There is an interesting essay, almost a small manifesto, posted at Tom Paine which makes a powerful and persuasive argument – that the time of a useful income tax is over. The longer a system is in place AND the more complicated it is, over time, people will find a way to play it, or to modify it beyond all recognition. And since our current economy pretty much specializes in separating money from the lower income brackets and piping it to the upper ones, it’s disturbing to see how the income tax and government spending fit in.
I was initially against the idea of doing away with the income tax, since the alternatives I saw were very, very shady, in that they would only accelerate what is going on now, the upward flow of wealth. The author cites The Rocky Mountain Institute and Redefining Progress as examples of new and different approaches to economic theory, but the only specific alternative proposed is to somehow tax on “waste.” Truthfully, the only way I can think of how to do that would require a radical re-structuring of the way trash is handled all over the country (which ain’t a bad idea anyway), but would be vulnerable to all sorts of chicanery, or an implementation of a series of luxury taxes (which could backfire horribly and merely be used to preserve status differences).
I’m going to think about this for a while, because this idea has merit. But in the meantime, those two organizations above do have some disturbing information to share… this, for example. Brrr.