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Why Republicans Can Never Reduce Government

Most Americans do not understand it, but the major cause of explosive government spending is our use of progressive tax rates to redistribute wealth. This is because the progressive income tax permits large constituencies of voters to pay zero taxes and equally large constituencies to pay next to zero taxes.

As we see in the chart below, IRS statistics show that the upper 50% of income earners in the U.S. pay 96.03% of all taxes, while the lower 50% of income earners pay 3.97% of the tax load. The bottom 25% of income earners pay zero taxes. Thus, a progressive income tax spawns a "something for nothing" voter mindset that dominates all elections. [From the Internal Revenue Service, Statistics of Income Division, September 2002.]

When large groups of voters are allowed the privilege of paying nothing and next to nothing in taxes, an irresponsible electorate will inevitably evolve to demand a steady expansion of government services. This is basic human nature and one of the cardinal laws of economics. If government benefits are free (or nearly free), demand for them will be infinite. Consequently, in every election there is an automatic 50% base of voters who always favor those politicians who propose increased government spending.

Overcoming this infinite demand for government spending will be impossible until we genuinely reform the tax system and eliminate its "something for nothing" aspect. This means ending ALL deductions, special breaks, loopholes, and rate progressivity. This will necessitate the adoption of a simple equal-rate income tax (i.e., a genuine flat tax) that does not convey favors or exemptions 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. They would 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. But as long as voters pay zero taxes or next to zero taxes, they will continue to favor politicians who offer more programs and more pork every November at election time. An "equal-rate tax" is the only way to end the automatic expansion of government.

But such a flat tax must be a real flat tax, not the plans put forth by Steve Forbes and Dick Armey. Their two attempts to promote a flat tax are not the answer because they increase the personal exemptions from approximately $19,000 to $34,400 for a family of four. This would greatly increase the number of people who pay zero and next to zero taxes (from 50% of Americans to perhaps as high as 65%), and thus increase the number of people who have infinite demand for government services. The Forbes-Armey "tax reform" would create an explosion of government, not a reduction. If we wish to shut down the inferno of government growth and spending, then we must truly shut down the progressive rates that are causing its relentless expansion, which means all voters must pay the same rates, which means no exemptions. Period.

In other words, no one is to get special privileges. All citizens must contribute to the system rather than leeching from the system. Under a 10% flat tax, if a man earns $100,000 annualy, he would pay $10,000 to fund the government. If he earns $8,000 annually, he would pay $800. This way everyone (no matter how small their contribution) has a stake in being a responsible citizen and voting for the common good instead of trying to get something for nothing by taking money from his neighbor.

Such a tax will quickly bring about a reduction of government, and as a result the 10% rate can be lowered accordingly. We could probably have a flat tax of 5%-7% within a decade or two because no one will continue to vote for all the pork and privileges if they have to pay for them out of their own pockets. Think what kind of country this would create -- where voters are demanding that Congress phase out excess spending, where they are willing to back up their demands by axing any and all legislators who do not do as requested. What a remarkable turn around this would be. We would have an America with a relentlessly shrinking government instead of a relentlessly expanding government.

Thus if we are to truly reform our political system today, here is where we must start. This is the all-important element, the linchpin to set in motion the beginning of the end of the Leviathan. All voters must pay proportionally out of their own pockets for their government services. No political activism favoring freedom will ever succeed until this element is set in place.

This is the reason why all our efforts to reduce government over the past 40 years have failed. We are ignoring the people's built-in predisposition toward automatically increasing government every election year that comes from progressive tax rates. This is the fundamental root of our problem. Our tax system has created "infinite demand" for government growth because it exempts 50% of the American people from meaningful payment of taxes!

Unfortunately the nature of our two-party system precludes us from ever rectifying this fundamental problem. Neither of our major parties are willing to put forth the necessary legislation to bring about an "equal-rate tax." Why? Because they know it would be death to their desires to be re-elected. Only about 20% of the people would support such legislation -- the libertarians, patriots, Goldwater conservatives, etc.

