Income Tax and American Businesss: A Square Peg in a Round Hole

Pueblo Bonito at Chaco Canyon - photo by JoAnn Sturman

Scott Sturman
fliesinyoureyes.com

" A popular stereotype of business is men dressed in suits on Wall Street who have more money than they can spend. But the true beauty behind business success is that it is obtainable by anybody whether they have a college degree or high school diploma. Business is about taking risks at the right time in order to gain success." Shannon Sturman 2011

Business is indeed the avenue to success for millions of Americans, and it has allowed a standard of living unsurpassed for a country of its size. An entrepreneur need not have an Ivy League education or be born to wealthy parents. Hard work, risk taking, innovation, and the thrill of not having to take orders either translates into success or failure. The dream, however, can be more illusive if oppressive regulations poison the business climate or tax law is written to favor inefficient businesses with strong political connections.

My father in law is a good example of the American dream. Born to immigrant parents, he started his own trucking company as a teenager and ran the business for over sixty years. To prosper as an independent businessman for this length of time, one must provide quality service at a competitive price while maintaining a health relationship with employees. One must be able to weather business cycles and cope with a horde of government regulations which more often than not degrade operational efficiencies.

Prior to the European Enlightenment, Western civilization was steeped in superstition and religious fundamentalism. The Church proclaimed a geocentric model of the universe with the earth at the center. This view defies all scientific laws and cannot be accurately explained, but brilliant men were able to concoct hopelessly complicated arguments and physical representations which demonstrated what the Church wanted to hear. Intelligent people do stupid things just like the rest of us, but they often do not realize they are wrong.

The American economy is dependent on the health of American business, and the business climate will not perform optimally as long as it operates under the convoluted income tax system. Businesses necessarily must be resourceful to survive, and this means adopting less than ideal business practices to insure maximum profitability for tax reasons; it is not unlike the geocentric model which baffled Middle Age scholars for centuries. Clever people constantly tinker with it, but it becomes more unwieldy with every intervention. Reform must be based on a fair and simple tax code based on consumption which does not penalize thrift and hard work, nor reward inefficient business practices.

Efficient and equitable tax law must be coupled with prudent expenditure of these resources. It is remarkable that evidence of this philosophy can be found in the most obscure sources. A history book discussing the European colonization of Africa, The Scramble for Africa, noted the reticence of British Parliament to engage in political or military activities without having the money to pay for it. Perhaps this is one reason Great Britain was able to remain preeminent for 400 years. This lesson has escaped Congress which has demonstrated consistently the incapability of exercising fiscal restraint and the inability to handle the country’s resources. Like a spendthrift child, the credit card needs to be shredded and a debit card put in its place.

If businesses, professionals, or households ran operations like the government, they would not last long without a printing press. Short of printing our own money, we in the private sector will thrive as long as government spends tax revenue prudently, removes unreasonable regulations, and enacts a tax code based on consumption.