While contemplating the gathering of information to prepare for my 2009 income tax returns, I started thinking about all of the different and creative ways governments come up with to impose taxes on all of us. Worse yet, most of the time we are not really even aware of the extent of that taxation.
Have you thought about all of the occasions in our daily lives that the governments reach their hands into our wallets?
Obviously there are income taxes, where some people think the process of withholding money from our paychecks has made this tax less painful, and others feel the lost interest increases the pain. And, of course, there are capital gains taxes on investment earnings, and yearly taxes on the ownership of real property.
Then there are the state, county and city sales taxes. In Orange County, the total sales taxes are 8.75%, and in Los Angeles County they are 9.75%. That makes my neighbor, who owns a home improvement store just over the Orange County line into Los Angeles County, really upset, because his customers will actually drive about 10 miles farther to make expensive purchases inside Orange County just to save that 1%. But any way you look at it, all of us pay a pretty large amount of money in sales taxes.
Most of us are aware that motor fuels are also taxed at a high rate, but did you know how high they are? In California motorists pay 63.9 cents per gallon for gasoline, and 72.9 cents for a gallon of diesel — and that is in addition to sales taxes! Imagine how much money that brings into various governments each day. The rationale for those high taxes is that the money raised will be used to build and maintain our roads and other transportation facilities. But often politicians find a way to divert it to other purposes, because they simply cannot ignore large amounts of money that are not being spent.
Other large sources of revenues for governments are the so-called “sin” taxes that are imposed upon cigarettes, which are taxed in California at 87 cents per pack, hard alcohol at $3.30 per gallon, and wine and beer at 20 cents per gallon. We also have inheritance taxes, or the so-called “death tax,” that take a fairly large chunk of the estates of deceased people above a certain value.
Those are the taxes that are normally the most visible. But have you looked recently at your telephone bills? My examination of my monthly Verizon cell-phone bill showed me that of the $30.81 total charges, 8.6%, was for various taxes and surcharges. There was even a charge of $1.75 not to publish my listing! (Maybe we all should start businesses of not publishing people’s telephone numbers, and then charge them a fee for it?) I would also pass along to you the amount of taxes on our AT&T home telephone bill, but I couldn’t figure them out.
There are similar taxes, fees, charges and surcharges on all other utility bills as well, which are mostly blended into the overall bills to obscure how much they are, or what they are for. But you get the idea. Similarly, I recently I flew from Orange County to Washington D.C., and calculated that the “taxes, fees and charges” came to a full 15.7% of the cost of the ticket.
The worst situation for added charges that I am aware of is, embarrassingly enough, with so-called “penalty assessments” that the court system imposes when people have committed a traffic violation. That means that when, for example, a person is ordered to pay a traffic fine of $100, the court is required to order the person also to pay penalty assessments of an additional $344.
These fees are assessed for such things as DNA testing, court security screening, the law library fund, court maintenance, traffic school and even unspecified “surcharge” fees. And it has been known that some judges inform traffic offenders only that they will be paying a fine of $100 “plus penalty assessments,” so the people find out how much they will actually owe only when they go down to the clerk’s office with checkbook in hand.
I was as much in the “responsibility business” as any judge, but it seems to constitute an institutional lack of integrity to add such a high percentage of fees onto the fines that we assess. Nevertheless, judges are expressly forbidden by law to waive any of these fees, because the folks in government are so hungry for extra money, and have run out of other options.
How has this situation become so extreme? The answer is that governments continue to grow and, therefore, they need more money to pay for additional employees, assets and programs. This is logical because it is the natural function of any bureaucracy to increase its size and power. But do we really need to have and pay for all of this government? For example, do we really need agencies like the Bureau of Indian Affairs? The Native Americans don’t think so.
Similarly, and as has been discussed in previous columns, why should governments own things like county fairgrounds, sports complexes and theaters? If there is a public need or desire for such things, the free market will provide them — and run them much more efficiently along the way. Or why should the government be involved in the partial ownership and running of automobile companies, banks or health-care services? Setting up oversight over these activities? Certainly, but that’s all.
In addition, why do we continue to require that mail delivery be publicly run? In today’s world of electronic bill paying, e-mail correspondence and computer teleconferencing, the amount of first-class mail that is being sent is steadily decreasing. Nevertheless, we continue to maintain the expensive U.S. Postal Service monopoly. Why not instead have Congress decide how much of a bounty it is worth to the public to have things like newspapers and magazines delivered through the mail and pay that amount to any carrier that will deliver them? Then we can open up all mail delivery services on low-bid contracts to companies like Federal Express or the United Postal Service, who will do the job better, and for far less money than the U.S. Postal Service.
Finally, I want to pass along to you a story. When I was a military lawyer at the U.S. Naval Air Station in Guam, for reasons only the Navy could explain, I was given the responsibility of overseeing the station’s child care center. When I took over the operation, the numbers of children left by parents with the center per day were down, the center itself was losing money, the staff was underpaid, and morale was poor. After assessing the situation, I ordered that the charges per hour per child be reduced, employees who were performing well be given a raise, and non-performing staff be let go.
Within four weeks, the center was full of children, morale was high, and we were making a profit. Government can learn important lessons from experiences like that. Often by reducing taxes and other fees the economy will improve, the government will actually increase its gross revenues, and everyone will be better off.
So the ultimate Libertarian lesson is that you and I must exercise the supervisory powers we inherently have over government as taxpayers and voters to reduce the size, power and expense of government. Then we can reduce taxes and other related fees, and along the way be able to spur the economy and the creation of jobs much better than we are doing today. But without our involvement, governments will continue sinking into their present sea of red ink.
JAMES P. GRAY is a retired judge of the Orange County Superior Court, the author of Wearing the Robe – the Art and Responsibilities of Judging in Today’s Courts (Square One Press, 2008), and can be contacted at email@example.com or via his website at www.judgejimgray.com .