The Land of the Free - Conservative Politics Web Site

Tax Oppression by Jeff Jackson 06/13/03
The Land of the Free - A Conservative Politics Web Site

Taxes are a necessary evil for governments to exist. Governments by nature do not produce much, if anything, that is of monetary value which they can sell in order to raise the money needed to carry out basic functions. Thus money must be raised through the imposition of taxes and these tax revenues can only come from two places: the people under the direct control of said government and people from outside countries seeking to deal with it.

People who live under a government should bare many of the costs of the government otherwise their care towards how that money is spent would be decreased. While some money can be raised through taxing foreign commerce it is still the obligation of those that partake of the benefits of a government be it a free society or not to help with the costs of maintaining such a society. The burden should not be weighted towards those that do not partake of a country's governmental system but they also can not be totally exempted either. And there is some truth to the argument that those seeking to trade with a country will partake of that system as well.

However, the method by which we tax our citizens in the United States inhibits our free society. We have a taxation system based upon taxing the generation of wealth. We tax the productive work of our people. And that in turn leads to an obscure side effect. This side effect is the ultimate inhibiting of the enrichment of our people by slowing the rate at which they generate said wealth. And not only do we tax people based upon the number of dollars that they earn, but we also progressively tax them at higher rates the more and more they make. Thus the creation of wealth is stifled because you have to work harder and harder to make more and more while paying a higher penalty to the government when generating more.

Now, the concept that as you make more and more you should bare a slightly higher burden of costs does have a ring of truth and reality. However the means by which such an end is currently arrived at is faulty. Our current concept is if you make under X amount you pay Y% and if you make X dollars or more you pay Z% (which is greater than Y%). We ignore simple math that even if you have the same rate for all people then those that make more inherently will pay more. No, instead we have a system that increases not only what you will pay, but the rate at which you will pay it.

And this progressive taxation on the generation of wealth is even worse for our country above and beyond simply taxing the generation of wealth.

Before we can actively look at how to solve the problems of this anchor that holds back our generation of wealth we have to make a few realizations. The first is that governments will seek to expand and broaden their power and in order to do this, they need more and more money. Thus constraining governments financially is a major method to reigning in what some would see as new callings of government. Give government less money and they have less to spend. Government's spending less means that ultimately only the necessary functions of government will be funded. If not then the government will collapse.

For example, if a government spends all of it's money appeasing special interests then it has no money to spend for it's basic functions. And if it can not raise more money to meet those functions it will collapse unless it shifts it's spending.

The second realization is that inhibiting the generation of wealth is indeed a bad idea. When you inhibit wealth creation you do not inspire the populous to work harder to create more wealth for themselves.

The third is that it should be the role of government to enable as many people under its control as possible to not be dependent upon the government except to provide for basic needs such as national defense and uphold laws while protecting liberty. While some would look at such things as certain subsidies and government programs such as medicare and social security as signs of a compassionate society, in the long run they create dependents upon government and are outside of the common good in a society based upon liberty. And people depending upon government for too many services creates a class of people beholden to the government upon the backs of those who are not enslaved to it. But, in the long run even those that are not dependent upon the government are indeed slaves to it. For they are the ones that will ultimately bare the costs to support those who are. They become slaves to the enslaved.

And knowing and realizing these truths we can proceed to solve our dilemma.

Every year around late March and early April headaches begin. They begin because as it stands we in the United States have a draconian tax system and code designed to intimidate, confuse and ultimately inspire over payment to the government. We are inundated with credits and write-offs and code changes and fear of audits if we list something incorrectly.

Such a system serves only to generate two outcomes. The first is to provide an avenue to generate extra income to the federal government through over payment of taxes. Ask five different tax attorneys if something can be written off and you will likely get 3 or 4 different answers. Thus through the fear of being wrong many people will not get everything that they are entitled too under the law. The IRS will be quick to point out when you owe them money but when is the last time they were so quick to double check your taxes and find allowable deductions that saved you money? The answer is they don't. Thus because the audit system is designed to only find underpayments, the process has already become flawed and must be changed.

The second outcome that such a tax code generates is a permanent bureaucracy and a whole new class of persons beholden to the government for their livelihood. For without the convoluted tax code they would not have a job. Once again, this makes the process flawed and it must be changed. Pile that up with the fact that many of them do not know the rules and laws either and it only compounds the problem.

In order to solve these two problems the tax structure of this country must be simplified. And simplifying the tax code must be done to ensure that people pay what they are mandated to pay by law without allowing them to hide behind loopholes or claim false deductions and hope to not get audited. We can argue about how much people should pay and so on but I will leave that for another discussion.

