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How to End the Income Tax
and the IRS
Nelson Hultberg
hultberg@afr.org
Apr 15, 2005
Imagine for a moment America without an income tax. No more tedious
record keeping of all our expenses. No more April 15th deadlines.
No more insufferable complexity and exasperating forms. No more
nasty audits, legal loopholes, and intrusive IRS agents. It would
no longer be government's business how much money we earn and
what we do with it. Such a reform would dramatically change the
lives of every one of us for the better.
Could such a spectacular reform
really be brought about? Yes, it certainly could. But before
I explain how, first a brief analysis of some of the philosophical
and psychological roadblocks that need to be confronted in laying
the groundwork for totally abolishing the income tax and the
IRS from our lives in America.
Feeding the Factions
The nature of 21st century
American politics is that our office seekers win continual re-election,
not by preserving the peace and protecting people's basic rights
as the Founders advocated, but by granting privileges, subsidies
and pork barrel programs to favored segments of the people.
This is known as the "big tent" philosophy of governing.
It means that political parties win elections by gathering numerous
disparate factions of voters in under one large tent. They do
this by promising to grant all of the factions something that
they want: welfare payments for lower income groups, loans and
price supports for corporations, subsidies for farmers and artists,
revenue sharing for obedient governors, pork barrel bills for
local communities, ever-increasing funds for educational, energy,
housing, and commerce bureaucracies, etc. Since government has
no money of its own, it taxes the necessary money from society's
productive citizens in order to become the grand benefactor of
all its favored factions.
This is the modern game of social welfare politics. Our politicians
basically buy their office and power. Both Democrats and
Republicans play this game in order to be elected and re-elected.
And no one ever challenges the game's fundamental premise --
that government has the right to confiscate some people's earnings
to gratify other people's needs and desires.
This is why Republicans talk about reducing government on the
campaign trail but never do any reducing in office. They are
afraid to challenge this fundamental premise of social welfarism.
Thus, they end up contesting the Democrats only as to where all
the confiscated wealth is to be spent, never on the premise of
"wealth redistribution" itself.
Noted scholar Thomas Sowell once pointed out a very useful analogy
that clarifies this dilemma: If a man enters your yard and begins
digging up all your daffodils and replacing them with geraniums,
you don't rush out and argue with him over which of the two flowers
you prefer. You argue with him over whose yard this is.
Our problem today is that Republicans refuse to challenge the
Democrats about whose yard is being dug up, i.e., about whose
money is being confisca-ted unjustly. Republicans muster only
a challenge over what kind of programs the confiscated earnings
should be spent on (in other words, over which flowers are more
preferable), while the Federal Government grows more and more
intrusive and tyrannical with its confiscation policies.
First Step in the Process
If we are ever to rid ourselves
of the income tax and the IRS, then there must be a genuine reform
of this corrupt and grandiose game of buying votes with
wealth transfers. A viable political party must come forth to
publicly ask, "Whose yard is this?" The operating premise
of liberal welfarism has to be challenged -- that government
has the right to utilize progressive tax rates to redistribute
people's earnings. A uniform tax rate system must be proposed,
fought for, and enacted into law. Until this is done, the social
welfare game of "tax and spend, elect and re-elect"
cannot be reformed. Ever--expanding, centralized government cannot
be stopped.
As I have pointed out in previous
articles, the reason why abolishing progressive income
tax rates is so important is because there would then be no incentive
for voters to try and gain their life's status by relentlessly
increasing government spending, i.e., by redistributing wealth
from the pockets of their neighbors.
Progressive tax rates are the major cause of explosive government
spending because they create large constituencies of voters that
pay zero taxes and equally large constituencies that pay
next to zero taxes. Thus, they spawn a "something
for nothing" voter mindset. An irresponsible electorate
then evolves to demand a steady expansion of government services.
This is one of the cardinal laws of economics. If government
benefits are free (or nearly free), demand for them will be infinite.
In order to overcome this infinite demand for government spending,
we must eliminate the "something for nothing" aspect
of our tax system. In other words, we must end all deductions,
special breaks, loopholes, and rate progressivity. This will
necessitate the adoption of a uniform tax system that does not
convey favors to anybody.
