Where I Stand — Brian Greenspun: Wanted: tax solutions

Friday, April 15, 2005 | 5:52 a.m.

Brian Greenspun is editor of the Las Vegas Sun.

WEEKEND EDITION

April 16 - 17, 2005

It is tax time. Again.

Just in case you missed it, April 15th has come and gone, taking with it the few anxiety-laden weeks and months that have burdened most Americans as they have struggled mightily to either understand the United States Tax Code or, failing that, put some numbers to paper to comply with the practically uncompliable, all before the stroke of midnight last Friday.

That doesn't mean the angst is gone because it isn't. There are still audits to contend with and, heaven forbid, mistakes that could cost well-meaning taxpayers many dollars in penalties and interest. And, of course, there does remain some doubt. Not that we haven't done the right thing, but because there are a growing number of income earners who either don't pay any taxes or who don't come close to paying their fair share. In a world of voluntary taxpaying, the thought that some people aren't playing by the rules is the kind of notion that could cause the whole thing to collapse.

All that isn't new. It happens every year, which is why we always get those scary IRS stories around this time. They are designed to "encourage" the taxpayer to do his civic duty and file the proper returns along with a sufficient-sized check to make Uncle Sam happy.

What does seem to be a more recent phenomenon, though, is the number of stories, not about the difficulties of determining one's taxes, but about the ability of many Americans to actually pay them.

I was told about one story the other day, which by most accounts would fill in Acts I and II of the great American Dream. A young man practically hitchhiked his way out of Texas to California in search of fame and fortune. He had $30 in his pocket and a bus ticket just in case his ability to thumb a ride failed him.

He was young, unskilled and educated just enough to know that he didn't want to stay in his first $7 an hour job at an all-night parking lot for very long. So he studied his way into a skilled job as a carpenter. Two years later he went from an income under the poverty level to making over $30,000 a year.

Working overtime, he hammered and nailed his way up the economic ladder. As an independent contractor he was responsible for paying his taxes and other expenses that would normally be the responsibility of an employer to withhold. I can't tell you he did everything right, but I do know that he worked his tail off to better himself and grab his small piece of that all-American dream that motivates so many.

When it came time to fill out his IRS return, he sought help because his math skills, reading skills and deciphering skills -- while generally sufficient -- were no match for the thousands of pages of IRS code that are designed to help the few and confound the many. With some of the best minds at work on the problem, it turned out that our budding master-builder owed almost $7,000 on a taxable income of approximately $26,000. Naturally, he didn't have it and had to borrow the money to meet the April 15 deadline.

That story is not new, either. What is new is the growing number of people who are trying their darnedest to play by the rules and work hard every day. In many cases, all seven days! But, what they are finding is that for all their efforts they just cannot make it on what they earn, especially after Uncle Sam takes such a huge percentage of what they make. It is small wonder that so many people are growing more frustrated each day with their economic circumstances.

The tax code is not written for the millions of Americans who get up every day, work very hard for very long times and do their best to make the ends meet at the end of each month. The tax laws are written to encourage certain behavior and to create certain incentives from and for those who are in positions to advance the policy directives of the people of the United States of America acting through their congressmen, senators and president. And only those who can afford the best of counsel and the most astute of lobbyists get heard within those hallowed halls of government. Simply put, tax breaks go mostly to those people who don't need them and are paid for mostly by those people who can't afford them.

The income tax system is broken and badly in need of repair or replacement before the people start a tax revolt, which started this whole experiment in democracy in the first place.

With that as a backdrop, I have been wondering which political party, candidate or great American will come forward with a tax system for the 21st century that might either repair or replace the income tax system that continues to fall into disrepair and disfavor with so many of our fellow Americans. It just seems to me that whomever that person or party is, there comes with it the ability to recapture the imagination of America and re-ignite that purely American belief in fairness that has made us the envy of the world.

One of the big ideas floating about is a consumption tax. It would completely replace an income tax by requiring every American to pay a single tax based on what they consume. There are various plans kicking about but I like the one that recognizes that people at the lower end of the income ladder must spend a greater percentage of their incomes for the necessities of life. So, assuming we can agree on a floor below which no one will be taxed, such a plan makes a lot of sense.

I can't think of a more inherently fair kind of tax than that based on the individual decisions each of us make about what we will buy and consume. The hue and cry today is that we the people know far better how to spend our money than does government. While that is used to rally the troops for tax breaks at a time of deficits to the moon, it is true that the more we are in control of our own economic destinies, the better and freer we are as individuals.

If two people need a car, for example, how much each pays in taxes will be driven -- pardon the pun -- by how much we choose to spend on the car. If I buy a $20,000 car I might have to pay a $5,000 tax while my neighbor who chooses to spend $100,000 on a ride to work will be hit for $25,000. And so on. There would be some complicated, transitional rules moving away from the current system to a consumption tax over a period of a few years, but the concept is simple and quite workable.

In the end, everyone will be a taxpayer because everyone will pay his or her share at the cash register every time something is purchased. Knowing that we are all in this together will go a long way to ensuring the perception, and creating the reality, that everyone is contributing.

There are other big ideas out there that might also serve to answer the questions of fairness, full compliance and sufficiency. I think they should all be considered. We shouldn't continue to hide our heads in the current tax code that continues to work against most hardworking Americans by confounding them and confusing them to the point that they start to question: Why?

So who will be the one with the great big idea? Which political party or leader is willing to get out front on the idea of taxes?

With the right kind of ideas on the table, we can make April 15th just another day on the calendar. Tax day could be every day and every day could be spent fulfilling the American Dream rather than fretting about whether we will ever catch a glimpse.

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