There is a way, however, to bring about the necessary legislation. We need to form a political party that doesn't care about being immediately elected, a party that will tell the truth to the American people, and then be willing to wait until the truth wins them over in order to win the White House. To win the people over with the truth, however, we would need to form a third-party that could gain entrance to the National TV Election Debates where our presidential candidate could, like Ross Perot did in '92, give half-hour lectures on national TV about the necessity of enacting an equal-rate tax in order to stop the relentless growth of government.

It can not just be another conventional third-party, however, like the Libertarian Party or the Constitution Party. It would have to be a third-party that does not marginalize itself with utopian proposals.

Conventional wisdom today maintains that third political parties in America cannot work. But this is a fallacy; and the reason why is that all third parties, like the Libertarians and Perot's Reformers, in the past century have been built upon two catastrophic strategy flaws -- marginalization and cloning -- that doom them to automatic failure. But correct these two fundamental errors, and a powerfully effective third-party could be fashioned that makes it into the debates. (More on this below.)

Imagine, if you will, Congressman Ron Paul gaining entrance to the National TV Election Debates via a third-party to give scintillating lectures about proper taxation in a free society. Imagine him also including a lecture about how the Federal Reserve robs us of our savings every year and how it is responsible for the inflationary boom / bust economy we suffer from today. Such a performance would shake up the Demopublican political establishment, that is for sure.

What is so exciting is that we have the power today to accomplish such an education of the people if we would only develop the necessary will to pull it off. As I stated above, probably about 20% of Americans would support an equal-rate tax that would shut down "infinite demand" for government services. Certainly there are 15% of voters in this country who would do so; and that is all it would take to gain entrance to the all-important TV debates every September and October prior to election, where a freedom candidate could then take on the Demopublicans for their obtuseness and corruption.

The American people only support "progressive tax rates" because they have been bamboozled into believing that an equal-rate tax would hurt all low income earners. But this is not true, and I have written a book demonstrating that passage of a 10% equal-rate tax payable by everyone would actually raise the standard of living of the low income earner who presently pays zero taxes. (More on this below.)

The 25% of the population who pays zero taxes will not support a 10% flat tax no matter how persuasively it is presented. But what about the upper 75% of the population who presently pays all the taxes? How many of them will support a simple 10% flat tax with no exemptions that requires 10 minutes every April 15th to figure? Conceivably half of these voters (38%) would support such a tax policy. This is because once it is explained to them via lectures in the debates that lower income groups will not suffer and in fact will benefit from a 10% equal rate tax, then the massive guilt that presently dominates these voters will evanesce, and they will let common sense guide their vote. It is this guilt imposed by statist propaganda that makes Americans vote for highly progressive rates and continually push the exemptions higher and higher like Steve Forbes and Dick Armey have done.

Why cannot we use the Republican Party to do this, you ask? Because our present tax system is structured to reward those politicians who peddle more and more spending programs to the people, it doesn't take too long for Republican congressman to realize that to assure re-election they must play ball and give the people the spending programs they want, which means joining the Democrats to wallow in pork and privilege. Very few Republicans will ever go up against this system because they are in politics to "win power," not to tell the voters the truth about our problems.

Republicans know that proposing an equal-rate income tax would be death to their desires for re-election. Thus they will rise up in opposition to smear all mavericks such as Ron Paul who attempt to attack their use of this tool. It wasn't just that Ron Paul opposed the GOP hierarchy on the Iraqi War; he opposed them on their domestic capitulation to social welfarism also. This is why they treated him in the 2008 campaign like a skunk that showed up at the garden party.

Thus working within the Republican Party by trying to vote in more "conservatives" will never stop America's dictatorial drift. We have been attempting to do this for over four decades now, and the conservatives we send to Washington continue to be bought off by "infinite demand" as fast as we can send them.

In conclusion, the only way to stop the growth of government is to propose the enactment of genuine tax reform that will end "infinite demand." This will require a third political party willing to tell the truth to the American voters every election year. Republicans can never tell the truth to the people. And until the truth is told, the voters will continue to opt for the fallacies of statism.

For those readers who are interested in pursuing this way of thinking, I have written a book about it titled, The Ron Paul Revolution: Why We Must Form A Third Political Party to Win It.