Since voters would then have to pay for all government subsidies
and pork barrel programs proportionately out of their own pockets,
they would lose their overwhelming desire for such subsidies
and programs. Voters would then begin to favor politicians who
advocate "reduction" of government instead of its "constant
expansion" because this is the only way they could get their
own taxes reduced and more freedom into their lives. All kinds
of Ron Pauls would begin to appear in congressional elections
every two years because the electorate would demand it.
A uniform tax rate is thus
the only way to restore a responsible electorate and legislature.
And as we will soon see, it is the first crucial step to total
eradication of the income tax and the IRS.
Forbes-Armey Tax Ignorance
So far, Republicans have shown
little indication that they grasp the importance of such thinking.
Their love affair with the Forbes-Armey flat tax plans shows
either that their true motive is merely more central-ized government,
or that they are frightfully ignorant about the requisites of
genuine reform. This is because the Forbes-Armey flat tax plans
actually increase the rate progressivity of our income
tax system. This they do by dramatically increasing personal
exemptions for the taxpayer. A family of four's total exemptions
leaps from $16,700 under our present system to $34,000 under
Armey's version of the plan and $36,000 under Forbes' version.
According to the Dallas based Institute for Policy Innovation's
calcu-lations (UPI Impact, November 1997), the bottom
25% of the population in America presently pays zero taxes.
This means they get their government services free, which means
their demand for those services is infinite. According to the
IRS Statistics of Income Division, the next 25% tier pays only
3.97% of total income tax revenues. This means that they get
their government services almost free, i.e., for pennies on the
dollar. Thus 50% of the American electorate pays zero or next
to zero taxes, which creates infinite demand for government
services among these voters. This guarantees that, except for
rare contrarians like Ron Paul, all politicians that come before
the voters every election year are going to be pushing more and
more programs and handouts. That 50% block of voters, hungry
for free services, is a beast that cannot be ignored.
The Forbes-Armey flat tax plans will greatly exacerbate this
problem because, by dramatically increasing personal exemptions
for the taxpayer, they will greatly increase the 25% segment
of voters who receive government services free. This, of course,
must increase the segment of voters who possess infinite demand
well above its present 50%. Surely any reasonably intelligent
human can see that this will make an already rapacious government
grow even faster and produce even more intrusive bureaucracies.
It will firmly entrench the centralized mega-state in Washington
for decades to come!
If we truly wish to reduce government, then we must truly abolish
progressive rates and move toward a genuine uniform rate
system for everyone rather than away from it as the Forbes-Armey
plans do. This is an unalterable law of political and economic
reality that must be faced instead of evaded or circumvented.
Challenging the Establishment Tyranny
Naturally the liberal establishment
raises quite a squawk over any mention of tax uniformity. "Would
it be wise," they ask, "to radically change our tax
system so as to tax all Americans the same percentage of what
they earn or what they spend? We believe that the present tax
code is fundamentally more fair than a one-size fits all system."
Liberals imagine themselves as being idealistic and just on this
issue, but in reality their defense of our present arbitrary
tax system is motivated by that natural human desire to protect
the power base that feeds one politically, ideologically, and
financially. The liberal establishment's massive power base in
this country is fed by the progressive income tax code. God forbid
upsetting such an elastic, arbitrary system of privileges and
favors that can buy so many votes so easily.
In answer to the liberal defense of today's tax system, it is
very instructive to examine the fundamental principles for which
our nation stands. What wisdom on this issue can we glean from
the Founding Fathers and other salient intellects throughout
our history? Did they approve of a tax code that was arbitrary,
progressive and privilege based? Or did they support UNIFORM
rates because uniformity was the only way to avoid the evolution
of class war, factions, and the tyranny of centralized government?
Thomas Jefferson astutely summed up the essence of the tax issue
when he wrote, "The true foundation of republican government
is the equal right of every citizen, in his person and
property, and in their management." 1
Alexander Hamilton firmly denounced the use of arbitrary (i.e.,
unequal) rates: "Whatever liberty we may boast of in theory,
it cannot exist in fact while [arbitrary] assessments continue."
2
Philosopher David Hume declared, "The most pernicious of
all taxes are the arbitrary. They are commonly converted, by
their management, into punishments on industry.... It is surprising,
therefore, to see them have place among any civilized people."
