In response to several recent columns, I received emailsexhorting me to "stop complaining and propose something." I agree that we'reexhausted from defining the problem and it's time to define solutions. With theelection coming up in 2012, let's go! I am disappointed in both Republicans andDemocrats, often for the same reason. In an election cycle, they are like Michigan and Ohio State fans arguing beforea big game.
Once on the field, they play by the same rules and the proposals madebeforehand quickly fade away. Candidates don't change Washington; Washingtonchanges them. After the inauguration, it's quickly back to business as usual.This really matters today because time is short.
My party is the Pragmatic People's Party (PPP). Our sloganis "What works—no magic!" We have a few central fiscal themes. First, thefederal government is the people, not something separate from the people. Weneed it for very few purposes, including shared defense, shared infrastructure (physical,electrical, environmental), international relations and regulating commerce(patents, safety). The federal government should stay far away from limitingsocial choices, beyond allowing those choices to be made.
Second, it makes perfect sense to support these commoninterests with user fees and income, sales/excise and property taxes.
Third,our party, unique among the others, insists that taxes should rarely, if ever,be a means to influence human behavior.
Fourth, we, the PPP, also accept the principle that if youare more fortunate, you should contribute more to the common good in linearproportion to your success, not more and surely not less. Fortune consists ofvarious combinations of luck and effort. Neither should be considered unfair.Fairness is a concept for meteorologists and elementary school students. Adultsknow life is unfair, and we get over it. Our platform specifically rejects theidea that taxes should appear to accelerate with success and then be counteredwith incentives and then countered again (alternative minimum tax) when thosespecial incentives are perceived by some to be used too much. Huh? This is ariddle wrapped in a mystery inside an enigma. Speaking of Churchill, we agree"that for a nation to try to tax itself into prosperity is like a man standingin a bucket and trying to lift himself up by the handle."
It's time to trim the rose bushes at the Internal RevenueService. Its complexities are a large drain on our productivity as a nation.Some calculate that it costs 30 percent of tax revenues collected to bothcalculate what is due and then scheme to find ways to avoid it. That's morethan $400 billion annually, a great potential source for United Way, your local symphony or evenmy life science startup.
Fifth, our party opposes corporate income tax and thecorporate component of social welfare taxes. These indirect tax channels fromindividuals (employees, shareholders, customers) provide opportunity forpolitical and business shenanigans that are not transparent. Following thistenet, life science companies will not be arguing for R&D tax credits.Depreciation rates need not be different for taxes versus book accounting.There will be no credit unions. There will be no income tax preferences fordrilling for oil or building a plant in a special real estate zone. Real estateand property tax abatement are development tools that would remain for localgovernment. No company will be motivated to hide cash overseas for tax reasons.All organizations should be profitable including churches, museums,universities, families and governments. To be nonprofit is a curse to beovercome, not a badge to be proudly worn.
Sixth, revenue would come to the federal governmentprimarily from the income tax directly on individuals with few—ifany—deductions. There also would be user fees for parks, highways, airways,patents, FDA and the like. Charities would be supported from the heart. Tocollect adequate revenue without deductions, the rates will be modest for all.
Seventh, Sarbanes-Oxley (SOX, or the Full Employment Act forAttorneys and Accountants of 2002) should be reversed (NOSOX, or theUnemployment Act for Attorneys and Accountants of 2012). We must slow downresponding to the question, "Why didn't the government do something aboutthat?" We ARE the government. A few of us will behave very badly no matterwhat. We have long proven that rules to prevent the malfeasance of a few oftendo great damage to the majority and little to those self-aggrandizing slimeswho are a side effect of sexual conjugation. The Enron and Tyco boards screwedup. Now the rest of us pay. Shutting down the IPO route to investment liquiditywas equivalent to taking milk from babies and venture capital from startups.
Eighth, as we have proven time and again, reducing capitalgains tax rates increases capital gains tax revenues. Life science investing isa long-term activity that must be driven by hope for more than just change, butfor gold. Should we tax those gains at all? I'm thinking perhaps not. Whatevergains there are will be put to work and thereby soon enough provide tax revenuefrom sales taxes, property taxes and income taxes. Growth catalyzes taxrevenue. Rates can do the opposite.
A lot of cash is frozen today by an uncertain upside andrepeated short-term plans that purport to create jobs, but simply move moneyfrom one private economy job to another or to the public sector. Capital sensesirrational behavior and hides. Consider the tax on medical device revenuesproposed to begin in 2013. How does this make healthcare more affordable anymore than raising the price of milk makes milk more affordable? How doesreducing social security taxes for a brief time encourage long-term hiring andsolve the economic problems of entitlements?
Prune the IRS rose bushes now. We can lower tax rates,simplify the process, improve transparency and raise government revenues whilefreeing capital to get back to work. That's where jobs will come from. We inlife sciences neither need, nor deserve any special help. Freedom now! We'll get it done the day we seea future of opportunity, not the threat of taking it away. Paying taxes is theresult of success. I'd love to pay more to do my share.
Peter T. Kissinger isprofessor of chemistry at Purdue University, chairman emeritus of BASi and adirector of Chembio Diagnostics, Phlebotics and Prosolia.