The book explains how to avoid the two fundamental errors of marginalization and cloning, puts forth a plan for a resultant third-party, and explains why it is the only solution to stopping the runaway freight train of government growth. Those who preach that we must, at all costs, eschew third-party efforts and "remain within the GOP" are captives of a myth. This book shatters the myth and outlines a revolutionary political strategy (never before envisioned in history) that will unify all conservatives, libertarians, and independents into one party that can effectively challenge the statist establishment in Washington and bring about a dramatic political realignment equivalent to the Republican displacement of the Whigs in the mid-19th century. Click here for a review of the book.

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Good luck.

The truth is, most people in this country are collectivists--and collectivists like centralization. Two dominant parties centralizes the flow of political power.

As to the tax issue itself--it will be very difficult to sell a flat tax to Ron Paul followers, because we want NO Income Tax.

On the other hand, to the American (socialist) people, the thought of no Income Tax is shocking. If there's no federal Income Tax, who will foot the bill for the welfare spending, the medicare bennies for Seniors, the bombs we drop on Muslim countries? They fear these things being cut off more than they like the idea of being free.

Support the Constitution of the United States

Support the Constitution of the United States

Great Points

The premise of "infinite demand" for the non taxpayers being a fat wrench in any attempt to scale back Leviathan is pretty convincing from my armchair. Aslo, Nystrom makes a great case for incrementalism.

So, 3rd Party YES!!. Great idea. I think we can agree on that.

I can answer that question in 4 words


Flat tax on Labor is just as Evil

Property tax is backed by my property -- fair enough you can have it if I don't pay.

Consumption tax is enforced against the retailer -- fair enough they can't trade in this economy if they don't pay.

Income tax is enforced against my corpus -- they take me if I don't pay. That is slavery.

The problem with this argument

First dividing the taxpayers up into the top 50% and lower 50 % is not very useful. The top 10 % pay a significant amount of the top 50 percents taxes. You can choose almost any division to make your point. Often better is the use of individual anecdotes - its not empirical, but you are at a place where statistics and be presented to show almost anything you want if you choose the data correctly. Austrian economic eschews detailed predictive equations, and complex statistics, and arguments against taxation should do so as well.

Also, an "eat the poor" approach is not very effective either. right or wrong, tough love does not sell. Many people in the middle income groups think that subsidizing the poor is the morally right thing to do.

A better argument is to show how the current system effects businesses - the tax code favors some - It is better to go with the anti- corporate line, than the "damn poor people taking my money" line.

Can you say unconstitutional?

Most Americans do not understand it, but the major cause of explosive government spending is our use of ANY income tax on the fruit of one's labor. There should be NO income tax of any sort except for what is constitutionally allowed. Any thoughts of a "fair" tax, "flat" tax, or any other type of "income" tax is buying in to someone's propaganda. As Ron Paul repeatedly said, "NO Fed, NO income tax". Getting rid of both as quickly as possible should be the real focus when it comes to saving our Republic. The rest will take care of itself.

If most of the American people have been bamboozled about anything, it's that the fruit of most peoples labor is "taxable income". Do your homework if your attention span is more than 10 min. long. Go to http://www.losthorizons.com to learn the truth. As long as we're using this forum to sell books, buy Pete Hendrickson's book, 'Cracking the Code- The Fascinating Truth About Taxation In America'. They called Ron Paul a fruitcake too. Knowledge is power.

Michael Nystrom's picture

Nelson's got a hard job here

Nelson's got a hard job here because he's playing to a very intelligent crowd.

But I'd like you to imagine this 3rd party pitched to the great unwashed, illiterate masses, as this is the point. This is incrementalism in reverse. How did the current powers that be get us here to where we are now? It didn't come in one fell swoop. They started off small - the IRS & the Income Tax in 1913. Then little by little, year by year they slowly tightened the noose.

I've read the comments below, and I had the same reactions the first time I read it. I don't like the idea of an income tax, either. But the fact is that when RP gets up there and says, "I want to abolish the income tax and replace it with nothing!" and we go crazy because we know he's right, the other 95% of the country thinks he's a nutcase. It is simply too far out of their imagination - the complete elimination of the income tax.

