A few words about: Taxes
By David M. Woods
Published September 22, 2006, 1:01 pm in Economic Issues.
If someone approached you with a dangerous weapon and demanded your money, else they would use the weapon to inflict physical pain and suffering, it would be considered armed robbery. The perpetrator, if caught, would be prosecuted, tried, and if found guilty, heavily sentenced. But if the perpetrator just happens to be an employee of the government, then it's all fine and well, and not a crime at all. Why is this? Why can government commit acts of violent theft with complete legal legitimacy, while simultaneously banning us citizens from the same?
Let us examine some of the myths and misconceptions about taxation, and consider some possible alternatives for paying for services.
Thieves make lousy stewards
For the record: taxation is theft. There is no way sugarcoat this fact. And thieves are notoriously wasteful. When an honest person must shed blood, sweat, and tears to eek out a living, he/she tends to be frugal and cautious how this precious income is spent. But a thief, who goes the easy route and simply takes someone else's pay, doesn't care. If the money dries up, the thief just goes out and steals some more.
Government is no different. Frugality and thrift have no meaning when all your income is really stolen. To say that we can make government "accountable" if we just elected the "right" people is a fantasy.
Therefore, all taxes need to abolished, right? Take away the power to tax, and the waste inherent in all government spending disappears, correct? Well, not quite. There's still one minor detail:
Spending
If all taxation were to cease to exist, government waste would still continue unabated. The source of the waste is not really taxes at all - it's spending. Ever dime the government spends must come from someplace. They can either raise the money via taxes, or just spend it anyway.
For reasons not quite understood, government can commit dishonest acts that we ordinary citizens would be prosecuted for, such as stealing. Yet another thing that government can legally do is spend money they don't even have. Some governments "finance" this type of activity by cranking up the printing presses and mass-producing paper currency. Other government try to make this counterfeiting appear somewhat more legit via institutions with names like the "Federal Reserve", but it's basically the same idea. Still other governments say they are just "borrowing" the money and not to worry, we'll pay it all back someday, trust us!
Either way, its we citizens who cough up the money, one way or another, and if any of us tried some of these techniques to finance our activities, we would surely be punished. Governments justify these actions by saying they are for the "public good" or the "national interest", but if these types of actions really were for our good interest, then why are they illegal for everyone else?
But it's particularly dishonest when government pushes through some much-ballyhooed tax "cut" while at the same time increasing spending like there's no tomorrow. A tax cut without a corresponding spending cut accomplishes nothing! President George W. Bush has raised this practice to an art form.
A Balanced Budget amendment to the U.S. Constitution was proposed many years ago, ostensibly as a cure for deficit spending. On the surface, this is positive move, and it's good to see a Constitutional amendment following the spirit of the first ten, which all had as their purpose to limit the size and power of government, not increase it, like the 16th amendment, which gave government the power to institute the income tax (which was supposed to be a "temporary" tax to finance the Civil War). But further examination of the BBA reveals that it would pretty much be a waste of the paper it's written on. There was absolutely nothing in the BBA to actually enforce it, and if Congress ignored it, so what? (A more useful BBA would include a clause saying that, in the case of a deficit, that every elected official must make up the difference out of their own pocket.)
The politics of Envy
So now that it's established that the government can legally commit armed robbery, let's really rub some salt in your wounds. Somehow the leftist liberal socialists in the U.S. have convinced us all that earning an income is a crime against humanity, and the more you earn, the more evil you are. Therefore, the government must punish the sub-human scum that had the audacity to work hard and succeed in life. So lo and behold, we have the Progressive Income Tax. If we can't have it, so the logic goes, then no one can have it. (Or rather, the government gets it.)
George W. Bush, early in his first term, proposed and passed a rather meager tax cut bill that reduced taxes on stock dividends. Since that day, his political opponents have been screaming how he "eliminated taxes on the rich!"
Let us examine some statistics: According the IRS own statistics, in FY 2005, the top 1% of wage-earners paid about 34% of all income tax revenues. The top 5% paid about 54%, and the top 50% paid about 96%.
From these figures, it is clear that the politics of politics of Envy are still alive and well, dividend tax or not. If the leftists desire a nation that soaks the rich big-time, they got what they want. So much for the leftist slogan of "equality under the law." Note that, even if the progressive income tax was abolished and replaced by a simple flat RATE, the rich would still pay more taxes than the non-rich.
Conclusion: Where do we go from here?
A few alternatives to involuntary taxation exist. User fees for government services are a valid source of revenue, provided that it really is a fee for some specific service, and consumers truly have a choice whether they want the service or not, and that competitors are not excluded from the market. Lotteries are another alternative. I have no ethical or moral objections to any organization wishing to raise funds via lottery; however, governments that use lotteries typically ban other organizations from competing with them.
Actually, the best course of action is not a total elimination of involuntary taxes. Government does have a legitimate role in our society, although it is a very limited role. Specifically, government is responsible for instituting a system of law and order and justice to protect life and property from violence, theft, and fraud. That is but a tiny, miniscule task compared with the zillions of things that government attempts to do today, and fails at miserably.
So therefore, I proposed the following compromise:
If the military, the police, and the judicial system must be tax-supported, I will accept that, on the grounds that these things can be considered legitimate government functions. However, everything else must go.
To finance these things, the total tax rate on every U.S. citizen would be fixed at 2% of income.
Furthermore, the IRS must go. It's Gestapo-like tactics make a mockery of the principles set forth in the Declaration of Independence. And abolish the U.S. tax code, also. It contains 3.4 million words; printed 60 lines to the page, it would fill more than 7500 letter-size pages of arcane, confusing, incomprehensible bureacrat-speak. One would think that the tax code would be plenty complex enough already, yet year after year, Congress adds yet more to it.
As a substitute, taxpayers could send in their remittance accompanied by a postcard containing the following 2 statements:
- "Enter your net income for the past year"
- "Multiply it by 2%"
Voters, this is absolutely plausible and doable. All we voters have to do is demand it.
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