REAL Tax Reform.

Glenn Reynolds has some interesting ideas for reform in the tax code. He would, for example, “repeal the "Eisenhower tax cut" on the movie industry and restore the excise tax.” He would also levy a “50 percent surtax on any earnings by political appointees in excess of their prior government salaries for the first five years after they leave office.”

Forgive me Glenn, while your ideas are great as far as they go, but that’s still “inside the box” thinking. The problem with our current tax system is that it focuses too much on income and not at all on how people make their money. That has a perverse effect on the economy.  For example, a farmer produces food which is vitally important to people, an auto worker produces cars which are the transportation mode of choice for virtually everybody. We can’t get along without miners and the people who produce and explore for oil and gas. We can say the same for people that work in industries that actually produce things ranging from aircraft to toothpaste. Doctors, while not actually making a product, are critical to curing our ills.

On the other hand, movie actors – if they were to disappear from the planet tomorrow – would have no effect on our well-being. Ditto college administrators, professors who teach any “studies” course, most lawyers, news and editorial writers, TV personalities, ball players, government bureaucrats and elected officials, nutritionists, First Ladies, anyone in the marketing or advertising business, economists and weathermen (whose value is being a good contrarian indicator), and virtually anyone whose product is not tangible.

No matter how much money Warren Buffet has made, or George Soros, or whoever heads Citigroup today, they are basically living off of the efforts of others, skimming an obscene percentage of the goods that people who really make the country work produce.

So how about a tax system that taxes you not on how much you make, but on whether what you make actually benefits the economy in a tangible sense.

So for starters, how about a tax of, say 50% on entertainer income up to $100,000, rising to 90% of income over $1 million? We can decide what the brackets should be, but there should be no question that this would produce a more fair and equitable system; a system where the people who produce the food, the cars, the fuel, the homes are encouraged to produce more for everyone. The people who entertain would come closer to the people instead of living lives of unimaginable luxury.  Those who live like leaches on the productive work of others could still continue to do so, but they would contribute to society by contributing the funds needed to maintain a free, prosperous and fairer culture.

This would also address the issue of inflation which is defined as too much money chasing too few goods. This tax system is aimed straight at this issue. If we reward the goods makers we will get more goods produced. Some of those government bureaucrats may even decide that they want to make something for a living. A win-win as they say. It would also address the issue of the export of high paying manufacturing jobs; by encouraging people to produce more at home and even rewarding those who work in manufacturing with lower tax rates.

I have to say that this proposal is truly brilliant. That’s tax reform for the 21st Century, “change you can believe in,” and “smart economics.”

Yes we can!