So this is just the first step in getting where we all want to go eventually. That seems to be how they play politics on the other side - through gradualism & incrementalism.

If I'm not mistaken, this appears to be an attempt to use their rule book on our side.

He's the man.

Paying no income taxes is

considered unpatriotic by most Americans, if you asked them. "Taxes are great because it builds roads and schools!" They have no clue where all this money goes.

Hell, I read posts all the time from people who want to pay MORE taxes, like dufus Sean Penn for example. So we have a long road ahead to be sure.

A flat-tax would be a wonderful first step. Something that at least 40% of the population could get behind if it was presented in the name of "fairness."

Bogus Statistics!!!

Hidden taxes { fuel taxes, excise taxes, luxury taxes, capitol gains taxes, etc. the list is long } paid by anyone who spends a dollar or pays into Social Security, account for the bulk of taxes.

If you'd been paying attention to Ron Paul who was the ranking member of the house finance committee, you'd have heard him give the real statistics on where the money comes from to run the out of control government,,,and where the spending could be cut so nobody paid income tax, and the IRS could be eliminated. { A huge savings right there! }

By the way Ron Paul calls himself a 'conservative Republican' and Champion of the Constitution. Neo-Cons are doomed!

Flat tax is just more propaganda!!!

My advice would be to get those that want to continue to call themselves Republicans to jump on the Ron Paul Republican platform or get out of politics.


No personal income tax.

The shouldn't be any tax on out labor. That's involuntary servitude. Didn't we abolish slavery?

“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.” -- John Quincy Adams

“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.” -- John Quincy Adams

Any Income Tax is Cruel

I've studied the issue since the 1980's. Any time you allow a government to require citizens to measure income, you create tyranny. Anyone who refuses to support the elimination of any tax related to income is cruel. There have been many credible citizen supported studies on this problem. For example, there is a privacy issue. There is a problem with the technique used to measure income. There is an expensive compliance cost to measure income. And there is the problem of the need to consider everyone guilty until proven innocent because the government has no other way to prove the amount that you owe. Too many false convictions and good people turned into criminals. There is a problem with 40% non-compliance. And there is the underground economy which will never pay an income tax.

After hundreds of hours of personal analysis on this issue. I support the elimination of the income tax and the interim replacement with the National Retail Sales Tax. Millions of dollars of studies have shown that it needs to be only 23%. There are 51 co-sponsors in Congress. the Bill is H.R. 25.

Gene Louis
Supporting a Real Tool for Government Feedback:
A Citizen-Operated Legal System.

Gene Louis
Supporting a Needed Tool for Government Feedback:
A Citizen-Operated Legal System.

National sales tax is double-dipping.

I support the elimination of the income tax and the interim replacement with the National Retail Sales Tax.

So now that everybody alive has paid income tax on everything they earned (except what went into IRAs and 401(k)s, which just got crushed and whose remainder is slated to be taxed when they take it out, if it doesn't get outright confiscated) and the boomers are retiring after an entire LIFETIME of being ripped off, you want to switch to a sales tax - and tax them AGAIN on what little after-tax money they held onto?

No way, dude! I'm with Ron: Eliminate the income tax and replace it with NOTHING!

Millions of dollars of studies have shown that it needs to be only 23%.

And if you think it will really stay at 23% once they get it in place I have some land in Florida to sell you. (Maybe I can recover what I lost in the crash. B-) )

= = = =
"Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job."

That means: For each job "created or saved" about five were destroyed.

I'm not so sure about the income tax.

I hate it for the reasons you list, but the government borrows money from the central bank to fund spending. I think the income tax is just a way to restrict class mobility, and to make everyone the loyal slave to the federal government.

"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."

Your title should say...

...Why government can never shrink government.

Do you honestly believe that there is a government solution to the problem of too much government?

As a little jug-eared Texan used to say:

Here's the deal.

I will stipulate your 50% who pay diddly in taxes.

But ya gotta add the ADDITIONAL percentages of:
1. Gov't workers (LOTS!!!!)
2. Miltary (same as above but sometimes people forget they're govt. employees (LOTS!)
3. SS recipients
4. Welfare recipients
5. Govt contractors
6. Steenking liberal commies

As you can see, we are HOSED!!! What's left? 30% of real productive workers? Maybe???

