Tuesday, May 18, 2010

Nix the federal income tax, reduce consumption

Some economists and financial commentators are quietly pointing to an underlying culprit responsible for our economic woes. The villain is a familiar one to environmentalists. It's consumption.

Our insatiable desire for material things, obscene profits, McMansions and disposable goods led to our financial collapse, say some experts. It's a complex explanation that has to do with over dependence on imports, good old-fashioned greed and our quest to find happiness through shopping.

Of course, environmentalists have known for years that these behaviors are filling our landfills beyond their capacity. Spiritualists point to the moral destruction caused by corporate arrogance and the public's obsession with buying a new house or car every three years. And now some economists are saying that if we don't get our consumption under control, we will eventually end up in a far worse depression.

All I have to do is look out my window on garbage-collection day to see how much stuff Americans consume. From TVs to toasters, everything apparently has a shorter shelf life than it did 30 years ago. Some neighbors consistently have long rows of junk sitting by the curb while others with more moderate spending habits might have one trash can or garbage bag awaiting pickup. The heavy consumers are buying and trashing all kinds of merchandise at a far greater rate than most people, and they aren't always the large families with more mouths to feed and bodies to clothe.

Of course, if people can't control their own desires to shop until they drop, there is one way to reel in consumption. Tax people more heavily on what they buy.

Now before you accuse me of being a tax-and-spend liberal, let me explain my viewpoint.

I am a proponent of getting rid of the federal income tax. It is a failed and highly unfair system. It leads to wasteful spending by the feds and hampers people's ability to keep what they earn, which leads to misguided political movements like the Tea Party and costly government agencies to collect income taxes.


What we need to start doing is taxing stuff not income -- taxing it heavily while getting rid of things like inheritance and capital gains taxes. Let people invest and save what they earn while discouraging the constant flow of junk that comes into our lives and ends up on curb.

A federal sales tax (food and certain other essentials would be exempt) will hurt businesses in the short term but create a better economic foundation in the long run. It will reduce consumption. And all kinds of positive things will come from that, including a reduction of the deficit.

Sadly, I know a federal sales tax won't fly in America. Lobbyists and credit card companies will fight it and politicians won't push back. Most Americans probably won't be able to stomach paying $75 in taxes on a $100 iPod, regardless of whether it could ultimately save them money.

We will continue along in our pursuit of sales and consumption of fossil fuels. Advertisers and lenders will tempt us into spending money we don't have and eventually we'll end up in a depression. The cycle will repeat itself until we finally realize we need a complete overhaul of how we live our lives and pay our taxes.

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