“The true foundation of republican government is the equal right of every citizen in his person and property and in their management.” –Thomas Jefferson to Samuel Kercheval, 1816.
The rationale for the property tax is a good one in that it allows for the funding of legitimate duties of the local government like the fire department, law enforcement, public infrastructure like roads and government buildings, and public education. However, while the ends are good the means are not. There exist at least three fundamental reasons why the property tax is wrong.
First, the obligation to pay taxes on property over an unlimited period of time means that you are essentially paying “rent” to the government for your land, your house, your business. If the government can and does make you pay rent for your property than just how much do you really own it? If you fail to pay the property tax the government may then seize your land and take away the very roof over your head. In effect, the government retains the right to own property.
Secondly, shelter, like food, is a basic human need. We don’t tax groceries because this added financial burden places an obstacle in the way of a basic human necessity. How cruel would it be to allow a family to starve because they could not afford the additional tax on food meant to fund the very public services meant to aid them in life? Obviously, this example is extreme but it illustrates the underlying principle. Likewise, shelter is a human necessity and, while it may not be necessary to own property in order to have shelter, even rent factors in the cost of property tax. Also, while it is true that much of the property taxed is for commercial use, most people only own non-productive property, namely, their home. No matter how valuable a person’s home may be it does not necessarily reflect ability to pay the tax imposed on it. Yes, property value and the wealth of the owner share a correlation but just because a house has value doesn’t mean the owner can pay – one must look no further than our retired elderly to find an abundant example.
Thirdly, the property tax, because it is a debt that can never be paid off, looms as a constant threat to family legacy. It inhibits family inheritance of “the homestead” if ever one generation should fall on bad times and be unable to pay. Thus, it increases the instability of the family economy. Furthermore, taxing real-estate based on reassessments of the property value often leads to a tax increase because the property has a higher estimated value than it did at the time of purchase. However, this means nothing to the home owner unless they sell their home for a net gain. This results in a financial punishment for the family that is resolved by selling their home, thus promoting a “nomad” mentality in which families may uproot multiple times in a lifetime and real-estate rarely stays within the family from one generation to the next. This undermines the idea of the family homestead and establishing a stake in life for the benefit of future generations.
Instead, we should replace the property tax. Even a local income tax would be better. However, I think that the best solution would be local consumer taxes. Conceivably, someone could grow their own food, generate their own energy and so on in order to be totally self-sufficient and thus avoid paying such a tax – thereby freeloading onto the system. However, a system that allows for the occasional freeloader is far better than one that allows for the outright destruction of a man’s livelihood. After all, isn’t the object of taxes supposed to be the advancement of the common good?
“…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.” – Thomas Jefferson
With the conclusion of the Iowa caucuses the GOP primary is now in full swing so I thought now might be a good time to succinctly share my views on an important aspect of economic policy, i.e., the income tax. This is meant to be a nonpartisan, non-candidate position – no party or individual will be endorsed. Proponents of the income tax claim that this type of tax is necessary primarily for two reasons. First, because our government requires a substantial revenue and the income tax is a good way to meet that demand. Secondly, proponents claim that such a tax is necessary to meet their objective of fairness. An income tax allows us to tax different income brackets fairly based on a percentage of their income and, in the case of the graduated income tax, to even assist in redistribution of income from the bloated rich to the anemic poor.
But the income tax is oppressive. First, consider what an individual’s income signifies. It is the monetary worth of a person’s work as estimated by his or her employer. Now, it may be argued that some people get paid more than their work is worth, e.g. corrupt CEOs who pay themselves exorbitant salaries and while this may be true this is not the case for the vast majority of Americans and most of income tax-derived revenue. What this means is that the income tax is fundamentally a tax on labor. Furthermore, because the primary means by which each individual contributes to the greater American society is through their paid work the income tax is essentially an individual punishment scaled for each individual’s contribution to society. Now, that’s not its purpose but intentional or not the more an individual contributes to society through his or her work, then the more they get paid and the more gets taken away in taxes – especially when a given individual works his or her way up into the subsequent income tax bracket.
Also with the income tax comes the issue of tax avoidance. Because of the much higher percentage of income withheld amongst the rich and the wider array of opportunities afforded them, America’s wealthy have the highest level of tax avoidance – some of it even legal. It is not impossible for a wealthy individual to receive an annual income of $1 but have millions in stocks and assets. It gets much more complicated than that but the message is the same. The rich can avoid paying taxes and keep their money while the middle and lower classes are not afforded the same luxury. So much for being “fair” or redistributing wealth in the poor’s favor.
The other argument, that we need the income tax because it accounts for our government’s primary revenue is only legitimized if you believe that big government is legitimate. It is not. The scope of power and cost of our government is not only unprecedended but unconstitutional and leads to such scandals to liberty as the Patriot Act and the new NDAA bill which allows the executive branch to detain any American citizen indefinitely without trial under the pretext of suspected terrorism. Big government stifles liberty, chokes the free market and creates an artificial industry of buearacracy in which an army of pencil-pushers must endlessly “regulate” and “manage” affairs that are the responsibilities of the individuals of our nation in a continual attempt to justify their own jobs. The solution is simple, however. Minimize the federal government, eliminate all federal programs not involved directly in the protection and safeguard of our liberties and national defense, and balance the power back in favor of the states and citizens. All monetary need for an income tax will evaporate.
The solution to the problems posed by the income tax is not a band-aid approach by patching the loopholes, we need to reevaluate our entire tax code. Instead of taxing people for the good that they bring to society instead let us get our revenue from what people take away. If we replace the income tax with excise and pollution taxes we can stop de-incentivising people from working and instead creates incentives for smarter consumerism and less waste. So, enough with the oppressive income tax. There is no need to tax Americans by taking away the earnings of their labor. The American people find their labor taxing enough.
- Christian Ohnimus