It’s been years now that TEA Party and other conservative resistance fighters have been proposing various alternatives to the infinitely huge mess that is the federal tax code. As with health care reform, many of these alternatives have been promoted as “repeal and replace” the IRS code, and of course “abolish” the IRS.
As we’ve just seen with the health care law (see my articles 206 and 207), tax reform too will turn out to be a lie.
• Abolish the IRS? No one will ever abolish the IRS. As long as the federal government will be picking revenue out of the pockets of Americans, there will be a government agency to do it and you might as well keep calling it Internal Revenue Service. That’s to distinguish it from the Customs Bureau (an external revenue service) which is picking the pockets of importers, and even if not all of them may be foreigners, certainly the goods they import come from the outside.
• Tinkering with tax brackets and deductions is “tax reform.” No, it is NOT. It’s just the same old jalopy running or struggling with the transmission set in a different gear. It’s still the same old marxist crap about “from each according to his ability;” that is, soak the rich. Never mind that they’ve never been able to “soak” the rich because they always find a way to beat the system, but it sounds good to those who vote for RINOs and Democrats.
If you wanted to implement true tax reform, first of all you’d bother to look into and understand a couple of fundamental facts.
1. People instinctively expect to be justly and fairly rewarded for their effort. No one likes to work for free. No one can afford to work for free because we all have to pay for our living expenses. As the experience of countries that have been brutally subjugated by a communist system — Russia, eastern Europe, east Asia, Cuba, Venezuela, etc. — incentive to work vanishes when effort and achievement are not justly rewarded, and therefore their economy collapses. Their brutally totalitarian dictators — or our own wanna-be dictators — don’t learn from history; they blame “greed.”
2. The old marxist crap about “from each according to his ability” and its implementation in the form of the progressive / graduated income tax is a disincentive to work or to better yourself. I have witnessed examples of that, when people made a very rational calculation and refused overtime because the combination of being pushed into a higher tax bracket plus higher premiums, deductibles and co-pays under 0bamacare would have resulted in LESS take-home pay…
3. The old marxist crap about “from each according to his ability” and its implementation in the form of the corporate income tax is an even greater fraud. NO business ever pays ANY taxes. To a business, ALL expenses of whatever form are simply the cost of doing business, and they have only two choices: (1) pass them onto their customers in the form of the price the customers pay for the goods and services they buy, or (2) run the business at a loss and end up in bankruptcy or go out of business or both. It is ALWAYS the end customer who pays all taxes for everybody higher up on the “food chain.” The end customer pays for all raw materials, all sales/inventory/whatever other taxes on those materials, all labor, all income and payroll taxes on that labor, the upkeep and maintenance on the building that houses the business, the upkeep and maintenance on the machinery that produces the goods and keeps the records, the regulatory compliance costs, insurance and litigation costs, etc.
4. If they have any profit left after that, they have to worry about competition who also knows what the costs of doing business are, and will figure out a way to reduce their costs and their profits so as to grab the other guy’s customers.
So, what would a true “tax reform” bill look like?
1. Repeal the existing IRS code. For good measure, also repeal the 16th Amendment, even though it only authorizes but does not require that Congress write an income tax law.
2. Replace the IRS code with a simple retail sales tax. Estimates reported elsewhere on this blog site show that a federal sales tax of 23% would generate enough revenue to replace all existing personal and corporate income taxes, payroll taxes, excise taxes, fees, and whatever else they might call it when the government takes your hard earned money. But the rate does not have to be that high if government is forced to live within its constitutional limitations; see Article 1, Section 8 for the enumerated powers, and none others, that government is allowed to exercise.
Because of the simplicity of collection at the point of sale, rather than wasting literally billions of hours on filings, the immediate benefit would be the drastic reduction if not quite the elimination of the tax racket industry — the enforcement bureaucracy, bookkeepers / accountants / lawyers dedicated to compliance with the tax code, etc., as well as lobbyists looking for an advantage for their clients. (Of course this is one reason they’ll never do this. The other one is that it is the income tax, more so than the sales tax, that allows politicians and bureaucrats to engage in social engineering.) Most states and local jurisdictions already collect a sales tax; collection can be as simple as reprogramming the applicable software. There would be no additional impact on enforcement; you don’t need more revenuers just because they are looking for more money.
But a sales tax is not fair!
Yes, it is. You pay it only when you have the money to buy something. You don’t if you can’t afford to. The poor pay less because they consume less, the rich pay more because they consume more, and more expensive, goods. (You can argue over taxing services, too, and the disparately bigger impact on the rich is even greater. The poor might have to pay a tax on a haircut, but it’s the rich who run to spas and lawyers at the drop of a hat.)
Will Congress do it? Only if we the people manage to drive it into their thick sculls that the “wave of the future” is not totalitarian marxism.
Make America Great Again? Sure. But we will make America great again only if we return to the founding principles of this once great nation, firmly grounded in individual rights and free enterprise.