A thought exercise
Imagine for a moment that you are part of a group that is creating a new state government from scratch. You, personally, are responsible for designing the revenue-raising scheme. How would you do it?
Let me propose one scenario. You think for a bit and decide that what you need to do is to tax personal property. People have stuff, you figure, so why not tax it? Of course, people may have stuff, but that doesn't mean they have money to pay the tax. Maybe they'll have to sell the stuff so they can pay the tax, after which they won't have stuff for you to tax.
But you would raise a lot of money this way, so you decide to tax their real property, too. The same liquidity problems arise, but so do some others. You have to place a value on their property, so you come up with a way to value their real property based on market trends. Your scheme works great in rising markets, but there is a lag between valuing property and collecting the tax on it. When the market goes up, taxes are low relative to property values. But when the market goes down, taxes are high relative to property values (and when markets are down, people tend to be earning less). So you end up with a system that taxes people most when they are least likely to have the money to pay. No matter; you would collect a lot of money this way.
You need more money, though. So you also decide to tax people's incomes. And their purchases (but not all of them; you're going to want to put in a whole load of complex exemptions). Plus, you place some extra "fees" on "services" the government provides.
Finally, you sit back to survey your work. You think to yourself, "Let's see, we have here a tax system that is confusing, is inefficient, is difficult to comply with, hits people hardest when they are least able to pay, is sure to be an awful mess to administer, and will kill jobs."
Is your next thought really going to be, "Yep, that's about right! Let's do it!"
Of course not.
And now for something completely different
And yet that's what we have effectively done.
I suggest that we rethink how we tax. Taxes, to the extent we have them at all, should have a few characteristics:
- Taxes should be broad-based and fair.
- Taxes should be collected only on liquid assets or at the point at which liquid assets are available.
- Compliance should be easy to figure out, which keeps taxpayer and tax collector costs as low as possible.
- The tax system should be consistent and predictable so businesses and families can plan ahead with confidence.
As your Representative, I will do my best to lead the charge on ridding ourselves of the crazy tax system we currently have and replacing it with something that makes a bit of sense. It will take a lot of work, and Colorado's Constitution limits how much we can do. But that should not stop us from doing what we can.
Striving for a better, more common sense tax system will enable families and businesses to thrive because they won't have to waste so much effort and so many resources trying to navigate a byzantine and unnecessarily complex, unfair tax scheme.
Will you join me in the effort?