“…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