3
In the early 19th century, renowned Scottish economist John Ramsey
McCulloch wrote, "The moment you abandon the cardinal principle
of extract-ing from all individuals the same proportion
of their income or of their property, you are at sea without
a rudder or compass, and there is no amount of injustice or folly
you may not commit." 4
Later in the 19th century, Supreme Court Justice Stephen J. Field
wrote, "If the Court sanctions the power of discriminating
taxation and nullifies the uniformity mandate of the Constitution...
it will mark the hour when the sure decadence of our government
will commence." 5
The reason why the Founders and all the prominent intellects
of our history opposed a progressive income tax is because it
violates the prin-ciple of "equality of rights under the
law," which is dramatically enshrined in the Declaration
of Independence as the fundamental axiom of our nation's existence.
Because different classes of society are assessed different rates
under a progressive tax system, American citizens are denied
an equal right to the disposal of their property (i.e., their
income) and thus denied equal protection under the laws of the
land.
In light of the above, it should be obvious that a progressive
income tax is incompatible with "equality under the law."
It is therefore uncon-stitutional and unjust. It goes contrary
to everything our country stands for. It has no moral justification,
and it has no practical ground upon which to stand.
The Naivety of IRS "Reform"
This then is the first requisite
for our leaders in Congress -- to face up to the unconstitutionality
of progressive rates. But equally as important, our legislators
must also stiffen their spines against the bete noir of
all taxpayers -- the IRS. Republicans have always been sensitive
to the people's growing unrest over the IRS, but as in the past,
they approach the issue in a typically naive and superficial
manner.
"Yes, the IRS is known to get out of control," GOP
legislators exclaim in tones of appropriate urgency. "But
we intend to rein in IRS abuse." Sure. Like a coterie of
schoolgirls will rein in mafia lords stomping through its neighborhood.
Like massage therapy will rein in cancer.
Republicans are living in a dream world if they think they are
going to "reform" the IRS in any meaningful way. The
nature of the IRS and its role dictate that it will always be
what it is. It must be intrusive, tyrannical, and ruthless in
order to perform its job of feeding the tax devouring Gargantua
that the Federal Government has become.
Consider this law of life: The nature of an entity and the nature
of its role in existence dictate its personality and its methodology.
Therefore, one does not sit children down with cobras as if they
were Teddy Bears to be hugged. One does not try to experience
a hurricane like one contemplates a sunset. Rocks cannot be transformed
into orchids. And the IRS is not going to be made into a group
of smiling federal receiving clerks to help us solve life's vicissitudes.
Congressional Republicans now imagine that they can somehow tame
this Frankenstein they have so cavalierly built over the past
40 years. They are deluding themselves.
Trying to "rein in" the IRS with tax reforms such as
the Forbes-Armey approach will be about as effective as trying
to rein in a snorting rhinoceros with kite string. The IRS is
out of control because the Federal Government is out of control.
It operates above the law, and in an intimidatory manner, because
that is the only way it can perform its job of collecting enough
money to pour down Gargantua's gullet in Washington.
The answer to this tyrannical mess is clear: Forget about "reining
in" the IRS and eliminate this Orwellian agency!
But to do so, we must eliminate the income tax itself. And the
only way to eliminate the income tax is to reduce government
spending to a low enough level so that it can be funded by flat
income tax rates in the neighborhood of 7%. At this level, a
national sales tax could then be substituted for the income tax
and collected by the state sales tax agencies. The IRS could
then be disbanded because under a national sales tax, the state
sales tax agencies (already in place) can collect all tax payments
and forward them to Washington.
A national sales tax is not
salable at this time because it requires a 15%-23% rate at today's
government spending level. So spending needs to be reduced dramatically
first. The American people would readily vote for a 7% national
sales tax, but they will continue to balk at a 15%-23% national
sales tax. It's just psychologically too much to overcome.
The first step in gaining this
goal is to eliminate "infinite demand" for government
services. And as we have seen, the only means to accomplish this
is to enact a true equal-rate income tax, which means no exemptions
for anyone. This will effectively reverse the culture of spending
in Washington and begin a steady reduction of government.
