Friday, March 2, 2012

Tea Party and Occupy Agree on a Very Bad Tax

Liberal/progressives generally consider taxes to be an investment in our societal infrastructure. Roads/highways, transportation, education, national security, environmental protection, food/agricultural protection, scientific research and other key initiatives that require such massive scale -they necessitate funding from all of us if we want to participate in an advanced society that provides world-class education and infrastructure.

Conservatives might argue that while some of the infrastructure initiatives are important -private industry can deliver with greater efficiency than government. They will often look to support candidates that want to "streamline or reduce" government in order to minimize the taxes we all must pay.

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What would my conservative and liberal friends say if I were proposing to implement a tax of, lets say 20% on all of our income? And this tax was not going to be used to fund any services whatsoever for the public. In fact ... what if this tax was going to take money from all and then write one big check to the wealthiest people in America? If you are a member of the Tea Party -would you support this tax? If you are a member of Occupy -would you?

This tax can't exist, right? Well I hate to share bad news but it does. It's called (in economic terms) an externality. All major for-profit corporations attempt to maximize profit and return as much (profit) as it can to its investors. This is not inherently evil -a profitable company makes money for investors who can then (theoretically) invest in more companies and stimulate growth. The problem is many companies will do all they can to shift what should be their costs to all of us. Because when corporations have less expenses they make more money. Think of it this way -if you ran an extension cord to your neighbor's home and started to take their electricity -you would be stealing (but lowering the costs of powering your home). When an oil company poisons the air in places like Martinez or Richmond, California -or the Ocean (Deepwater Horizon, ExxonValdez), or rivers -they are stealing clean air, water and other valuable resources from all of us -and transferring the costs or expenses of oil energy to all of us. It is a hidden tax.

So while I haven't seen the Tea Party and the Occupy movement shaking hands yet -I hope to see the anger and frustration they both share directed against companies all over the world that are taxing and stealing from all of us as they externalize their costs. Economic growth and profit are not bad -however should be sustainable and fair. Corporations should account for the true costs and not shift them to generally the most fragile and vulnerable populations in America and throughout the world.

We Agree?