Wow.  Some of the responses on this line have been great.  Anywho...

Mike Yawn equated Social Security to a pyramid scheme, and from a technical definition in its current incarnation I would be hard-pressed to argue against his assessment, but I don't think total abandonment is the solution.  Abandoning its current form or parts thereof?  Most certainly.  I think the problem comes from the same kludge most computer systems face after years of modifications.  If you start with a clean idea, and implement it relatively well (i.e. meet most of the goals of the original request, many of them in a good way, some poorly and miss the mark on a small percentage), then add and change things over time, what you will have many years later will not be pretty.  Hence, SS today is a piece of crap.  It's been a sore spot for many politicians and has been a rallying cry for many.  I would like to see if reformed entirely, but I would not want it removed.

He then commented that, in general, government fails to accomplish the economies of scale that would allow it to provide the services we would otherwise have to pay for ourselves directly, and then noted the price savings disincentive (or more correctly "lack of price savings incentive") that plagues most public programs.  I completely agree with him, and would suggest that here too what is needed is better system design and monitoring, not an abandonment of the system.  I have priced having my driveway repaved.  If removal of old material, reconditioning of the surface, improving the side drainage and covering 700 square feet would cost me $2000 (which was the cheapest bid to date), I think what little I pay to see hundreds of square miles of roads for what little portion of my property and income taxes are used for that purpose is a bargain.  I don't disagree that there is probably some HUGE percentage of waste in that system (anything in double digits would be completely unacceptable in the private sector usually), but I reiterate what is needed is better system design and monitoring, not asking every citizen to be responsible for "their" section of the roads.

Then we get to the juicy bits: the inherited rich and highest income level persons being taxed more heavily and his contention that the system is unfair.  Three points come to mind:  (a) the rich are much better represented in government and therefore HAVE and WILL receive better treatment in the tax code and all things monetary regardless of any attempts to make the system more fair; (b) the rich are disproportionately more likely to qualify for every type of exemption or be better prepared to take advantage of every type of exemption put in place to help the lower income classes and as such take benefit from EVERY change made to the system; and (c) the rich have better information and resources to change as quickly as the laws their outward facing financial makeup and therefore will be able to sidestep most changes made specifically to increase the percentage of them who do pay their fair share.

Basically, my argument is for a system to be fair, it has to appear on the surface to be unfair to the rich for the very reason that they are best prepared to circumvent legally, if maybe not immorally, every law put in place to have them pay a truly proportionate part of their income.  Mike's argues that this unfairness provides a disincentive for wealth attainment, but I don't think it outweighs the perceived incentive of the act itself.  People want to be rich.  Realizing that they will have to pay higher taxes if they become rich will not stop people from wanting to be rich and working at doing so.  And while the transition points are where everything is the worst, my mind immediately inserted the phrase "weeder classes" into my response.  If you can't make it over the fence, you aren't supposed to be on the other side yet.

He then poses a very good question: what should we tax?  The only fair taxes are on consumption of non essentials.  Water, unprepared food, and basic shelter are the only things that would be exempt.  You want juice instead of water?  There's a sales tax on it.  You want the meal prepared for you?  There's a restaurant tax on it.  You want to have a six bedroom home for you and your spouse (i.e. resident ration greater than 1:1)?  There's a residence tax on it.  Yes, this is ludicrous, but simplistic ideas like this are the ones that would be hardest to circumvent.  My expectation is that the complexities of our tax system are derived mainly from three things: attempts to be fair; using the system to accomplish OTHER goals such as create incentives or disincentives for other actions; and attempts on the part of "less than scrupulous" politicians to accomplish their own goals at the expense of all involved.

Regardless, if the concern is that a tax system which focuses on income is too unfair to those in lower income brackets who are attempting to move into higher ones (e.g.: getting allot of overtime on one paycheck and having it all disappear in taxes which then *mostly* come back to you at the end of the year), then simply change the income tax system to be something like this: the minimum wage times two and then multiplied by a cost of living adjustment value for your zip code is tax exempt at all levels.  Any dollars above that value are taxed at a flat rate with a set percentage going to your city, county, state and federal governments.  Deductions are limited to incentive programs such as mortgage interest or charitable donations.  The only sticky point then becomes determining what is income.  This is where all income tax models breakdown.  The "double taxation" of dividend income was a red herring.  Most corporations do not pay fair taxes.  They have accountants and lawyers whose sole function is to keep from paying taxes.  As such the dividend income was the ONLY portion of their profits being taxed.  In the private sector, I have worked for a few companies which paid dividends to their shareholders, but never paid much of anything in taxes; and was not impressed with the need to eradicate this bane on the economy.

