Exactly. The closer to the people that actually see the money spent, the better. That was the genius of the Founders. They saw it was better to reserve to the states and localities those things that affected the people at those levels most directly.

Education is a great example. I remember when Sputnik went up was the beginning of a serious push by the Feds to get involved in education. It started slowly but soon the snowball effect began and now it is a major avalanche. It has, over the years, morphed from a desire to improve math and science education into an affirmative action program for all with a resultant inflation of costs. I cannot believe what a college degree costs today. I matriculated from 1950-1954. Between a summer job where my mother allowed me to live at home rent free so I could save my wages and working as a waiter, house cleaner, and yard man I got through college on my own dime. (Probably $8000[includes board, room, tuition, books, and incidentals] for the four years) That was a common story in those days. College has become so expensive that it is very difficult to do that today. Like Glenn Reynolds (the Instapundit) and Victor Davis Hanson I blame it primarily on Fed involvement and student loans. I think it’s also pretty well understood that the overall quality of education has declined except in the hard sciences.

I attend city council meetings occasionallly and it astounds me that fifty% of the issues taken up involve trying to conform to Federal regulations or applying for Federal grants. It was never supposed to be this way! Their tentacles are everywhere. Changing it is going to be a long struggle. I don’t expect to live long enough to see huge changes, but we have to start and 2010 was a beginning.

On to 2012.

I do agree with you wholeheartedly about this:

“Then tell the government to quit doing all the extra constitutional things (Charity, education, housing, energy, agriculture, labor relations, etc. etc). Get them back to defense, law enforcement/courts, and regulation of interstate commerce, period.”

But that has nothing to do with how we pay for the things we DO need government to do.

Hope you agree that we also need to pay attention to what government does these things best…federal? State? Local?

J.J., all the problems you mention about elimination of depletion allowances and depreciation allowances simply disappear if the companies paid no income tax and were allowed to spend and invest as they see fit instead of being guided by the government.

And quite frankly, we NEED a sudden dislocation in the economy now…in the direction of less consumption. Excessive consumption that we haven’t been able to afford is what got us where we are now.

The government maxed out its credit card just today.

So, under the fair tax, you keep every penny you earn. You’re only taxed when you spend it. To me, that creates all the right incentives for people to save, invest and generate capital formation for productive economic activity. Similarly, it also provides disincentives to engage in “conspicous consumption”. You can build a McMansion if you want, but you will no longer get the tax subsidy on your mortgage interest.

I’m not saying J.J. formerly Jimmy J is wrong in his analysis. A revolutionary change like switching to the Fair Tax will undoubtedly cause some serious dislocations for a couple of years. We’re going to experience a few years of pain to get the budget deficits fixed, so this might be the time to ask “if not now, when?”

It just seems to me the incentives/disincentives line up more naturally with a tax system based on consumption rather than one based on income.

texexec. “Surely we don’t want a market to exist for a product or service because the government subsidizes it via the tax code. That’s one of the things wrong about the current system. Special interests are subsidized by exemptions (aka “buying votes”).”

That is why I mentioned the idea of phasing out the exemptions and deductions over a period of time. Right now our tax code is written to steer fiscal behavior in all kinds of directions. Many people, I’m one, have arranged their financial lives to pay the least taxes possible. Is that bad? No, it’s what humans do. To abruptly change the rules would result in major financial dislocations for a large part of the population. And so it would be with a national sales tax. People would seek to lower their tax burden by no longer buying new and big ticket items or seek ways to purchase them in other tax venues or in the black market. I mentioned the small example of cigarettes. The same is true of hard liquor here in Washington State. The state sells liquor through state run stores and the taxes are exhorbitant. As a result bulk liquor sales are way down and much liquor is bootlegged into the state from Oregon and Idaho. It does probably accomplish the goal of reducing drinking somewhat. It has also goosed the consumption of wine and beer. But it has not helped the state aka tax revenue nor even with fewer DUIs.

Speaking of tax preferences how about the so-called “subsidies” for oil companies? Those are actually known as depletion allowances and have been in effect almost since the beginning of the oil industry. They are meant to encourage new exploration for new oil with the taxes saved. Do they accomplish that? For many of the operators they undoubtedly do. So, are they good or bad? Depends on where you stand on the “evil” oil companies. Another is the depreciation alllowance for buildings, equipment, vehicles, tools, and other means of earning a profit. Meant for companies to set aside money to replace worn out or outmoded parts of their businesses just like the depletion allowance. Is that good for business? IMO, yes, but when you want to collect more taxes from the “greedy” businesses it all becomes a bad thing.

My answer is to phase out the preferences and deductions over time and simplify the tax code to make it flatter. ie Steve Forbes’s postcard 1040. Then tell the government to quit doing all the extra constitutional things (Charity, education, housing, energy, agriculture, labor relations, etc. etc). Get them back to defense, law enforcement/courts, and regulation of interstate commerce, period.

i finally found a way to summarize everything short enough…

“Ryan is already the de facto leader of the Republican Party on the most critical issues of the day,” says Jennifer Rubin…

“I’m at a loss to think of another Republican who can bring together Tea Partyers, wonks, social conservatives, hawks, libertarians, Wall Street and Main Street Republicans and connect with a new generation of Republicans.”

Surely we don’t want a market to exist for a product or service because the government subsidizes it via the tax code. That’s one of the things wrong about the current system. Special interests are subsidized by exemptions (aka “buying votes”).

Which all sounds pretty darn reasonable compared to a million pages of rules resulting in ten billion man hours wasted on tax calculation in a country that already has major problems in the selling of big ticket items.

I think it was Mark Steyn who said it so succinctly…”Baseball is supposed to have a season. That taxes have a season is absurd.”

“Perhaps the most interesting, and enduring, feature of the book is the “multiple vote”, seen as a necessary reform of democracy. A person can have up to seven votes. Everyone gets a basic vote. Other votes can be earned for education (including a commission in the armed forces), earning one’s living overseas for two years, raising two children to the age of 14 without divorcing, being an official of a Christian church, or having a high earned income. The seventh vote, which in the book is awarded to Nigger for his heroism, is only given at the Queen’s discretion by Royal Charter.

Multiple votes have been known in history. Until the late 1940s, the graduates of Oxford University and Cambridge University sent representatives to Parliament. The graduates of the National University of Ireland and of Trinity College are still represented in the upper house of Ireland’s parliament. Part of the Reform Act 1885, as originally proposed, would have granted some Britons a second vote. That part of the Act was never enacted.”