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A Taxing Proposal
By Tim Holland
The area that Congress, and most legislative bodies, seem to neglect is in the follow-up to the legislation they enact. There is the tendency to collect the signing pen and move on to the next challenge. Remembering the details of the legislation (if they were ever totally known) is useful only when touting its benefits during the next election cycle.
Sound cynical? Of course, but the cynicism is well founded. Too often we run up against laws and rules that, when enacted, were ideally suited for their time and quite necessary, but as the years pass and technology, living standards, work environments, and even family and moral standards evolve, many of the old laws become useless and, in many cases, obstacles in themselves.
Asking for our legislators to be visionaries is probably going too far as an election requirement, but why not at least require that they acknowledge that the needs of the 21st century are going to be as different as the 20th was to the 19th and 18th? In truth, the differences will be even more dramatic as the last half of the 20th century experienced more change than the previous 200 years combined and the 21st century is following in the same mold.
Early in George W. Bush’s first term, the Congress passed a series of tax reductions that contained an interesting twist: They had expiration dates. The concept of adding a term limit to the legislation was a compromise to the Democrats, as a way of getting them to agree to the tax cuts. However, in retrospect, maybe it wasn’t such a bad idea.
In a world that is changing as quickly as ours, does it make sense to establish rules that will last forever? Even the Constitution has a provision for amendment so that it remains relevant to the time in which we live. So why not establish a system where all laws passed must be reviewed, if they do not expire, within a set time after passage? The system we have now is one in which Congress is, essentially, ruling from the grave, whereby a previous generation of legislators sets the agenda for the current society.
If you were to use the example of de-regulation of the banking system in the United States, would the difficulties we are now experiencing in financial markets be as severe if the effects of de-regulation had to be reviewed and reauthorized every ten years? If nothing else, certainly there would have been a public discussion of the results of de-regulation and the direction the industry was heading. There may also have been an opportunity to add, delete or modify the rules based upon how the banks were actually adapting to the new environment (what was working and what was not).
There are many legislative areas where maturity dates might be useful and most of them seem to revolve around de-regulation: Consider the airlines, utilities, global trade, environmental protection, natural resources as just a few examples. Small steps are sometimes better than large ones, especially when technology is changing so quickly.
Those in the industries or activities that are directly affected always want everything permanent if they believe it is in their favor, but is it good for the rest of us? Keep in mind that the current ruling business leaders seem to be slaves to quarterly earnings reports and all long-term visionary plans are always approached in light of what will be the effect on short-term earnings and stock prices. So would it be so bad to say to the lobbyists: “Okay, we’ll give you what you’re asking for, but if it doesn’t turn out the way you promise, it will be undone”? Well, maybe not completely undone, but certainly revisited and revised.
Now, the idea of expiring legislation would work both ways in that tax increases and new and re-regulation rules would be subject to re-evaluation at a set date in the future. This tactic has been used in a number of local instances where a sales tax was put in place until a dollar figure was reached that would support the construction of a road, bridge, school, etc. It’s a novel (but old fashioned) idea where the current generation pays for something to benefit their children and grandchildren (it’s called savings), rather than have bonds issued that will be paid for by the next generation (debt financing). The latter, of course, is what the finance experts like, just as banks would prefer you use your credit card and pay them interest, rather than save for something.
In the current economic environment, the idea that a previously enacted tax reduction might expire could be a bad idea. However, it’s not a bad idea to have the issue raised and a debate held as to whether the tax legislation actually delivered what was promised and how it could have been made better and what should be done going forward. The idea of simply making the law permanent doesn’t seem to be a good idea in view of the country’s current balance sheet. Here again we are involved in the question of the fairness of passing the price of our excesses on to our children rather than be willing to pay for them ourselves.
Being in the midst of an election cycle that is billing itself as one of “Change,” perhaps this would be a good issue to be addressed by not only the national candidates but also the local ones? Fiscal responsibility is not just about “no new taxes,” it’s also about paying your bills and making sure that the services and requirements the people demand are properly funded, without mortgaging their future.
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#1 |
on August 20 2008 13:16:27
#2 |
on August 20 2008 16:51:49
#3 |
on August 31 2008 06:02:28
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