The tax system is over-complicated and unfair. What is the simple solution? What is the new start that is required?
The Glass-Steagall Act associated with the Great Depression was just 37 pages long. It did the obvious thing of separating deposit-insured banks from firms taking investment risks. It worked fine for decades. The repeal of this Act in the late 1990s was the trigger-cause of the global financial crisis. It was the step too far by the political-financial elites that was 100% predictable in THEE's schema.
Without it there would still have been a crisis of government debt or some other catastrophic malfeasance intrinsic to vested-interest plutocratic pluralism, but we would not be facing that today.
The response to this current disaster is the Dodd-Frank Act that is 848 pages long. You can be sure it won't work. Aside from being a product of plutocratic pluralism, it is just too many pages.
I only give this example because I want to make it evident that this sort of over-complicated legislation is evidence that things are going very wrong. No politician can properly read or understand what is going on. No one can possible work out what the effects will be. Probably true compliance will be impossible.
In my last blog, I emphasized that there are easy, simple solutions to what seem like terribly complicated situations, like the tax system. It just requires the guts to face the shambles and choose the solution.
There is a good thing about the present global financial crisis and the escalating war of governments against their citizenries. It is, I believe, slowly forcing society, the populace as a whole, to mature and evolve towards the next stage of political development—to what THEE calls: the Conventionalist Stage.
The key feature of this Stage is that the people (at last) become willing to take responsibility for what their politicians get up to. It means giving up the impossible dream of the 'great leader'. It means seeing government for what it has become as well as what it could be.
What it has become is an oppressive force that serves its own interests and the interests of its direct financial supporters. What it could be is a system that acts for the benefit of each and all. The distressing feature of this ideal is that it means that there is rather little that the government can do in comparison to the enormous needs and wants of the public. But living on dreams was the wrong turning that created the current mess. Once you decide that a diet of realism is the necessary new start, then you can see that politicians will have no constraints or natural incentives to work for the country until and unless those constraints and incentives are specifically built into its political institutions. The only people who will do that is you, and people like you. The politicians certainly won't. Why should they?
The internet era provides the possibility for the public to come to broad agreement about such constraints and incentives. It is now cheap and easy to communicate a consensus on these to current and aspiring politicians. That in itself would be a constraint. Governments currently talk about the silent majority and politicians refer to vocal opponents as radicals and minorities: irrespective of whether that is true.
Now back to a new start for taxation. Politicians currently have every incentive to use, misuse and abuse the tax system while keeping their deceptions secret or so abstruse only academics can decipher them. They take to that incentive like a duck to water. We could stop that easily just by insisting that the tax system becomes far simpler. We do not have to know the details of how that simplicity is to be achieved to vote in favour of simplicity. Cleverer people than you and me can do that.
A referendum could be held proposing that Tax System Legislation had to be written in under 30 pages, or 50 pages or even 100 pages, but that's surely got to be the limit. Any annual amendments should not be more than (say) 10 pages, with the option to re-write the whole legislation at the original limit. Once the total legislation had reached double the number of initially authorized pages, it would have to be re-devised to be the originally agreed number of pages.
You may say that your country does not support referenda. But while there may have been good historical reasons to avoid referenda, like cost and complexity or an insufficiently educated citizenry, the situation is now different. There is the internet, and the mass of the people are educated.
So the first referendum should be that there will be referenda on constraints/incentives for politicians. If the public are not ready to take up that responsibility, then the political institutions will not evolve beyond a system utterly dominated by a power-mongering ultra-wealthy elite class. That society is not yet ready to move to the Conventionalist Stage. Not to worry, because one day, when it has suffered enough, it will be.
With a mandatory limit on the length of the tax code, you could be 100% confident that there would be a far more transparent tax system that most could read and understand. Even the politicians. That would force a sharp fall, possibly an end, to tax breaks, tax fiddles and tax manipulation by legislators. There would also be vast savings on the armies of tax lawyers and tax accountants, who could then turn their considerable talents to socially productive activities. Everyone is a winner—except current politicians.
Why not do it?
There are many other simple constraints and incentives that could be passed by referenda to swing the balance of political power back to the people: invent your own or see some here.
Do you think that a new start is possible?
WK
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Warren Kinston