On October 26, 2011 I wrote “The Real Tax Bite” (http://dr-jfm.blogspot.com/2011/10/real-tax-bite.html). Interestingly, all the talk of tax reform has disappeared like smoke in the wind and it is business as usual in government—tax and spend politics that exempt special interest groups and large blocks of prospective voters, while increasing the burden on Middle America.
As described in the above-mentioned blog, the system depends on its ability to “divide and conquer.” For example, those that do not drive diesel-fueled vehicles don’t care if diesel taxes are raised and people that do not use a particular government service or property are not concerned when fees are raised. It is the ability of government to levy taxes and fees on small segments of society and earmark those funds that gives government the freedom to use general revenue for unpopular, wasteful or politically profitable causes. Every dollar Americans pay in fees and taxes for government goods and services is a dollar freed from the accountability inherent in the income tax stream. Politicians know that if their only source of income is the income tax, they will be accountable to all the voters, without the favor of those they exempt.
Much has been written about the benefits of a national sales tax, others suggest a flat-rate tax, and there are other proposals, but the method that is tried and works in our own country is the graduated income tax, where everyone that has income pays something. When the graduated income tax was abandoned, the door was opened to squeeze the middle and exempt the ends.
A simple amendment to the U.S. Constitution will fix the problem: “Government will have no source of revenue other than the income tax.”