As citizens, one of the big problems we face is excessive taxation. If you think about it, these taxes and fees come from a myriad of places and can be tough to follow. You might have heard local or state politicians brag when they “cut” taxes. What they didn’t tell you is that they reduced one tax, but likely increased a few other taxes and fees. Sure, you won’t be paying as much in one particular tax, but make no mistake, you will pay.

For just a moment, let’s forget about federal taxes and just focus on taxes and fees you would pay at the state and local level. Here are a few that come to mind: State income tax, city income tax, property tax, sales tax, gross receipts tax, car tax, inventory tax, corporate tax, capital gains tax, bridge tolls, meal tax, and taxes on cell phones. There are also fees for registering your car, fishing licenses, birth certificates, death certificates, etc. This list of taxes and fees certainly isn’t exhaustive, and I’m not saying they should all be abolished. What I am advocating is a simplified tax structure that makes it easier for the typical citizen to quantify their tax burden.

Let’s propose an extreme example where every tax and fee were eliminated except for the income tax. The rate would likely have to be increased, at least initially from its current rate, but on the other hand, the typical tax payer would be relieved form the burden of taxes and fees for nearly every activity under the sun. A reduced financial burden is obviously important, but the most important benefit would be a level of simplicity that would allow people to more easily engage their government. With just one tax, you would have one tax to follow and one rate to know. Attempts to raise the tax would be widely followed and widely understood by the citizenry. Legislators could no longer get away with “cutting taxes”, when all they really did was spread an increase around 10 other taxes. Government would be simplified, more transparent, and more efficient.

Is is possible for us to get down to a single tax? Sure, but I wouldn’t count on it. Instead, we should hold legislators accountable and encourage them to completely eliminate a particular tax rather than reducing several different taxes. Allowing so many methods of taxation makes it easier for politicians to drain the citizenry of taxes. Do you want to give them another tool to hide their extensive spending? By allowing them to have so many ways to take your money, that’s exactly what you’re doing.

The lesson: When faced with the opportunity to cut taxes, it’s better to eliminate a particular tax than reduce the rate on a few. Since it’s easier to raise a tax than re-institute one that has been abolished, taxpayers will receive more protection from future increases.
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