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Good social policy


Jason Reese March 22nd, 2007

It is time for the franchise tax to go.   Interestingly, it may well be on its way out. Senate Bill 636 provides a needed first step in abolishing this pernicious levy by raising the tax's liability e...

It is time for the franchise tax to go.
 
Interestingly, it may well be on its way out. Senate Bill 636 provides a needed first step in abolishing this pernicious levy by raising the tax's liability exemption from $10 to $250. By so raising the exemption, more than half of the filers would no longer have to waste the time and effort, let alone the funds. For the time and effort is the greatest burden of the tax. The compliance costs for far too many of the businesses outweigh the revenue produced for public services.
 
Businesses readily pay a great deal already in taxes; the corporate income tax rate is 6 percent, and the funds derived from it benefit us all, including the business that pays. Revenue pays for the roads on which customers drive to purchase goods, schools that educate the next generation of workers and police who keep the order necessary for any commerce to thrive.
 
The franchise tax, however, diverts money and manpower from productive efforts for petty bureaucratic compliance. This waste hits small business especially hard. Large firms tend to have the internal structure to jump through the various hoops erected by the government to siphon lucre from the private sector. Most small businesses, where margins are thinner, haven't such luxury.
 
Small business is not only the backbone of our economy (in Oklahoma this is surely the case) but also a vital element of the life of a republic. Owner-operators learn lessons especially well-suited to the duties of a citizen: balancing a budget, planning for the long term, reacting to unforeseen events. It is the same principle that justifies government incentives for home ownership. In the long run, a healthy citizenry is one that has experience in responsibility " the administration of a micro-government of sorts. With this experience in government, the small businessperson and homeowner is best qualified to keep our political leaders accountable.
 
Americans have known this truth since the colonial era, when the lesson was learned from the old Roman republic. At first limiting suffrage to property owners was seen as the best way of putting this principle into practice. Such an arrangement could never last in a country that obtained its independence on the slogan "no taxation without representation."
 
The new Republican Party of the mid-19th century, drawing on the ideas of its predecessors, the Whigs, found a better way. Rather than limiting the vote to those with property, encourage those with the vote to gain property. Land in the West was offered at rock-bottom prices, or even free, to those who would live on and improve it. The family farms of the post-Civil War era, the building blocks of Oklahoma, were the complete synthesis of home ownership and small-business creation.
 
Personal property is the enemy of both socialism and monopoly. Each of the latter is a concentration of property in but a few hands, the government in one and oligarchs in the other. A republic must be based on widespread property ownership to survive.
 
All this from just one tax cut? I think so. Not all economic policies are created equal; those that especially benefit small business are to be welcomed as good social policy, too. Now, if we could just do something about health care "¦
 
Reese is an attorney who lives with his wife and son in Oklahoma City.
 
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