Reform Assumptions

This seems to be the time of tax reform. Well, maybe not true reform, but there are a lot of tax change suggestions being floated on the Federal and state level. And I admit I’m doing good to keep track of the major suggestions on the Federal and Kansas levels. But one thing is starting to bother me about them.

Most proposals seem to rely on people, programs and laws over which the proposed change has no control. A few examples:

• If we cut EITC on the state level, then we could get matching Federal funds for programs that target those recipients. It assumes that the state will qualify and that the program will actually exist when they need it.
• Cutting business taxes will increase jobs. It assumes that the business will use the former tax money to hire and not pay down debt, pay bonuses or buy a boat for the owner.
• Increasing sales tax won’t decrease spending because businesses will use the money they are now paying on income and withholding taxes to reduce the cost of their goods to offset what consumers are paying in sales tax. Yeah, right! See above.

You get my point. It seems to me that taxes and the effects of taxes need to be realistic thought out. If we need to pay more in taxes to cover our spending, I may not like it but I understand the need. And I appreciate that you aren’t trying to BS me to cover your backside.

But to assume that a person or business will act a certain way and justify your tax proposal based on that behavior is just plain wrong. If you want to cut a program or increase a tax, do it.  But unless you can qualitatively demonstrate the results your change will create, you’re just making an assumption based on something you can’t control. And you know what they say about assumptions.

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