And, the argument that the government takes too much from the average worker is moot when discussing changes being made to the tax code which are targeted at things like dividend income, inheritance taxes and upper income tax rates.  None of them are applied to people in the lower income brackets.  Regarding the inheritance tax, for example, if the first $250,000 is not taxed and transfer of farm property is not included, who exactly was being harmed by the inheritance taxes: your average lower income worker who just happened to be inheriting a half million dollars from some uncle he never knew?  Please.

So, when Greg Stigers makes the point that the government should do only what it can do, I am thrown back to one of the planks in the Republican Party platform with which I will probably always completely agree but which I think is sorely misapplied: a smaller centralized government with higher levels of control at a state and local level.  The federal government's *main* functions should be dispute resolving and enabling collaboration between the states: investigate the problem, determine a set of standards, and allow the states to implement their own solutions which do not directly conflict with other states.  I am all for a federal system to set a standard for what anyone graduating from a publicly funded school should have been taught, but the choice of what other curriculum is included, and whose text book to use, and when during the school year to teach each subject, should be entirely controlled locally; and by that I mean the school board which meets two miles down the road, not in the state capital a day's drive away.

And the idea that public schools are crap is a generalization based more on the lack of support given by the families rather than a complete failure on the part of the schools.  I was educated in the public school system but my family made it perfectly clear that I was there to learn, and instilled in me a high value for education.  My parents were part of the PTA, made me do my homework before going out to play, questioned me on what I was learning and quizzed me on it, and expected me to take the harder classes when given the option.  If parents can't or won't participate in their children's education, paying for a private school where the teachers have more authority is still only a Band-Aid, and they are still not going to be happy with the education their children receive.  Using school vouchers to allow tax dollars to pay for a student to attend that private school is even worse.  Schools are not babysitters anymore than a television is, and neither is the school responsible for teaching children anything other than the academic curriculum set by the state and their local school board.  Parents do not get to shuffle off their responsibility to raise their children when they reach school age.

Yes, Greg, if the government did not purchase and maintain wetlands and forests, I would donate to organizations which would, much like I do now, though today I get tax credit for it as charitable contributions.  And an underlying assumption in your question is that my taxes would be lower if the government didn't pay for it, and therefore I would have more money to contribute.  I think having natural filtration systems for the water I drink and use to water my garden is important.  :)

Where there in inequality in what I pay versus what I get in return (e.g. if I live in a pothole free town but still have to pay for a DOT), I accept the idea that there will be some other inequality that is in my favor.  I think the universe wouldn't exist if at some point, everything didn't eventually work out.  A little religious mysticism there, but the idea is a valid for the structures of man.  As such, I didn't state my "given" that the house I and the cash paying dotcommer are both paying property taxes on were similar if not the same; but it is what I meant.

Greg's point that if income were not taxed, but businesses were, brings back up Mike's point that taxation is to a certain extent an incentive system.  If we taxed businesses only, why would anyone start a business?  This is visible now in the fact that many businesses don't pay taxes because they don't make a profit, or are borderline to the extent that the amount on which they are taxed is miniscule compared to their revenues.  Those same companies are paying salaries to people who get money whether or not the business shows a profit.

And I don't think that there is any promise that I will receive back more than I pay in.  Rather, I think the promise is that I will receive more than my money would get me in another way.  For example, the citizens of my county are not paying $2.85 per square foot to repave our roads, though that is what I will pay to pave my driveway.  I'm not saying we aren't paying close to that for new roads, but the repave cost is minimal, and my driveway already exists.  It just looks crappy right now.

The odd thing about all this is that I think we probably are taxed more than we should be, and I recognize that we are taxed unfairly: in some ways to our benefit and in others to our detriment.  And, I share Mike's desire for lower taxes, less intervention in our lives by the government, and a feeling that the money I'm sending to the town hall, state capital and D.C. is not wasted, but rather is put to use to help me and my fellow man.

The problem is that we cannot fix the system by cutting off all the inputs and saying "Okay, now that the government has no money, they will cut the services we don't actually need them to provide, and businesses will appear to take up the slack which will then cost/value fight each other until the best value for the consumer is reached, and we'll all live happily ever after."  The reality is that getting three people to agree on where to go to lunch is the smallest microcosm example of the HUGE problem public officials face continually: coming up with solutions to problems in the face of conflicting interests and limited resources; and focusing on the systemic problem du jour is pretty much the only what change happens.  Whatever the populace wants fixed most will get attention and everything will get its chance.  Some things even resolve themselves.

I am amazed at how often I can tolerate things I don't like by playing a game my father taught me when I was younger.  I try to come up with a better solution that takes into account all the people or systems that are effected by the problem.  If I can't, I let it go, because I tried and don't see a better way.  If I can, first I assume I left someone out, and then I take it to heart: discussing it with friends, or writing my representatives.  I may even post something about it on 3000L.

:)

Mike, Greg, Brice, Paul, Christian, William, Joe, Richard, et al...  thanks for the discussion.

Rs~
 
Russ Smith
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