An issue that deserves our attention has recently surfaced in the debates between the Republican Party candidates who hope to unseat Sen. Mark Begich in the Nov. 4 general election. That issue is the 100-year-old income tax system which can only be described as a ridiculous, complex and intrusive mess. It is burdensome to tax filer, destructive to the economy and custom designed to invite political motivated abuse and corruption. It is broken beyond repair and the time has come to correct a 100-year-old mistake.
Here are some facts about the income tax for voters to consider. Our Founders rejected a tax on earnings three times in the Constitution. Federalist Papers indicate they believed government could be funded adequately and unintrusively by taxing consumption. Near the end of the 19th century the Supreme Court ruled an income tax unconstitutional. In the early years of the 20th century progressive presidents aggressively advocated a constitutional amendment to allow a tax on income. The 16th Amendment was narrowly passed by the Congress and ratified by the states in 1913. At first the tax filing form was simple, and as sold, the rate was very low affecting only the very rich. Contrast that to what we have in 2014.
In 2014 we have 74,608 pages of tax codes filled with special interest, written by lobbyist, rubber stamped by legislators that unfairly burden the middle class. The income tax system is administered by America’s largest bureaucracy, the IRS with a $13 billion annual budget. Both Democrat and Republican administrations over the years have used the IRS to harass and punish those considered political enemies. I suggest you read Frank Chodorov’s 1954 classic, “The Income Tax: Root of All Evil.”
The income tax is a direct confiscation of earnings by government. Employers must take a government imposed share of employee earnings before the remaining earnings can be disbursed. The income tax burdens individuals and businesses and penalizes production, saving and investment. Karl Marx was a big fan of the income tax. The second plank of the communist manifesto demands a heavy progressive income tax.
The United States has the highest corporate tax rate in the world (40 percent) which places American businesses at a disadvantage that cannot be overcome in the competitive global economy. This has forced thousands of businesses to flee to offshore locations. It has resulted in millions in the labor force to lose jobs and the treasury to lose tax revenue. The global elite are holding a total of $18 trillion in offshore banks. Much of it belongs to Americans who are hiding it from the IRS. Imagine what those kinds of money would do to boost the economy and create jobs if it was invested onshore. The United States would become the investment capital of the world if we did not have such a punitive tax system. We could even pay off the $18 trillion national debt. We need to get rid of all of this game playing once and for all.
Candidates Mead Treadwell and Joe Miller, with real world business experience, and not yet afflicted with beltway dogma, seem to understand how burdensome the income tax system is on working Americans and how damaging the system is to the U.S. economy. In public debates they have voiced support for a bill pending known as the FairTax®. The FairTax® Plan replaces all federal income and payroll based taxes with an integrated approach including a national retail sales tax. A Family Tax Refund Allowance (called a prebate) is dispersed at the beginning of each month to ensure no American pays federal taxes on spending up to the poverty level.
Through companion legislation, the 16th Amendment is repealed. This nonpartisan legislation (H.R. 25 / S. 122) abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare and self-employment taxes and replaces them with one simple, visible, federal retail sales tax — administered primarily by state sales tax authorities. The IRS is disbanded and defunded. The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The government would not know how much you earn, how you earned it, how you spend including who you donate to. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.
It is not in the DNA of those who hold power to voluntarily relinquish it. I’m convinced if voters understand FairTax®, they will demand it, and; only if demanded will it be enacted into law. It will return the power from the politicians to the people as our Founders intended.
The primary opposition to replacing the income tax comes from what is oft referred to as the “Washington Establishment.” Affiliation is informal but the term applies widely to members of Congress, all of whom deny membership. The primary goal of the typical congressperson is reelection. Repealing the income tax would work against re-election of many incumbents as they would lose contributions from K Street lobbyist.
If you ask an incumbent why they don’t support the FairTax®, the likely response is “I favor comprehensive tax reform” and/or “the tax laws need to be simple.” Recognize that as lip service. I have been hearing that refrain my entire adult life — I’m 81. As long as there is an income tax lasting reform and simplification ain’t going to happen. We had significant simplification in 1986 during the Reagan administration. Since 1986, there have been 14,000 changes to the income tax laws.
To learn more about the FairTax® visit www.FairTax®.org.
Wiley Brooks is the Alaska State Director for Americans for Fair Taxation.