Taxes Must Have a Rhyme and Reason

This article was originally published in the “CAPITOL BUSINESS : The Business-Government Connection” section of the Sacramento Union on May 30th, 1991.

Tax, tax, who gets the tax?  Like a deviation of the traditional children’s game of “button, button” – the business community, as all California, is trying to guess who is going to get stuck with the new taxes which are virtually inevitable as the legislature tries to balance the $14.3 billion budget deficit.  All sorts of tax ideas are being thrown into the legislative pot as our elected representatives scramble to pluck enough money out of our pockets while offending as few people as possible.  Last weekend’s Assembly and Senate Joint Budget Conference Committee resurrected all manner of proposals and no agreement is in sight.

To name just a couple of ideas, the committee proposed reinstituting an inheritance tax in California (a tax which was disbanded years ago by the voters), and they proposed limiting the mortgage interest deduction for California homeowners.  Of course, ideas from other quarters also abound, such as Governor Wilson’s desire to tax certain types of food.  There is a head over heels rush to increase the state’s income through new or increased taxes.  And with a $14.3 billion deficit, the motivation is reasonable.

However, I must ask if there is any rhyme, reason or logic behind these various tax proposals.  Is it really just a pell-mell rush to tax anything which the legislature thinks it can get away with?  Whichever wheel squeaks the least gets the tax?  Or, are there guiding principles being used as to what makes a reasonable tax and a fair tax?  Unfortunately, I am inclined to believe that it is more of the former, and this leads the general public and business community to further distrust our system of taxation.

I once asked a state senator who has gone on to higher office whether the 120 members of our legislature used any guiding principles in their decision making processes.  He hesitated a moment, and then responded that perhaps a handful do.  The others just make decisions and cast votes based on what seem opportune or workable at the time.  Many vote for something, just because someone else voted against it or to get even with another legislator.  Reasoned principle was certainly lacking in the process.

How unfortunate this is when it comes to taxation – the most potentially tyrannical and dangerous aspect of government.  For indeed, the unlimited power to tax is equivalent to the power to destroy.  And, of course, arbitrary, excessive taxation was the primary provocation for the American revolution in 1776.

Elected representatives must realize that when government takes a portion of a person’s earned income for its own uses, that it is in effect confiscating a proportional percentage of that person’s working time.  Taxation is a form of impounding a share of person’s time and his life.  Furthermore, he is deprived of the fruit of his labor.  Excessive taxation becomes tantamount to a form of slavery.

Therefore, even with the obvious need for money, our lawmakers should take great care in how they choose and implement taxes.  Taxes should be equally and fairly applied.  They should not be arbitrary.  Recognizing that taxing authority comes from the People, the legislature should not flaunt the public will.  Furthermore, taxes should only support the mandated, constitutional duties of government.  Therefore, the scope of our government should be rigorously reviewed so that only enough money is collected to meet the limited functions of our government.  Broad, generous interpretations of governmental duties should be first scrutinized, before increased taxation is liberally applied.

Ben Franklin commented in 1758 that a government would be considered hard if it commandeered more than 10% of its people’s time (ie – earned money).  In combined government taxation, we have well exceeded that mark, and the strain is showing.

Bruce Lee expresses the views of the California Business League, a trade association dedicated to restoring quality government.  His column appears Fridays in The Union.  If you have comments or an item for the column, write Capitol Business, P.O. Box 60267, Sacramento, CA  95860.

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