Three Views of Taxation

Three Views of Taxation

“Taxes are the price we pay for a civilized society.” Attributed to Oliver Wendell Holmes, Jr., American Jurist

“Of all debts, men are least willing to pay the taxes. What a satire this is on government! Everywhere they think they get their money’s worth, except for these.” Ralph Waldo Emerson, American Essayist

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” Attributed to Jean Baptiste Colbert, Finance minister to Louis XIV, France

The above quotations aptly summarize three major aspects of taxation: its benefits, its negatives and its fairness. The first quote affirms that there are benefits from taxation, in spite of the negatives. Well-maintained, modern public infrastructure is essential for economic productivity, as is quality, affordable public education. Responsive emergency medical services, disease control research, prescription drug regulation and agricultural product quality inspections are important health related services largely supported by taxes. The foundation of our society, the rule of law, is protected by local, state and federal law enforcement agencies and the judicial system, all supported by taxes.

The second quote affirms a nearly universal disdain for taxes. Some maintain that the best interest of Americans is minimal government and low taxes. Minimal government is presumably the amount necessary to secure only those services necessary to maintain our civilized society and nothing more. Thus, a low tax rate is presumably one that supports only minimal government. Yet, given the faults of government – inefficiency, waste and abuse without exception (although there are exceptions), even the lowest possible rate of taxation is considered too high by a few. Taxes are also galling due to the potential use of force for their collection. Taxes are an enigma. We don’t want to pay for government, but we know that government, like taxes, is a necessary evil.

The third quote affirms the importance of tax policy. Probably no feature of public finance has drawn greater interest from economists. Tax policy also produces quips about the best tax being one paid by the other guy. Thus, the rhyme, “Don’t tax me and don’t tax thee. Tax the fellow behind the tree.” Tax policy is formulated by a debate to reconcile the disdain for and the need for taxes.

In Kansas, tax policy historically has been a three-legged stool relying on property, retail sales and personal income. For years, these three primary sources provided stability to Kansas governmental finance, kept rates on any source lower and lessened inter-state competition vis-à-vis the rates for these sources. Reference: Kansas Politics and Government, Flentje, H. Edward and Aistrup,Joseph A., University of Nebraska Press, Lincoln,2010, P. 172

The recent Kansas tax policy change to reduce and eventually eliminate personal income taxes and exempt so-called “pass through” income from taxation altogether has stirred a debate over the once settled issue of three major sources. A tax policy issue has risen over the fairness of wage earners paying income taxes while others earning "pass through" income don’t pay and no end date is set for the income tax. The non-taxpayers are called job creators who will use funds from exempted taxes for business expansion. Income taxpayers are not called supporters of Kansas government (surely an oversight) and contributors to the Kansas economy as buyers of consumer goods (surely another oversight). Thus, the fairness of the new tax scheme is an issue for wage earners and retirees who cannot create “pass through” income, but continue to pay for government services and facilities. The Kansas tax policy goals of balance, diversification and fairness seem to have been cast aside in favor of “the fellow behind the tree” paying the taxes.

(This entry was authored by Dave Warren. Dave is a retired Kansan and co-founder of the Moderate Party of Kansas Movement)




The views expressed in this blog are those of the author and not necessarily the official position of the Moderate Party of Kansas Political Action Committee

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