How to Actually End the Income TaxSubmitted by Nelson Hultberg on Sat, 05/02/2009 - 16:05
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 intrusive IRS agents. It would no longer be government's business how much money we earn and what we do with it.
The liberal establishment naturally rises up in unison to protest such a goal, declaring those espousing the abolition of the income tax to be "right-wing extremists" and "troglodytes who wish to go back to the 19th century."
Unfortunately far too many conservatives allow themselves to be intimidated by such attacks. Because of their fear of being considered "anti-establishment," the political right puts forth nothing but insipid pseudo-reforms (such as the Forbes-Armey flat tax). Moreover congressional conservatives continue to give credence to our monster tax system by bowing and scraping in front of the IRS.
The Naivety of IRS "Reform"
Republicans have always been sensitive to the people's growing unrest over the IRS, but invariably they approach the issue in a naive and superficial manner. They actually talk about reforming this agency.
"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.
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.
How to Actually End the Income Tax and the IRS
The tax protest uprisings in America today are very encouraging. They are passionate and on the right track philosophically, but unfortunately they stop short of any coherent strategy to actually implement the abolition of the income tax.
How to bring about implementation is the all-important issue. In this writer's view 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 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.
How to bring about the necessary reduction in spending then is our task. It can be done, but only if we are willing to think outside the box. The way to do this is to end "progressive tax rates" by enacting an equal-rate income tax where everyone has to contribute proportionally to the cost of government, which means no exemptions for anyone. In other words, no one is to get special privileges. All citizens must contribute to the system rather than leeching from the system.
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.
This does not mean a Forbes-Armey style flat tax. Their tax plan does not end exemptions, it increases them, which will increase the desire for government spending among the people. An equal-rate tax with no exemptions is the only way to stop the growth of government. It could be done at a 10% rate that would be revenue neutral in three years, if accompanied by appropriate sunset legislation for those fringe welfare programs that are excessive and totally unnecessary ($580 billion worth as of 2007).
The beginning 10% rate would not be a burden on the low income earners either. Space prohibits a discussion and validation of this, but the organization I head up in Dallas, Texas, Americans for a Free Republic, has formulated a plan for a 10% equal-rate tax assessed on all citizens that will NOT burden low income earners in any way. It will, in fact, bring about a 6% net increase in their standard of living. See http://www.afr.org/Hultberg/2009_03_22.htm
This would dramatically reverse the culture of spending in Washington and begin a steady reduction of government because no one would vote for all the egregious spending programs if they had to pay for them out of their own pockets. Every state in the Union would begin sending Ron Pauls to Congress instead of Chuck Schumers with demands to reduce spending in big ways, for this would be the only way they could get their 10% tax reduced.
Such an equal-rate tax would quickly bring about a reduction of government, and as a result the 10% rate could be lowered accordingly. We could have an equal-rate tax of 5%-7% within a decade because no one would continue to vote for all the pork and privileges if they had to pay for them out of their own pockets.
Four Step Plan for Tax Freedom
Radical tax reform is the great unifying cause that can break the stranglehold collectivism has over our country's politics. Conservatives, libertarians, and independents need to unify behind a workable plan to implement this goal. Here are four steps that could bring it about:
1) We must truly end progressive rates by enacting a 10% equal-rate tax with no exemptions for anyone. Progressive rates are unconstitutional, illegal, dictatorial, and have no place in America. We are supposed to be a nation based upon "equal rights under the law." This is why the Founders put the uniformity clause for taxation in the Constitution (Article I, Section 8). Equal rights necessitate equal rates. This is justice. The statists are highly vulnerable on this issue. We should be pressing it in elections, in the streets, in the courts, everywhere that humans gather for meaningful discussion.
2) This one reform would revolutionize the political paradigm, for it would allow us to dramatically reduce government spending to a level that could very shortly be funded with 5%-7% rates.
3) This would allow us to replace the income tax with a small national sales tax.
4) This would then allow us to abolish the IRS because the state sales tax agencies could collect all payments and forward the money to Washington.
Voila! No more income tax, and no more IRS. A constitutional amendment could then be passed prohibiting the Federal Government from taxing the incomes of the American people in any way whatsoever. And most importantly, the growth of the federal Leviathan would be stopped.
The ratcheting down of the rates, of course, would not have to stop. The people would still be highly motivated to keep lowering rates. Since the equal-rate tax is to be paid by everyone, voters could conceivably vote rates down to 2%-3%. They could even replace such a small 2% sales tax with excise taxes and tariffs as the Founders used. The Republic would be reborn. Small, limited government would once again prevail.
Bold, Innovative Leadership Needed
The times we live in call for bold, innovative leadership, not business as usual. Our present tax reformers in Washington are putting forth nothing but dreadful plans. 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 wishy-washy Republicans.
The income tax and the IRS have no place in America. To truly abolish them, however, we must adopt a coherent plan that is both just and capable of reducing government. The place to begin is with the repudiation of "progressive tax rates" and the restoration of "equal rights under the law." The American people would then vote the income tax and the IRS out of existence.
Nelson Hultberg is a freelance writer in Dallas, Texas. His latest book is The Ron Paul Revolution: Why We Must Form a Third Political Party To Win It. To read a review, click here: http://www.afr.org/Hultberg/2009_03_22.htm