Don't Tax You. Don't Tax Me. Tax that Fellow Behind the Tree.

Dallas Blog | Tom Pauken:

“[The column title] is an apt expression as Gov. Perry’s tax reform commission conducts public hearings all across Texas and hears recommendations on various solutions to the school finance issue which must be resolved by a June 1st deadline set by the Texas Supreme Court. ... The two plans that best meet those goals are David Hartman’s business activities tax and Albert Huddleston’s flat-rate income tax.”

Ed Cognoski responds:

The choices are:

• Continue to tax property
• Tax business activity, as Mr Hartman proposes
• Tax income, as Mr Huddleston proposes
• Tax consumption (sales), as I'm sure someone must be suggesting, but I don't know who.

I haven't seen a good analysis of the pros and cons, in principle and practice, of each source of tax revenue. But I have a good feeling that a reliance on any single source of revenue is going to prove to be unsatisfactory. As John Sharp says, some people "think that the good Lord put ‘em here not to pay taxes." Humans are adaptive. The clever will devise ways to shift wealth from the taxed activity to the untaxed activity.

The best way to assure a truly fair and equitable tax system is to ... Tax you. Tax me. Tax that fellow behind the tree. In fact, tax everything that moves. Don't tax any single source of revenue so much that it artificially favors one kind of economic activity over another. Instead, tax everything only as much as needed so that the cumulative tax burden is enough to finance society's needs, including a quality education system for the children of Texas. When taxpayers complain that they are being nickel and dimed to death, that's when we know the tax burden is spread evenly across all who live, work, and do business in Texas. Ironically, the almost universal unpopularity of such a proposal is what convinces me that it is truly the most fair and equitable. Which is why it doesn't stand a chance. Because taxpayers aren't really interested in fairness and equity. Their real goal is to ... Don't tax you. Don't tax me. Tax that fellow behind the tree.