How can we simplify the tax code? Let us explore the possibilities and accept that you can never be too simple. But before we do let us add one more truth and that is that no system will be completely without faults.

There is only 1 fair solution. However that fair solution does not work and in the end there are really only 2 viable solutions to the taxation problems of this country.

First solution would be that Everyone pays equally.

This is the fair, but currently impossible as a solution I just mentioned.

While it would be nice to have everyone pay an equal share of the cost of government such a system is impractical. It is impractical because it assumes that all government monies spent benefit all equally. And only if such an argument were true could we step into the realm of equal payment. The concept that we all benefit equally from all monies spent by our government has never been compellingly made to myself so until such time I can not consider that as a viable alternative. In a land where monies are given to special interests every year by the millions it will likely not ever be made.

Now, if we remove the needless and unconstitutional programs funded by our government and get our expenditures to around $700 - $800 Billion from the $2.2 Trillion that we currently spend maybe we can revisit this. I thought all men were equal before the hand of government and liberty. And they are. However as soon as we begin to deem that certain groups benefit through receiving more money that others, we can not all benefit equally from that money spent because we are not a party to the recipients of the money. That is what is meant by "special interests".

Compound this with the inherent flaw of such a system. Such a system would impose an equal burden upon all in terms of dollars that they must contribute each year. For the sake of simplifying math we will say that our government spends roughly $2.2 Trillion each year and has a population of 280 million. Under the concept of equal pay for government services this would mean that each man, woman and child would owe $5,789.47 each year under such a tax system and budget.

But what about those that can not work? The elderly? The young? The disabled? The unemployed? Who would pay their share? And this is the problem that arises even if we cut spending from $2.2 trillion to around $800 Billion. Someone would still have to pay it and to be fair it would have to be them otherwise we have already broken the theory of equally sharing the burden of government. If we were to shift the burden to those that could "afford" to pay it because they were employed then we have again created a class of people that already have no interest in how much government spends or on what simply because they do not pay for it. And should they become a sizable enough portion of the population the danger of them enslaving the able bodies to provide for them is all too real.

It doesn't matter if taxes are only $1 per person. If you create a class that does not pay you run the risk of that burden slowly creeping up and up and up as budgets increase. Again, what do they care; they don't pay it.

And what about others that don't make enough money to pay their "fair share"? In a land of liberty and free markets it is possible that there is a class of people that would not make enough to pay or that such taxes would prevent them from doing anything else aside from working all year to pay the government and have nothing left to feed, clothe and house themselves and their dependents. Thus we have created a class of slaves to the government who work to do nothing but provide for it. A family of 4 in this society would owe $23,157.88 just to pay their taxes. For some of us that would indeed be a tax break. For others it is nothing more than enslavement.

It is a viscous cycle for those that would fall at or below this tax line. They would work all year to pay taxes and have nothing left. Thus someone would have to pay to clothe, feed and house them at the very least. Government would of course be seen as the source of their basic needs. That money they spent on taxes enters into the government where it passes through layer after layer of bureaucracy and eventually is returned to them at a lower rate than it entered into the government at. After all we have to pay the employees that administer such programs.

The only true way to ensure that we all pay equal taxes would be to institute a system where every working man, woman and child made exactly the same amount of gross income every year or at the very least a minimum standard wage that would allow them to pay the government and then do what else must be done to survive. But alas it is simply not practical in a free society with free markets to expect to pay a fry cook the same price as a brain surgeon or an engineer or a car mechanic. Part of the concept of freedom in our society is to allow free markets to operate. Societies where everyone has been forced to equilibrium or arbitrarily raised up to a level because they "need" to be at that level to continue on and allowed to partake of services regardless how much they contributed have been tried and failed throughout history.

Now let's move on to the 2 viable tax solutions.

The Second solution would be taxing the generation of wealth; but simpler.

Let's revisit this theory from above. A role of government in a society based upon liberty is to enable those that seek to enrich themselves to do so as long as it is within the confines of the laws, etc. Thus the progressive taxation of the generation of wealth is at odds with this concept. To tax people as they work harder places a drag on their liberty. Especially with the system that we currently live under where money is taken away from one's pay check before one can even touch it or use it to promote their own well being.

This kind of direct confiscation of wealth is a dangerous idea. Combined with the overly complicated tax code that allows for deductions for this and that and credits for other things, etc. many people see the funding of government as a headache rather than a necessary evil.

