with their own special interests as they see fit.


But deep-six the Federal Tax Code.


Without taxes on employees and corporations and capital investment, not only would our own companies come back home, but they would be joined by an avalanche of foreign multinationals investing in this country---essentially rebuilding our long-lost industrial base. There would occur a landslide reversal of job loss, replaced by an enormous surge in employment at really good wages. Unharnessing business from taxes would usher in a rebirth of increasingly fallow Midwestern farm communities. A huge surge in national wealth would follow, this time without the wealthy running off with all the dough.


A value-added (essentially a flat tax) on purchases would replace what we'd throw in the ocean. Special interests have so transmogrified the 55,000 page tax code that it no longer serves any useful purpose. It has, in fact, wrecked the business climate here within the United States and driven corporations off-shore, taking with them good jobs and the substantial wages that supported and expanded the American middle class.


Tax law, more than any other single issue, has brought us to our knees and set us at each other's throats economically. The middle class is shrinking and with it, America. We are not a land of aristocrats and peasants and yet we're creating an economic aristocracy that's increasingly served by an underclass.


It's absurd to say we 'can't' do anything about the Income Tax.  Of course we can. Throw the lot into a dumpster and haul it off to a landfill.
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