What is broken in America cannot be fixed until we fix the tax system.
There is no difference between taxation and robbery. Both result in the property of one person being taken for use by another. Governments always have the potential power to rob their citizens. The original Constitution dealt with this challenge (1) by not having any provision for an income tax; (2) providing that all taxes were to be per capita or duties; and (3) guaranteeing that if private property were taken by the government—even for a public purpose—just compensation would be paid to the victim of that taking.
It is almost incomprehensible for American citizens today to picture such a tax environment. We are accustomed to a small (“rich”) fraction of Americans paying a huge proportion of total income taxes. We are inundated with demands that it is only “fair” that they should pay more. Yet nearly half of the population pays no income tax and many not only don’t pay taxes, but are paid an Earned-Income-Tax-Credit with money taken from others. There is a never ending demand from the federal government for more taxes to pay off the deficits that same federal government increases daily.
What is the root cause? It is easy. Politicians are elected by voters. Politicians get votes by promising voters benefits that cost money. Because of the federal income tax politicians have access to tremendous wealth to distribute as largesse to their supporters. In a democracy, the majority has the power to take money, through Congress, from the minority.
In addition, the federal government uses its vast taxing power to take large percentages of business and personal income. Then the government grants that money back to the states—to build roads, to educate children, to provide for the poor—but only if the states subject themselves to an avalanche of federal regulations. Were the federal government to restrict its spending to only the core roles of a central government in a federation, federal income taxes could be dramatically reduced. Individuals, and states, would have far greater ability to use their money directly to solve the problems facing their communities.
Finally, the income tax system is a ridiculous shambles. It is incomprehensible. It is certain that no one knows for sure if they are paying the correct amount. The rules are so complex that many are paying more than they should and many are defrauding the system by paying far less. Tax enforcement is so harsh that it violates even basic concepts of due process. There is probably a special provision buried in the bookcase of tax regulations for every group that ever hired a lobbyist.
As long as the federal government can tax at will—because the majority (much of it non-tax paying) is always willing to tax others—and spend at will (to buy votes, a sure-fire strategy in a democracy), our present chaos will continue. Until you fix the tax system in America, almost everything Congress is doing is hacking at the branches and ignoring the root problem.
1. There should be a simple, flat, tax that everyone will pay on earned income. Protection from enemies, a functioning federal government, national parks, national highways, etc. benefit everyone whether they are rich or poor. Everyone should have the privilege of contributing to their upkeep. If people need welfare then it can be granted, but not through incredibly complex tax regulations. Equal protection of the laws, as guaranteed by the 14th amendment, should apply to tax laws as much as it does to voting laws.
2. No one should vote who doesn’t pay taxes. A simple, flat tax means everyone can be a tax payer (or part of a tax paying household) without undue burden. If all who vote are themselves taxed it will prevent voters (through their elected representatives) from passing tax laws without having those same laws applied equally to them.
3. There will be no exclusions from taxable income. If the recommendations contained herein are adopted, income taxes will be reduced so much that individuals will be amply able to support their chosen charities and causes without a tax deduction for doing so.
4. Capital games should be taxed at the same rate as any other income. Keep it simple. Differentiating sources of income for tax purposes sends false signals to the economy.
5. No income taxes can be collected that cannot be readily calculated by an average citizen.
6. If we believe as a nation that no one should earn more than some fixed amount then pass a law prohibiting corporations, professional sports teams, Hollywood studios etc. from paying anyone more than that fixed amount. But do not permit the federal government to use the excuse that because some earn too much Congress should be allowed to collect astronomical taxes from them to fund the federal treasure chest of treats to buy votes with.
7. No special benefits to chosen industries, causes, geographic areas, etc. can be granted through provisions lessening their tax obligations. They can only be granted by clearly identifiable largesse from the federal government, not hidden in the tax code.
8. Every federal grant to states, students, universities, etc. should be reviewed to see if it has an essential federal purpose. If it doesn’t, that grant should be terminated and the tax rates correspondingly lowered. The federal tax power should no longer be used as an ATM machine for politicians to reward their favored constituencies. Those subsidies can be replaced at the community or state level if justified.
9. The federal courts should be reminded that the Constitutional right to not have property taken without just compensation is equal, if not pre-eminent, to the taxing power. Just compensation for taxes to protect us from foreign enemies is provided equally to all citizens, so all can be asked to pay for it equally with a flat tax. But no one is justly compensated when their property is taken to pay for some special interest group in a distant state. That is tyranny.
Making these changes in our federal tax laws will seem impossible to many, if not most, politicians. It will require war with every industry, interest group, educational institution and lobbyist who perceives their existence depends upon continued access to the federal trove. It will require battle with the mega-army of tax advisors, accountants and IRS employees whose livelihood arises solely from the complexity of the tax code. But it won’t be unprecedented. Our country exists because an earlier generation of politicians were willing to pledge their lives, fortunes and sacred honor to battle the most powerful nation on earth. It will require many politicians to walk away from, even offend, their sources of power—just as President Washington was able to walk away from the power and status of the White House—creating an unmatched legacy. That generation did what they did out of their dedication and devotion to following generations. Can we?