A potential for this system is to eliminate all deductions and credits and institute a flat rate for all people regardless of the money one makes. We would get rid of progressive tax brackets, and any doubt. If you make $10,000 a year you pay X% in income tax to the government coffers the same as someone that made $100,000 and someone else that made $1,000,000.

The problem is that there is already a sizable part of the populous that nets out to paying $0 in taxes each year due to credits, income range, deductions, etc. Such a system would in effect amount to a tax increase on this class and that will be met with fevered cries and shouts. No one wants to have things taken away from them. And there are other ways to contribute to the welfare of this nation aside from simply paying taxes. However trying to draw comparisons for argument becomes convoluted because apples and oranges do not compare well. And if we continue to grant lower income persons exemption from this new tax system then we have just replaced the current progressive bracket system with a new one and not really solved much of the problem.

But even if we removed all the complicated tax deductions and credits, this idea is still not necessarily good. For it is a way for governments to control rate at which wealth accumulates under it. Taxing people as they work harder enables the governments to essentially "allow" people to earn money at a certain rate instead of letting free markets dictate such things.

It can also be used as a method of enslaving those under the government's charge in the sense that as people generate more and more wealth they will become less and less dependent on government except for all but the highest levels of government responsibility such as national defense. As more and more wealth is acquired, less people are under the jurisdiction of dubiously constitutional (at best) government organizations and roles created since our founding. And as less people rely upon government, the role of government is reduced and that means less and less government. Less government is a threat to government itself and certain theories and beliefs.

Thus taxing wealth generation is an inherently dangerous form of revenue collection for it can be far too easily manipulated by the government to engineer the results and amount of wealth they desire. The other problem with the current system is that money is taken before it is received. "Withholding" detracts money from the pockets of those that earn it.

We can improve upon the current tax system by instituting a flat tax and also eliminating withholding and instead allowing people to keep their money and only paying taxes at year's end. This allows people to use the full potential of their wealth to generate more wealth over that time before tax collections come due. It also has the benefit of being a somewhat familiar system that people have gotten used to.

The other good thing that will occur is that if we use a flat tax system with no deductions is that there will be no doubt as to if anyone paid their legal share of taxes.

Only problem arises when those that are fiscally irresponsible fail to save money for year end taxes and can not pay. But in the end that is their responsibility.

Thirdly we have a national sales tax system

A national sales tax performs a shift from taxing of earnings to taxing of spending. This is not without its faults. Taxing of earnings with deductions and credits, requires a huge bureaucracy as previously pointed out. Taxing of spending activities has the offset of increasing the amount of money we all pay for services and items. It's main benefit however is that the money is always yours until such time as you decide to spend it.

People might decry this again as a tax increase on those that already don't pay taxes by requiring higher prices. Personally I don't see the problem with that. I don't see that as a problem specifically because, as stated previously, when any segment of the population does not bare the costs of government they become less and less interested in the expenses of that government.

We must also consider that as a proposal we do not tax the essentials of living such as food, clothing and shelter. Most of the money our poor and lower class workers pay will fall into these essential categories. Your primary house, mortgage, or rent would be exempt. Your food (grocery store level shopping) would be exempt. And your non luxury clothing would be exempt. But everything else will be taxed federally.

No, I am not talking about some huge number here; 8% or maybe 10% at most. And that is a heck of a lot less than those of us that do pay taxes already pay in withholding.

This is the system that I prefer and see as a greater benefit to this country than impeding dollars into the hands of the people that earn it through taxing income. This way, every dollar that under the current federal tax system would never do any good but feed government spending enters the worker's hands FIRST. Entering the worker's hands first before the hand of government means that the worker now has more money to invest and save until such time as they decide how to use it. It also reinforces the role of government which is to be subservient to the people.

It also generates an entire population concerned about the spending of the government rather than a fraction as under the current structure. Re-adding low income workers to the tax rolls makes them care about where their precious money is being spent.

There is also no need for such a huge bureaucracy to administer convoluted codes and rebates. If what you buy is not exempted, you pay a small amount of tax. And the national sales tax is a flat rate. It would not be changing depending what you buy. Items are either taxed or not taxed. And again only food, shelter and clothing is not taxed.

This method meets some good standards.
1) It is simple.
2) Most of us already pay sales tax and are familiar with it.
3) Everyone pays it.
4) It doesn't require a huge bureaucracy to administer.

Is it perfect? No. But I believe it is better than what we have. If for no other reason than it makes everyone have a stake in the spending of government.

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