Comment: I was distressed to learn of this effort only at this late date, since the parameters have evidently been limited so that meaningful reform is off the table. Nonetheless, just in case what is currently being planned doesn't work, this is the way it should be done: 1. The basic parameter should be that no product of anyone's effort should be taxed away from them. To do so is not only immoral, but unnecessary, since revenue can be raised without doing that. 2. The simple answer to How to Tax is contained in Henry George's Progress and Poverty. In that book he presents (in a much more complicated form) the proposition that the development of a society contains within itself not only the incurrence of costs, but the means for paying those costs. For example: * The first settler across the West in America crosses a thousand miles of trackless land with one spot just as good for settlement as any other. He picks one and settles. The second settler encounters the same conditions, except that there is now one spot that is distinguished by the fact that he would have a neighbor if he settled there. To the extent that there is an advantage to that, the property is incrementally more valuable than otherwise identical spots elsewhere. As this scenario is repeated until a community exists there, it is evident that having a fire department and a school system for the benefit of all is a good thing. These things are an expense. That expense should be borne by the increased value of the proximity to others. This means that, if settler A's property can be sold to a newcomer for more than it originally cost, plus the amount that he has spent improving it, then that increment should be taken as a tax to pay the costs of the community improvements (the fire department and the school). Fast forwarding to the present time, there is no reason why I should reap a windfall when the selling price of the piece of property which contains the house that I bought to shelter my family skyrockets, not because I put in a swimming pool and a patio cover, but because many more came here to live. The costs of roads, fire protection, and security that have arisen because of the population increase should be paid for from the increase in property selling price, also caused by the population increase. * Another example. Capitalism involves one person investing his money and another his labor to produce a product which can be sold at a profit, which they share. If the company thus established produces regular profits, acquires assets, and enters into advantageous contracts, it will have a value, and someone else may want to buy the company. When it is sold, the original capitalist will have a profit which is based on his sagacity, and willingness to take a risk. He has thus earned his profit, and he should not have it taxed away from him. If, on the other hand, when he sells his business the price of it has been inflated by speculation as to what it will be worth in the future, by increases in the price of the stocks of other companies in its "sector", and "buzz" about this being the next hot thing in the stock market, then the price he receives will not reflect the results of his efforts, but elements that he did not control. They are, as to him, an accidental price increment. All of that portion of the increase in the price at the sale, over the amount he earned, can legitimately and morally be taken to pay the costs of the community which caused the additional increase in price. In short, any profit made on a sale of stock that cannot be justified by the intrinsic worth of the stock, and the underlying company, should be taxed at 100%. This is what is truly meant by a "fair" tax. * A third example. The spectrum of signal carrying capacity is something that no one created, and it is something that is useful for mankind. Therefore, no one should feel that they are being unfairly taxed, if that value goes to pay for the things of use to society. It is important to distinguish the value of someone's having invented a more efficient way to use this spectrum that exists in nature. That increment in value should, of course, not be taxed, since to do so would rob someone of the legitimate value of their labor. Please base the next attempt to make taxes fair, simple, and understandable on these principles. Bill McKim 29634 Camino Delores Sun City, CA 92586 (951) 679-6179 billmckim@gmail.com |