Or as the Guru would say: "Freaking DOOMED!"

Yes, let's come up with a new way to fund our enslavement

We need real money first. Until then, taxes are just time in government service.

If we had real money,

the elites who own the Fed would not be able to fund and control the media.

NelsonHultberg apparently believes the media's lie that things are the way they are because that what the majority wants.

But the majority would not choose such a flawed electoral system. They would choose Direct Representation.

Do you even know what infinate means?

"If government benefits are free (or nearly free), demand for them will be infinite."

I beg to differ, obviously at some point supply will meet demand. Of course to say demand could never be met is troubling, considering the abundance of everything in our time I can't think of a sector we can't flood with so much product that we never have a demand again. Let's take something like food stamps though, the demand isn't infinite because we only have so many mouths to feed before no one is hungry. The only reason there is a demand for it is because the private sector doesn't provide it for them, the only option these people have to eat food is to beg the government to give it to them, if the market wouldn't deny people food, as to say if it wasn't profitable to deny people food, we'd never have a demand for food stamps.

"This is because once it is explained to them via lectures in the debates that lower income groups will not suffer and in fact will benefit from a 10% equal rate tax,"

What you'd find is overwhelmingly government services would be slashed, and many a time I find government services as the answer to our problems when the 'free market' doesn't find something necessary profitable. Like bringing electricity, phone, water and roads to the majority of the country, it cost this country billions of dollars to do when no one else would do it and could only have been done with a progressive tax system. My reasoning is that the wealthy class are better off having built their wealth on the backs of the population, and while they still get to live at the very top of society I believe they have an obligation to make the world a better place for everyone (something I believe our government CAN do but hasn't). It also paves the way for future generations to have the same opportunity they did and more. Projects like the rail system Obama is talking about building that can go upwards of 100 mph, no private company in their right mind would ever take that kind of risk but government can and needs to to help create it because the demand is there but we have no supplier.

I don't stand for a progressive tax system because I'm uneducated, I believe that if I were to get to the point where I'm making $250,000 a year I'm not going to care about how much I get directly taxed, I'm far more worried about the indirect tax of inflation, how much I have to pay for services. You have to understand this is an ideological difference, not an educational one.

Actually, no

According to economic modeling, anyway, demand for free goods will be effectively infinite. I assume he's speaking here in the language of neoclassical economic modeling, which is certainly faulty and, as modeling, not perfectly reflective of an empirical reality, but he's not without basis. Demand may not be literally infinite (in fact, nothing in REALITY is) but it is effectively infinite, and certainly so in terms of economic modeling.

"What you'd find is overwhelmingly government services would be slashed, and many a time I find government services as the answer to our problems when the 'free market' doesn't find something necessary profitable. Like bringing electricity, phone, water and roads to the majority of the country, it cost this country billions of dollars to do when no one else would do it and could only have been done with a progressive tax system."

Methinks you are perhaps on the wrong site. This same old hapless canard is completely unfounded, that "no one else would do it." Indeed, the examples you cite of electricity and water when these have been privatized to great saving (although they are only quasi-private since they're granted government supported monopolies without which they would be forced to be more efficient), and phone services, which have been more completely privatized. No doubt you also think that only the government can provide internet services too. In all instances for which we have examples, private businesses have provided better services more efficiently for less. It's just too easy for those without the inclination to challenge the status quo to rely on the coercive theft of the government to provide them services they don't work for or deserve, that they aren't willing to sacrifice for themselves, but that they "need."

reedr3v's picture

At heart I think ideological differences

probably are educational differences. Opposing sides tend to review the information media that agree with their own biases. Seldom are opposing partisans willing to honestly listen to each other. Each stays stuck in a narrow ideological niche.
I appreciate the fact, watchout5, that you are willing to exchange ideas.
That said, from your comments I believe you haven't studied real-world economics. You demonize "wealthy people" by the old Marxist rhetoric that they build wealth on the backs of the population. If you're talking about the super-rich who collude with government for advantages, I'm with you. But that includes any form of government including communist;
and most of the very politicians you hope will make the world a better place are paid off by the banksters and mega-corporations, both in dollars and the means to gain more power.
the guy/gal who works long hours seven days a week to build a business that creates productive jobs for people and takes home $250,000 a year isn't living on anyone's back and is paying a very big percentage of that in taxes.
Finally, there is no way government can ever make the world better since government is nothing more than organized force. Try to resist any of its directives and you find out very fast that is it brute force hiding behind a very thin veneer of populism.


