More On Income Taxes
I got quite a lot of comments on last weeks article on income taxes. It may have even gotten me banned from Facebook. I stand by my views, including the view that income taxes (especially when used for redistributive social programs) represent a form of slavery.
I am going to try and answer the questions posed by my readers below, with the exception of Young Conservative’s question on the definitions of morality. This will have to be saved for a separate article.
Yes, Kristen, I was tossed off of Facebook. I hope to be back soon. In the meantime, dont forget to click the “share” button to help me out.
Jeffrey Bowman asked if I would favor a consumption tax like the FairTax. Yes, I would. I believe that taxation is a necessary evil, but that it is necessary. As I said in my article, I am not an anarchist. I believe that a limited government is necessary to protect the rights of its citizens. In order to fund the government, taxes of some form must be levied.
I prefer the FairTax because it essentially makes taxation voluntary. Under the FairTax, every family in the country would be sent a check at the start of every month for the amount of money that their family would spend on taxes if they lived at the poverty line. Additionally, used goods (ie, used cars and used clothing) would not be taxed. Every individual would essentially pay the taxes that they wanted.
Wealthy individuals would be encouraged to save and invest, as savings and investment would no longer be subjected to taxation.
Under this system, even illegal forms of business could benefit the economy, as drug dealers and other criminals would be able to put their money into bank accounts, rather than under their mattresses.
Businesses would no longer have to match contributions to social security and medicare. These programs would be funded through consumer spending.
In fact, the abolition of corporate income taxes could lead to foreign companies relocating to America.
American workers industry would benefit as well. Because the employers would no longer have to match employee contributions, and because they would no longer have to pay corporate income taxes, American made goods could be sold to foreign consumers at a cheaper–and more competitive price.
Several years ago I read an amazing book on the FairTax called . Check it out. It breaks down the FairTax and tells of its effects on every group in society, as well as the effects on many different types of industries. It answers questions and concerns on the tax that you may have.
Hawk–I wrote about property taxes here. If that doesnt answer your questions, lemme know. Yes, a tax on consumption would decrease consumption. However, the increased income due to larger paychecks and the monthly “prebate” could offset this drop in consumption. Additionally, greater profit margins for businesses inevitably leads to entry of new firms into business, which in turn leads to lower prices, thereby giving another incentive to consume.
However, maybe consumption should drop. After all, the typical American family is deeply in debt. Furthermore, many of the consumer goods that Americans buy with debt are purchased from foreign nations, leading to an increase in our negative trade balance (trade deficit). I dont think it would be the worst thing in the world if consumption did drop, however, I still think that it would not do so due to the facts that I mentioned above.
The argument that CPA’s would lose their jobs doesnt bother me. So what? Let them use their financial skills to find work in other areas. We shouldnt have to live with an unjust and complicated tax system just to keep CPA’s employed–at the expense of the rest of society. Just as we shouldnt forgo sentencing reform to keep prison guards employed. In fact foregoing either tax reform or sentencing reform will keep many people employed, but it does so while keeping others in chains.
I had another thought on the nature of income taxes in this nation. A [so called] progressive income tax is a violation of the 14th Amendment to our Constitution. Section 1 of this Amendment states that the government may not “deny to any person within its jurisdiction the equal protection of the laws.” This doesnt just apply to giving preferential or discriminatory treatment to people of different races or religions. The Amendment prevents denying equal protection of the laws to all people. This includes the rich as well as the poor.
Hawk, you are right that a debate is needed on taxes at this point. This is exactly why FairTax supporters are proposing a Constitutional Amendment to repeal the 16th Amendment and allow for a tax on consumption. The Constitutional Amendment process is a long and cumbersome one which would force this proposed change to be debated in the halls of Congress, the halls of State Legislatures, and most importantly among the citizenry itself.
Americanly Yours,
Phred Barnet
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A couple of points.
Your article on property taxes is good, but it doesn’t address the issue of how different levels of government collect revenue. Maybe the answer is for each level of government (local, state, federal) to share a respective percentage of the collected sales or consumption taxes.
Currently, property taxes represent the majority of government income on the local level. The feds and states don’t always share the income taxes they collect in ways most efficient for local governments (and many times their funds come with strings attached). If the property tax were to be modified/repealed due to the reasons you present, there has to be a way to replace that funding on the local level.
VA had this issue with the personal property tax in the late 90’s. A governor ran on the slogan “No Car Tax”. Great slogan, especially when running against a guy who made a living selling cars. But when it came down to it, the revenues for that tax all went to cities and counties and never made it to the state. So when the state repealed the tax (actually they were only successful in cutting it in half), local governments got pinched. Now the state may be able to funnel more money to the localities through other means, but the local governments must then deal with the mandates from “superior” governments that may or may not be in the best interest of the locality.
To the point about those who depend on the complex code for employment. I didn’t mean it to come across that we shouldn’t review/revise the tax code because of potential impact on CPA’s, attorneys and the like. I meant to forewarn that these individuals are at worst a force to be reckoned with and at best a substantial obstacle to overcome in any type of reform. Whenever you have an entrenched group of people who have created a knowledge or skill based insulation form of job security, they will work to blow the political winds in their favor. Just look to Sunday’s Family Guy with reference to the Timber industry.
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