If our goal is truly to repeal the current tax code and completely replace it then I believe it would be best to explain why. Of course there are many who do not like it and I would expect if a poll were taken, a heavy majority of Americans would express their distaste for the current system. Last week discussed that if not for the 16th Amendment, the current tax code could only be found unconstitutional. This week will focus on why repealing the entirety of the current code is the only way to restore our constitutionally limited government.
It should be no surprise that the American society we live in today was not foreseen or desired by our founders. Our tax code has created a class system that pits us against each other in a perpetual class war that creeps into every tax debate on Capitol Hill. This division only serves to hamper our efforts to succeed. Every tax discussion then serves to separate the American people leading to great difficulty in taking dramatic steps to right the ship. All of the vitriol that surrounds a class warfare debate has led our fearful politicians to lay dormant as the federal debt climbed $10 trillion in as many years. In addition now to roughly half of Americans not paying into the income tax system, just as many receive government benefits that an increasingly few pay for. Our government has become one chiefly interested in the redistribution of wealth. The tax code is the chief cause. At this rate the many recipients will quickly outvote the diminishing providers, unless action is taken to correct the course. Repeal this system to regain the balance.
Our tax code is not merely content with defining people by class but would like to dictate as to how to live our lives. This involves particularly the “marriage penalty”. The tax structure, and its many exemptions, provides a benefit for single parents and those that remain single without marrying. A few laws have been passed to correct this penalty to marriage, but the Alternative Minimum Tax automatically puts married couples in a higher tax bracket. This burden becomes heavier the further down the income ladder you go. Marriage becomes increasingly costly and therefore less feasible. In addition to providing barriers to marriage the higher the taxes are raised the more they inhibit children. It is bad enough that this recession has brought the United States to its lowest birth rates in our history. Raising taxes will only provide another burden on young families. Any economic downturn hurts young families and the poor disproportionately; our tax structure highlights these problems and serves to increase the burden on those who wish to raise a family in America.
Our income tax has also led to the rapid increase in the size of government. As per the 16th Amendment our government has the unlimited power to tax. An unlimited power that is only restrained by the attentiveness of the American populace. In 1913, the year the government was given this unlimited power, our federal budget stood at 8.21% of the GDP. In 1903 it was 6.80%. It took ten years to move 1.4%. In 1914 it rose to 9.55%. In one year it grew more than it had in the previous ten. Over time the government has bloated to consume roughly 40%. As we know the federal debt has risen to such levels as to downgrade our credit rating. There are many ideas as to how to respond to this growing crisis and creative methods on raising taxes are also on the table. One idea floated recently by the President himself was a Global Minimum Tax. Meaning that corporations are punished for being American even if they hide their wealth offshore. There now also exists the idea of a Reasonable Profits Board that will regulate the profits of oil and gas companies. Six congressmen have created this bill put before congress in an attempt to gain more government revenue. As you can see this unlimited power given to congress creates a mindset that if more can be taken then take it. Serious cuts to spending have to vie for time in discussions revolving around increases to revenue. If you find the idea of an unlimited power to tax unsettling or even vaguely socialist then repeal the current system because as history proves, it shows no sign of slowing its own power grab.
As the past few examples show the current tax code has a depressing effect on commerce. Investors have been repeatedly attacked this campaign season by both parties, proving that the class warfare aspect to the tax code provides an easy grab bag of attacks in any political season. The Global Minimum Tax and Reasonable Profits Board are nothing but attacks on businesses. Not only does this country punish success as one moves up the income ladder into increasingly punitive tax brackets, it also houses the single highest corporate tax in the industrialized world. It is a testament to our ingenuity and workmanship that this is still the best place for business in the world. It is also proof that America is the last best hope for liberty on this earth. But we are watching as this precious right is slowly being stripped away. Each attack on a business is an assault on every person with a job. A job created by a business started by an entrepreneur. Creating regulations for every American businessman is not a way to keep the jobs connected with that investment here at home. Our current tax code is not friendly to anyone but the politician but it is certainly an enemy of American businesses.
It should only make sense then that corporations spend heavily in election years. They are, rightly, concerned with easing this considerable burden placed on them by the tax code. This creates an incredible incentive for focused lobbying efforts to change the tax code. The 70,000 plus page code is riddled with exemptions and exclusions favoring one party over many or all others. As one can imagine this only serves to create even further complexity in the code. A code far beyond the reasonable American’s grasp of understanding. These lobbying efforts exclude the voice of the constituent and continue to make the tax code something indecipherable to even the trained eye. Our government’s most basic connection with its citizens is an incomprehensible boondoggle that must be viewed through the lens of a third party, that being an accountant or accounting software. While we wait to see if we paid enough and if the government wants even more of our money than it forcibly removed from our paychecks over the year, companies, GM for example, pay nothing thanks to a dedicated team of tax lawyers using every loophole paid for over the many years of lobbying. The idea of a representative government is lost in a discussion of the tax code and it is beyond repair. It is in need of repeal.
The tax code, along with the lack of ethics of elected officials, is a reason for the rising trust gap between representatives and the governed. The realization of the truth of corporate taxes also adds to this ever widening gap. The fact that we consumers pay the price for every penny of increased corporate taxes in the form of higher prices, lower quality goods, or lower wages is a chafing one when Washington seems intent on raising these taxes. The additional “hidden tax” of compliance is another costly one on our economy as a whole. But most egregiously are the rights stripped away and privacies lost in complying with the tax code. It has been covered here before about the infringement of the 1st Amendment phrase in regards to churches ability to preach without government punishment. If the church crosses over certain government boundaries, then they are punished with the same tax code that we have to deal with on a daily basis. At least the government can acknowledge as we can that the code is punitive.
We can see now that our tax code is not interested with collecting revenue. It does too much more for that to be its primary concern. This President’s Day let us remember those that strove to lay the groundwork for this nation, that set forth the guiding light that led us to where we are, and follow in their footsteps toward a nation concerned with personal liberty and the responsibility that is intrinsically connected with it. The repeal of our current tax code, one that has grown over almost 100 years, is not suggested lightly; however these injustices are an intended consequence of a dedicated few over time to transform this country from the independent nation of our founding to the dependent nation of today. This is no longer a point of discussion but an egregious affront to our liberty that demands action. We have suffered long under the crushing weight of a government with unlimited tax powers and are now reaping the fruits of that long labor. We reject them outright. We reject the idea of a government that can centrally plan an economy or can remove from our paychecks the property we worked to earn before we even see it. We reject having to comply with a convoluted mess designed by those that do not pay into it. We reject a system that chooses who will win or lose in what is supposed to be a free market system. We reject our rights trampled on by unaccountable bureaucrats; we reject the social planning that comes in the form of tax rebates or the lack of those rebates. We reject it en masse. There exists no redeeming quality that could justify its continued existence. And we demand action. I do not believe that one should solely criticize without offering up a differing solution. I offer up the FairTax. The problems described above that it does not address it eliminates. There are other tax proposals that are also discussed under the broad umbrella of tax reform. That will be the topic of discussion for next week. But leave on this note. In the words of Cicero, “What is morally wrong can never be advantageous, even when it enables you to make some gain that you believe to be to your advantage. The mere act of believing that some wrongful course of action constitutes an advantage is pernicious.” This tax code is morally wrong; its reach far exceeds its grasp, at its core it is evil. We shall end it.