How to Handle the Establishment Backlash
As I have pointed out in previous
articles, liberals and me-too conservatives will naturally attack
any genuine equal-rate tax as unfair to the poor people. So if
a floor is to be established under which no one will have to
pay the tax, i.e., an exemption for those under the poverty level,
then a provision should be included in any equal-rate tax bill
stating that those who are exempted from paying are also to be
excluded from voting. After all, we deny children the right to
vote. Why do we do this? Because they are not mature enough to
vote responsibly. The same principle applies to men and women
who are exempt from taxes; they will never vote responsibly.
They will possess "infinite demand" for government
services.
Liberals will, of course, protest
vehemently upon hearing such a proposal; but if one thinks the
issue through, he will see that it is really the only solution
if a large segment of voters is going to be exempt from paying
taxes. There is no other way to stop infinite demand for government
services unless everyone who casts a vote has a stake in doing
it responsibly.
Both logic and history provide
ample justification for societies to decide who among their members
are to receive the franchise. All nations throughout the history
of democratic governments have always determined according to
certain criteria who should, and who should not, be allowed to
vote. Never does any nation allow EVERYONE to vote.
For example, we stipulate that
all those who are under 18 years of age cannot vote. We also
say that all those who are mentally unbalanced cannot vote. So
we the citizenry decide who can and cannot vote. And our decision
is based upon who we feel will be responsible. Reason
and experience, if used judiciously, are very good guides as
to who this should be. Why then cannot we the citizenry redefine
from time to time our conception of what constitutes "responsible?"
Societies have always done
such defining and redefining. In 1787, the Founders required
voters to be male and to own property. That, of course, is too
extreme according to our way of thinking today. Women are obviously
capable of voting responsibly, and so are non-property owners.
The requirement of property ownership was gradually rooted out
of the system over the decades by the state governments; and
the states of Wyoming, Colorado, and Utah led the way for women's
suffrage by granting voting rights to women in the 1890's. This
culminated in 1920 with the 19th Amendment to the Constitution
to allow all adult women to vote throughout America. Again in
1971 we re-evaluated our conception of responsibility when we
lowered the voting age from 21 to 18. (Unfortunately this latter
reform was a mistake. We should have raised the age to 25 years
old; but that's another argument for another day.) The point
is that we, as a society, have the right and the duty to define
just who can and who cannot "vote responsibly." Our
modern intellectuals and politicians have egregiously defaulted
on this by allowing everyone to vote even though they don't pay
anything to support the system. This must be corrected.
The major roadblock to overcome
here is that we have all been taught that unlimited democracy
is some sort of nirvana, and that everyone must vote
in order for us to have a just, civilized society. Thus any policy
to the contrary will be a tough idea to embrace. But embrace
it we must, or we will collapse into dictatorship over the next
two decades. Think of it this way. Is it rational to continue
creating "infinite demand" for government services
among 50% of the people, while attempting to reduce government?
No, it's not. Just like it's not rational to try and put out
a bonfire with buckets of water while tolerating a massive fire
hose pouring kerosene into the fire.
The dictatorial powers that
are developing in Washington today have come about because 50%
of the citizenry possess "infinite demand" for government
services. This demand is the kerosene hose that is allowing the
fire of government to relentlessly expand. We the producers of
America are becoming slaves to these tyrants and their ever-expanding
fire. Continuing to go up against such an inferno with little
water buckets of pseudo tax reform (such as the Forbes-Armey
"flat" tax plans) is senseless and embarrassing to
anyone who can think clearly.
In this writer's opinion, the
ideal solution to this problem of infinite demand among the voters
is to provide no tax exemptions at all, and simply require everyone
to pay a 10% flat tax no matter what their income is. This would
comport best with the principle of "equality under the law."
Everyone pays proportionally, i.e., the same rate. Thus, the
law treats everyone the same, and no one's vote would have to
be denied. Such a policy would quite quickly bring about a dramatic
reduction of government, and as a result, a substantial reduction
of taxes. We could probably have a flat tax of 5% within a decade
or two. Is it too much to ask a man who makes $5,000 in a year
to pay $250 to support the government that protects his rights
and preserves domestic order for he and his family? I don't think
so.
