Tax Torn

Well, it’s Tax Day — April 15, the due date for most federal and state income tax filings.  The butt of jokes by comedians for decades.  The annual source of angst for millions of American taxpayers.  A rallying cry for conservative anti-taxers ever since the Sixteenth Amendment was ratified in 1913 and allowed the federal income tax in the first place.

My feelings about Tax Day are decidedly ambivalent.  I recognize that taxes are the price we pay for living in a free society, and I pay them willingly.  A modern military with modern weaponry, a welfare state system that tries to help the poor and elderly, and a government that shoulders far-reaching tasks like disease control or preventing alien species from invading the Great Lakes can’t be funded by the system of duties and tariffs that supported a much more limited government during the colonial era.  I also think it’s ridiculous for people like Ted Cruz to talk about abolishing the Internal Revenue Service.  If you accept that taxes must be paid, as I do, there must be an entity that collects the tax.

At the same time, it’s hard for me to feel warm and fuzzy about our tax system or the IRS.  Last night Kish and I watched the latest Last Week Tonight with John Oliver, and it tried to make viewers feel sorry for the IRS, because IRS jobs are boring, the Internal Revenue Code is constantly being changed by Congress, and IRS funding has been cut.  Good luck with that effort!  The IRS may be necessary, but don’t expect me to give it a hug, okay?  And when I sign my forms and send in my payments, don’t think I’m a nut if I wonder about the presence of unfairness in our tax code and abuse and favoritism in the highly political process by which tax exemptions are determined and tax rates are imposed.

Every year, as I look at the forms and the complicated instructions, I wonder if there isn’t a simpler, fairer way to do it.  Say what you will about the sales tax, but it’s a straightforward percentage that anybody can calculate, and it targets consumption rather than work.  If you want to soak the idle rich, wouldn’t a tax when they buy ridiculously appointed $200,000 SUVs be a good idea?  And user fees that are triggered when a specific federal service is used — say, for use of ports and customs, for airline security, or for drug or vehicle testing to ensure compliance with safety standards — also seems fair.  Couple that with an income tax and withholding system that involves fewer exemptions, exclusions, deductions, tax rate levels, and schedules, and maybe you’ve got a workable system that won’t cause so many Americans to take the IRS’s name in vain come every April 15.

Doubling The Airline “Security Fee”

Last week the “security fee” the federal government charges to airline passengers more than doubled, from $2.50 per passenger to $5.60 per passenger.  The increased fee was part of a budget agreement that Congress and the Obama Administration worked out last year.

IMG_2260I don’t have a problem with the concept of “user fees,” and I view the “security fee” as falling within that category.  I think user fees are a fair way of paying for services that some Americans use, but not others.  Every American needs our military, for example, but not everyone needs the blue-shirted Transportation Security Administration folks who remind us to take off our belts, look at our drivers licenses, and wave us through scanners.  Why should people who don’t regularly fly on airplanes pay for services that are used only by regular air travelers like me?  And with all of the nickel-and-diming that goes on with air travel these days, from baggage fees to food fees to other obscure charges, who’s going to notice an extra $3.10?

The problem I have is that the money raised won’t be used entirely for the TSA, or apparently for services that are directly related to air travel security.  I recognize that the federal government is one huge bucket, and it’s hard to precisely account for specific payments, but if you really want to implement a “user fee,” the proceeds should go solely for the service being used.  Otherwise, you’re just using the fee as a thinly disguised tax to raise general revenue, and you’re targeting just one group for the tax hit.  That’s not equitable, and it’s destructive of the fairness principle that make user fees a sensible approach in the first place.