I actually work for a private electric utility. It's really a much more complex issue than "is it profitable" or not. But first let me say that selling electricity is very profitable, hence why profits are regulated and capped by government. There's zero need for government to run it. If anything, government has prevented electricity from being traded in a much more open, competitive market.

Second... you're making only $250k a year and you already don't care how much you're taxed? Really?? Right now you'd be losing something like $70k a year to taxes. Inflation won't take nearly as big a chunk out of your earnings, and definitely not within a year's time.



The neo cons are fighting a holy war

that cost money.

The truly rich don't earn "income"

And don't pay income tax

They receive capital gains on their investments and pay capital gains tax instead, and come out way ahead.

Why do you think all those billionaires are always going on about how they graciously decided to only work for $1 per year?

"The consolidation of the states into one vast republic, sure to be aggressive abroad and despotic at home, will be the certain precursor of the ruin which has overwhelmed all those that have preceded it."

- Robert E. Lee, 1866



ever hear of "capital gains tax"????

Yes he has...

That why he said that they pay capital gains tax in his post.

He makes a very, very important point. At it's core it explains why the super rich are such fans of the income tax. It does not effect them.

What it does do is allow for their loans to the country to be backed by the average citizen and the middle class's labor----and their childrens' of course.

oh to dream

I dream of a fair flat-tax almost daily. Sick? Maybe. Why would I want someone making poverty wages to pay any taxes at all? Because we're all in this together, and fair is fair.

The "progressive" tax we all suffer under is one of most insidious, unfair, ill-advised, bullshit, jacked-up, laughable..... well you get the picture.

Looking forward, the middle-class is shrinking rapidly. The upper 50% is going bankrupt while the lower 50% is (and always will be) making their money under the table. Tax revenues are plummeting, so good luck on a flat-tax anytime soon.

I would sooner expect any funds you may have left to be "appropriated" by the State.


A fair or flat tax is a pipe dream.

It supposes, among other things, that you can tax the government 23%.

The reality is, you would end up with a 60% or so national sales tax.

Which is great for anyone making over $250,000.. and pretty crappy for everyone else.

Do a lookup on misis.org.

~Live life to its fullest, with an open heart, open arms and most important... an open mind~

We need to eliminate the Income Tax altogether.

If the state was responsible in its spending, it could run on tariffs, user fees, and special revenues.

There's no need for an Income Tax, flat or otherwise.

Support the Constitution of the United States

Support the Constitution of the United States


Of course if we are to have governments they must be paid for, but only, obviously, for those things the constitutions allow. My share of the expense of government should be paid to my town, which would then pay its share to the state government which would then pay its share to the federal government.

The problem is that, thanks to the printing press, America right now is addicted to a seemingly never-ending reliance on government largesse.

I know everyone has probably seen this video a million times, but I still can't get enough of it....so here it is, one more time, for Saturday: http://www.youtube.com/watch?v=as3AYVzWmOI

What you're suggesting then is;

If I make a $100K/yr and you make only $10K/yr, if we both go into a McDonalds- my hamburger should cost $10 but yours should only cost $1. It's the same hamburger... why should yours cost less simply because you have a smaller income? Don't the two hamburgers represent equal value?

A truly Flat Tax would distribute the total cost of government equally upon all citizens, regardless of their income. A person's income should have no relevance to the value received and should not be used as a basis of taxation. Income taxation (progressive or otherwise) is redistributive in nature.

If the cost of our government is three trillion dollars (and the population is three hundred million people), then the annual tax burden for each individual should be three-trillion divided by three-hundred million.

Just a thought.