If this is too horrifying to
contemplate for the advocates of "compassionate conservatism,"
then such conservatives need to seriously rethink what has to
be done to save our country. Is not the underlying source of
all government growth today the fact that we have become a nation
of voters and legislators who are living irresponsibly and totally
out of control? Thus our paramount concern must be to RESTORE
A RESPONSIBLE ELECTORATE AND LEGISLATURE. But this cannot be
done if voters get their services free. The only way voters will
act responsibly is if they are contributing proportionately to
the cost of government. This is not rocket science; it is simple,
basic, observable human nature. To blind ourselves to this truth
(as liberals have done for 90 years) is inexcusable.
To all pundits throughout America
who profess to favor a free society, if you are too squeamish
to demand eradication of the primary source of exploding government,
then our society is doomed. You might as well fold up your tents
and head to the local pub to wallow in inebriation every day,
rather than to your computers and printing presses to try and
influence your fellow man as to the true meaning of our country.
If you can't bring yourselves to tell the truth to the people,
then you have no business presenting yourselves as educators,
writers, galvanizers. You have fashioned a make-believe world
and are merely playacting as patriot intellectuals.
Four Steps to Ending the Income
Tax and the IRS
Radical tax reform is the great
unifying cause that can break the stranglehold collectivism has
over our country's politics. Americans are ready to scrap the
income tax. Yet this monumental policy reform will not happen
unless conservatives, libertarians and independents unify behind
the only viable path to that goal. The path is constructed of
four steps:
1) We must truly end
progressive rates by enacting an equal-rate tax for everyone.
It would start at a revenue-neutral rate somewhere between 10%-15%.
2) This reform will allow us to then dramatically reduce government
spending to a level that can be funded with 7% rates and lower.
3) This will allow us to then substitute a national sales tax
for the income tax. 4) This will allow us to then abolish the
IRS because the state sales tax agencies can collect all payments
and forward the money to Washington. Voila! No more income tax,
and no more IRS. The federal Leviathan would be stopped. A constitutional
amendment could then be passed prohibiting the Federal Government
from taxing the incomes of the American people in any way whatsoever.
History is strewn with the wreckage of societies whose leading
pundits and politicians locked themselves into an erroneous mindset
and refused to budge from their flawed perspective in moments
of great crisis. Let us hope that will not be the case with America
on this issue. The times we live in call for bold, innovative
leadership, not misinformation and business as usual. Our present
tax reformers on both the left and right are putting forth nothing
but dreadful plans; and the Leviathan is chortling with glee
at their imbecility. America needs a Patrick Henry and a Samuel
Adams to come forth. She needs clarity and a principled stand,
not the pusillanimous ambiguity that oozes today from our wishy-washy
solons on the Potomac.
Notes
1. Letter to
S. Kercheval, 1816. Saul K. Padover, ed, Thomas Jefferson
On Democracy (New American Library, no date), pp. 34-35.
Emphasis added.
2. Harold Syvelt,
ed., The Papers of Alexander Hamilton, vol. III (New York,
1962) p. 104. Cited in Charles Adams, "Our Income Taxation:
The Darker Side," Manassas, VA: Citizens for an Alternative
Tax System [no date], p. 6.
3. David Hume,
The Philosophical Works, vol. 3 (London, 1882) pp. 356-360.
Cited in Adams, Ibid, p. 6.
4. J.R. McCulloch,
Taxation and the Funding System (London, 1845), pp. 141-143.
Cited in Charles Adams, For Good and Evil: The Impact of Taxes
On the Course of Civilization (Lanham, MD: Madison Books,
1993), p. 365. Emphasis added.
5. Justice
Stephen J. Field, Pollock v. Farmers Loan and Trust Co.,
157 U.S. 607 (1894). Cited in Adams, Ibid., p. 370.
Apr 14, 2005
Nelson Hultberg
Americans for a Free Republic
website: www.afr.org
email: nhultberg@afr.org
Hultberg Archives
Copyright ©2005-2008 Americans
for a Free Republic www.afr.org.
 Nelson Hultberg is a freelance writer
in Dallas, Texas and the Executive Director of Americans for a
Free Republic www.afr.org. His
articles have appeared in such publications as The Dallas Morning
News, the San Antonio Express-News, Insight, The
Freeman, Liberty, and The Social Critic, as well as
on numerous Internet sites.
He is the author of Breaking
the Demopublican Monopoly (2004). and he has a forthcoming
book on political philosophy entitled The Golden Mean: The
Case for Libertarian Politics and Conservative Values.
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