This is a tale of two tax schemes: one federal, the other state, both seemingly too good to be true.
Let’s start with the feds and H.R. 25, “The Fair Tax Act of 2009.” This is not the first time this proposed statute has hit the federal legislative chambers. I can only assume it will not be the last.
The purpose of this proposed law is “to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.” Anything that abolishes the evil and despised payroll tax and the Internal Revenue Service cannot be all bad. We get to take home more of our paycheck. This is a good thing, right?
The offset here is the creation of a new tax-collecting arm of the government and have you pay a sales tax, a 23 percent federal sales tax, as well as city, county and state sales taxes.
“Wait a minute,” cry the opponents of this bill. “The math just does not add up. The tax rate would be 30 percent, not 23. ”
Just imagine going to the store and buying a pair of slacks for $100 and having to pay $130 with the federal sales tax alone. Here is the math according to the conservative and Libertarian anarchists: The proponents of the bill take cost of the goods, $100 and divide that into the total charge, $130, you will find the reduction difference at 23 percent. They are call that “the tax rate.” That is not how the tax is determined.
The $30 sales tax is based on the $100 retail sale, not the end price. The $30 federal sales tax, therefore, would be 30 percent. The proponents of H.R. 25 are working the numbers backward. It is the “rule of the ridiculous.”
Now for Missouri's scheme to take your money. This time the culprit is the Missouri Department of Transportation. The problem is that Missourians are buying less gasoline, which is a good thing, and buying more fuel-efficient cars, which is even better. However, these two factors mean that Missouri is receiving less fuel tax revenue to fix our highways and bridges.
The St. Louis Post-Dispatch reported that MoDOT is interested in eliminating the state tax for gasoline, a savings of 36 cents per gallon (42 cents for diesel). Sounds good, doesn’t it? However, this is a “drive now and pay later” scheme. The plan is to charge you a “per mile” fee based on a new meter installed in your motor vehicle. Two questions: first, who is going to pay for having this mileage meter put on our cars; second, is this just another sneaky way to impose an already unpopular tax?
Mind you, I dislike paying taxes as much as the next guy. I hate hearing that some legislator has earmarked money for his or her district so the member looks better in the constituents’ eyes and remember to vote in 2010. I hate seeing FEMA and other government agencies being so inept with my tax dollars that entire regions of this country might be scared for generations.
I also hate being misled. Remember the old adage, “numbers don’t lie but liars use numbers?” I coined “The Rule of the Ridiculous,” or using a number so big or so small that you look like a hero.
Just moving or renaming the tax is not a benefit to anyone. Simplify state and federal tax codes to a something smaller than the Encyclopedia Britannia, maybe the size of the New York City telephone book. St. Louis Post-Dispatch columnist David Nicklaus agrees, even daring his readers to decipher line 70 of the 2008 Form 1040.
So members of the state and federal legislative branches, manage our tax dollars smarter and with appropriate oversight. Simplify the tax codes. Do your jobs as the elected leaders of our community. Don’t play to our wallets and forget our brains. We are much smarter than that.
David Rosman is a business and political communications consultant, professional speaker and college instructor in communications, ethics, business and politics. Besides the Missourian, David is also a featured columnist for MissouriTribune.com and TRCB.com. He welcomes your comments at ProfDave1011@netscape.net.