Repelling a Tax

I fail to understand how Herman Cain's whine-whine-whine proposal would hold much appeal. It diminishes the most progressive tax (i.e., the graduated income tax) and imposes yet another regressive tax (i.e., a national sales tax).

And for businesses, how many auto manufacturers and car dealers will be thrilled to see what was once a $20,000 automobile suddenly escalate to $21,800? That will certainly impact sales of price-sensitive goods, especially in an already struggling economy.

I normally applaud efforts to simplify the tax code. My parents lived in Pennsylvania, so when I was stationed overseas in the Navy, I claimed PA as my home state. I don't know how it is now, but back then the tax form was the size of an old IBM punch card. It took 10-15 minutes to complete, and only that long because I kept stopping in amazement. I strongly favor simplification of the federal tax code as well, but Cain's formula is horribly misguided: lopsided in favor of businesses while tilted heavily against ordinary wage-earners.

First and foremost, however, we must stop using tax policies for social engineering. For example, in the early 80's, Congress passed a tax law encouraging construction. Builders cranked out new buildings solely to capitalize on those tax breaks, not because there was any market for those building. Houston and other cities wound up with vast inventories of unoccupied office buildings all because of a misguided tax statute. The law of unintended consequences is one law Congress cannot repeal and too often promotes.

We should strive to create an environment where businesses pursue projects based entirely on their own merits, not skewed by the distorted lenses of tax inducements. I as a homeowner would willingly surrender my home mortgage tax deduction if it led to a simpler, more equitable tax structure with no business loopholes. Instead, every February-April we create a cottage industry of tax preparers. We need to stop this foolishness now.