Americanly Yours

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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I received my property tax bill the other day and noticed a substantial increase.  I think that property taxes are entirely inappropriate and should be abolished for several simple and logical reasons.

If you buy a house or some land, you become the owner of that property.

When the government charges a property owner a property tax, they are essentially charging the owner to use property that he already owns.  To me, at least, this idea is completely baffling.  I could not imagine how vocal the opposition would be if the government began assessing a 5% annual tax on the value of your jewelery or your ipod.  Why then should the government be allowed to charge you money to live in a house that you have already purchased?

The government does this because it has a captive audience, meaning that most of us cannot simply pick up and move our property to another county.  They also claim that in exchange for the increases, you will be given a better standard of living—new roads, better schools, and more parks.  I’m not even going to address the fallacy of these claims now.

The main problem now is that the government is raising property taxes at a time when foreclosures are growing and the unemployment rate is surging higher.  Simply put, people are hurting for money and they are afraid of losing their jobs.  This is the wrong time for the government to raise property taxes on its citizens.

You might be saying that you dont own your home, and therefore the increases in property taxes do not affect you.  However, you are wrong.  If you rent your home or apartment, the owner of the property still has to pay property taxes to the government.  Any increases in his property taxes will likely lead to increases in your rent.  Homeowners arent the only people who are required to pay property taxes.  Businesses also pay them.  When property taxes on businesses increase, so does the cost of goods and services produced by the businesses.  Even worse, these increased costs on businesses could cause companies to cut down on their employees’ hours, or even cause the businesses to fire some workers.
Property taxes are immoral because they result in the government charging you a fee to use something which you have already purchased.  When the government charges a property tax, they are essentially saying that even though you have already bought the land, the government still considers it to be their land, and they reserve the right to charge you to use it.  In fact, you could argue that property taxes are nothing more than the government charging you rent to use your own property.

Besides this, property taxes are not fair to older Americans.  Retired Americans who are earning a fixed income from Social Security or their corporate pension already have to deal with inflation in the costs of everyday goods.  It is unfair for them to also have to continue to pay taxes on something that they may have purchased decades ago.

Americanly Yours,

Phred Barnet