The Myth of Fair or Easy Taxation
By Anthony Gregory • Wednesday April 15, 2009 1:58 PM PDT • 3 Comments
We can expect to hear calls around this time for tax reform. Some say we need to make the tax code so simple that you can fill out your return on a postcard. Looking at the 1040 forms going back to 1913, it appears as though the Income Tax form was never that simple.
Some say that we need a flat tax, or a “Fair Tax.” These are impossible. Taxes cannot be neutral or fair in any sense, and when the federal government is spending trillions every year, there is no way to extract that much from a population equitably or without violations of privacy.
A national sales tax would break down the division of labor, turn each state and retailer into a national tax collector, and move us closer to a system of money even more closely tracked by government. It would also be unconstitutional. A flat tax would not be flat if it included vouchers for the poor, and it would be terribly vicious if it did not.
The American Revolutionaries didn’t just want more convenient or even simply nominally lower taxes. When the Molasses Tax was cut by 50% in 1764, they smelled a rat. They suspected, rightly, that it was a British trick to get more revenue by making enforcement easier. They did not want an empire, with its writs of assistance and wars. It was government power, especially in violation of civil liberties and peace, that the colonists most resented.
Many of today’s tax protesters carry this radical legacy forward, but many others are confused about the underlying problem. Government power is the problem. War and the national security state are the problem. The French-Indian War gave us the taxes of the colonial era. The Civil War gave us the Income Tax. World War I meant a much higher tax and World War II meant tax withholding. Today Americans are still filing for 2008, to pay for Bush’s expansionary government and wars abroad.
If you resent the taxman, work for much less government in all areas, especially those that have historically meant the most abuses of our property rights and free economy — the national security state, corporatism, and the police state. Taxation is always theft, no matter the form, and the state is the central problem.
Tags: Budget and Tax Policy, Civil Liberties, Constitution, Personal Liberty, Taxation, The State 
American voters want big government. That is why they elect Republicans and Democrats. Americans think rich people and corporations are going to pay for their health care and retirement. The American voter is like the GM worker thinking GM will always be there to take care of them even when they retire. The U.S., like GM, is bankrupt. GM cannot print fiat currency like Uncle Sam, but when the federal debt is more than $20 trillion there will be a huge crisis. It took 29 years to double the federal debt from 1945 to 1974. We are now doubling it every 6-8 years.
High taxes, inflation, and unemployment are the result.
The solution is to allow the system to fail under its own weight. If you are a productive member of society, pay off you debts, work less and reduce your income. Live on less and get off the treadmill. The government will take half of the fruits of your labor while you work and half of what is left when you die. Why sweeten the spoils for them? Also, stop buying government debt. Invest in corporate bonds instead. Stop supporting the government with your labor and your savings. With hyperinflation around the corner, hard assets and essential businesses will outperform paper money and marginal enterprises.
Bennet Cecil | Apr 15, 2009 | Reply
The Clinton-era taxes are more fair than people want to admit. They seem not to understand that taxes make their lives much easier than none.
Ada | Apr 17, 2009 | Reply
The author seems to have a few facts wrong. First, most states already collect sales tax, along with most counties and municipalities. To imply that a flat or “fair” tax would result in states being tax collectors misses the point that they already are. And unconstitutional? Would the author care to offer any explanation of why a federal sales tax would be unconstitutional? The Feds already have a federal sales tax on certain goods, such as fuel. Additionally, the author claims, “A flat tax would not be flat if it included vouchers for the poor, and it would be terribly vicious if it did not.” Much of the available flat tax/fair tax discussion assumes that necessities, such as food, are exempt from the tax. Using such an approach a tax may be flat, fair and not vicious toward the poor.
Evan | Apr 21, 2009 | Reply