Look, TaxRascal is no fan of unfair taxes. We’ve pretty much affirmed that by now, yes? But the airlines are already enjoying all kinds of gentle caresses from the IRS (as well as basically every other government agency ever created, ever), so giving them a pass on another somewhat despicable revenue stream is silly, if not unconscionable.

Facts on the ground are changing, and the tax code should follow suit. Airlines are participating in a cashgrab orgy, and given the loose reins, there’s not an end in sight. Just a couple weeks ago, Delta & Continental both increased their baggage fees, tempting other carriers to follow. Delta’s increase moved their fees to $25 for the first and $35 for the second, up from $15 & $25. Delta’s been the pioneer in the baggage fee frontier, with the other legacy airlines quickly following suit once the sky doesn’t fall on their heads.

At the very least, our buddies in the IRS should take their rightful slice of the pie. A couple billion drops won’t fill the deficit bucket, but it’s a start. It’s a simple, common-sense move that’s been sorely lacking in the tax code lately. Which is exactly why it won’t happen, but TaxRascal likes to dream.

All that being said, it appears there’re a few IRSZombies who’re tired of the fees, too:

“This ruling does not address whether fees for the Services are reasonable because such a factor is not necessary to reach a conclusion on the facts provided herein.”

Amen, little taxman. Amen.

(Here’s the code being referenced, btw.)

Detroit City Council member JoAnn Watson has landed in hot water thanks to revalations that she saved a sweet $12,000 over the last nine years. A flurry of media attention forced her to explain exactly what was going on, and a thorough investigation (it lasted about a week). She didn’t exactly get a positive reception when she explained herself:

If anyone here in this circle received a bill and you’ve argued to pay more, just raise your hand.

That’s fine, but if I lived in a notoriously corrupt city, and happened to have a job in politics, I might at least think it looked bad.

And it’s not like Detroit is doing especially well, financially. Did Watson have any idea how many steamy text messages from Mayor Kwame Kilpatrick to his chief of staff that money could have paid for? Or how many jobs for the mayor’s friends and family that money could have saved (answer: not many — his associates got raises averaging 36% over two years, while city employees scraped by on raises totally 4% during that time period).

JoAnn Watson’s behavior is inexcusable. The city of Detroit has far more entertaining forms of corruption, some costing just a few cents per ridiculous text message. If she has any sense of civic responsibility, she’ll return the money to the city — or share the wealth and cut a big check to Blagojevich’s defense fund.

But there are a few big problems with this plan. First, it’s a huge violation of privacy, that’s prone to error. If there’s a mistake in the records that keeps the state from contacting a taxpayer in time, it might be a mistake on the state’s end — so they could end up naming and shaming someone who doesn’t owe money after all.

And even if the state is able to collect back taxes from taxpayers who are grateful for the amnesty, what if the naming-and-shaming gets the attention of the IRS? According to some reports, owing lots of back taxes could become a felony. If that happens, this plan would essentially give the IRS a list of targets who could be hit with serious penalties. New York State would end up using the Feds as muscle to enforce their own tax claims.

So if they can’t name and shame, what can they do?

• They can negotiate with taxpayers, and find out how much they can pay, and when they can pay it.
• They can wait and let the interest and fines accumulate. If you make paying late more expensive than paying on time, you give everyone an incentive to pay on time, without using scare tactics.
• They can let private collections agencies take a crack at it. It’s a way for the government to get cash up front, and for everyone to try new collections policies.

It’s good to see the government trying to innovate, here. Collecting taxes is not a solved problem, and nobody is even sure what kind of problem it is. Some states treat it as a personal finance management issue, like having a mortgage; others treat it as a crime. It’s probably best to aim for a middle ground: to admit that most late filers are people who plan to pay their taxes, and will be able to pay them, but were unable to get it done on time. Naming, blaming, and shaming won’t help.

Inside sources tell the Tax Rascal that this proposal is just a preliminary one, and that the full plan also includes a cost-saving cap-and-trade system, reducing the total number of flavors available to an easily managable group including stalwarts like “Bitter,” and “Bland,” as well as new introductions like “Asphalty,” and “Shame.”

Okay, maybe not. But it’s still a bad plan. The jury’s still out on whether or not taxing this kind of stuff would actually lead to better health (or would just lead to people trying unhealthier alternatives). And even if it is the right thing to do, there’s always the question of why that’s the right way to cover the extra health costs of people with unhealthy habits.

A rule like this basically says that the way to charge for health care is to figure out how much people are likely to cost the system, and then charge them in advance based on that. But that doesn’t make much sense: it’s like a restaurant charging people when they come in the door, based on who looks like they’d want steak and wine and who looks like they’d want a burger and coke. Why guess what people will do, and charge them based on guesses, instead of waiting to see what they do, and charging them for that?

The answer exposes a weird contraction in how we view health: we’re happy punishing people for something fun (like eating, when they eat too much), but not happy to punish people for something painful they deserve (like having an unhealthy lifestyle that leads to health problems). So we find punishable fun that leads to un-punishable pain. It makes more sense to just get over it, and start charging people when they make us spend money, not when they enjoy themselves and make us think they will.

More, elsewhere

• Wall Street Journal: Soda Tax Wieghed to Pay for Health Care

• Roth & Company: Soda Jerks

• Taxgirl: “Fat Tax” On the Scene Again

• The Tax Lawyer’s Blog: A Fed Tax on “Bad” Foods?

• Walletpop: We’ll Drink to That

• NYMag: Paterson’s Soda-Tax Dream May Live On

The core of Arnold Schwarzenneger’s new budget plan is an increase in taxes to pay for the state’s current budget shortfall: in addition to raising the sales tax, he wants it to apply to some services. He’s also raising taxes on alcohol, cigarettes and energy.

But one industry gets a tax break: TV and movie companies could get millions from other initiatives.

It’s not surprising that the state would want to tax some industries and subsidize others, but it’s disturbing that they’d need to help that particular industry: there is no state with as much access to the talent, capital, and expertise necessary to make movies. There is almost no reason for an ambitious person who wants to enter that industry to go anywhere but California. Schwarzenneger could easily get away with taxing them more, instead: ask yourself how high taxes would have to be for Universal Studios to relocate to, say, Milwaukee.

One of the most common problems with tax policy is that the industries with the most clout are also the ones least likely to need handouts. There isn’t any way to fix it — clout is usually a function of lobbyists hired, and more profitable industries can hire more lobbyists — but it’s helpful to see through the obfuscation. California’s taxpayers will pay the state a little more money, in order to give more money to one industry that isn’t going to do anything new with it (except, perhaps, lobby a little more next year).