Wednesday, July 11, 2007

A Windfall Contribution Tax

Politicians love to talk about "windfall profits," by which they usually mean profits that just fall into the lap of business with absolutely no conscious or socially responsible effort. Undeserved. Unjustified. Unfair.

Like the profits that come from the mindless and technologically simple tasks of exploring for oil on a planet where it is difficult to find, extracting it from the earth's crust or from deep beneath the sea, transporting it safely to another location, converting it into gasoline, and making sure that every Joe Sixpack can conveniently find it at a local station, 24/7, along with a Diet Coke and a candybar.

Gosh, can't anyone do that? What's so special about the energy business, especially compared with being President. A President has to do so much more than an energy executive. And a Presidential candidate has to do even more than the President, just to get elected.

Like get a haircut. The Washington Post reports that John Edwards' campaign spent a whopping $1,250 for just one haircut for its candidate in 2004. His defense? He didn't know how much it cost. He doesn't pay the bills. Someone else scheduled it for him. It wasn't his money.

Not a reassuring message from a guy who wants a job with even more responsibility and more access to money that is not his. Not a reassuring message for the poor guy who wrote Edwards a check believing that it was going to change the world, and who found out it didn't even pay for a haircut.

This is just more evidence that American Presidential elections have gone way beyond being a serious debate about ideas, and are now more like American Idol than the American Revolution. Haircuts matter! All we need now is Ryan Seacrest on election night, and instructions on text messaging our votes. Like the entertainment industry, running for office has become a process where lots of money changes hands with reckless abandon and questionable results.

However, there is a solution. Why not make politicians pay taxes on the money they raise and the money they spend? Why not tax them on their "windfall contributions" and limit their "election expense deductions?" Why not limit deductions by a progressive rate on contributions, whereby the more they raise, the more they pay? Why not tax them with an "alternative minimum contribution tax" if their intelligent tax planning drives their effective tax rate too low? Why not tax them on money held in their "political estate?" Why not tax them on their "political transfers?"

Making the taxation of political income and political wealth a mirror image of the taxation of private income and private wealth would place the full burden of their thoughtless actions on politicians who currently could care less.

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