2. Propose to “redistribute income” using government policies.
3. Plan government activities based on the expected size of your income.
4. Treat you unequally under the law based on the size of your income.
5. Make it illegal for you to earn income without reporting it to the government.
6. Decide what government mandates you can “afford,” based on your income.
7. Use its revenue service’s information about your income to intimidate or punish you.
8. Pursue you for income tax if you live and work overseas.
9. Tax your income if you fail to buy a government-approved health “insurance” plan.
10. Withhold tax-exempt status from your political organization if the administration in power wants to stymie your efforts.
This last can only be done, let us realize clearly, because we have an income tax. If we didn’t tax income, government couldn’t hold the tax regime over Tea Party groups, or any other public-interest group. No public-interest group would face paying income taxes to begin with.
When the federal income tax was instituted 100 years ago, it became only a matter of time until the U.S. federal government would engage in each of the above abuses. Some citizens warned about this at the time, and, as usual, were called fools. Warnings about the enlargement of government power typically go unheeded – especially when the enlargement is sold to the voters as a measure that will apply only to the wealthiest citizens.
Americans trying to redevelop the mental habits of liberty need to understand that it is possible to pay for government without an income tax – the United States did it for 122 years, by taxing consumption – and that the absence of an income tax is a remarkably effective condition of liberty.
Without the income tax – and I include under this heading the capital gains tax, which is also percentage-based and indexed to the accretion of value – the great majority of our entire federal tax code would go away.
The income tax makes hundreds of things illegal that would not be illegal if there weren’t an income tax. One of the most important of these is something we never think about now: the fact that having a Social Security number and being known to the IRS are conditions of legally holding a job. If there were no tax on income, there would be no justification for mandating that employers and employees make the SSA and the IRS parties to our transactions. It would be not only possible but normal for employers and employees to transact our compensation privately, without anyone in the government knowing what the figures or terms were.
Think, if you haven’t done so recently, about all the things government mandates which are based on the monetary size of an income. If we had stuck to the principle that government has no business knowing our incomes – not through our reporting, and not through our employers’ – the whole slate of federal and state interventions in our compensation would either not have been established, or would operate on a much simpler and less obtrusive basis today.
Imagine just earning income and not having the government know how much you earned. Why should that be illegal? Imagine that no data summaries on your income and everyone else’s were made available by the government to public or private researchers. Why would that be a problem?
After all, it isn’t “charity” or compassion when governments institute “income transfer” schemes. It’s just government programs, which have the usual purpose of tending voting or donor constituencies. If we didn’t know what anyone else’s income was, we would be forced to open our eyes and see: we’d have to consider the actual situations of individual people who are in distress, as opposed to grouping everyone by income and trying to move what they have created and earned around among others. When anyone but the government does that, it’s called “theft.”
Yes, there would be no justification for the minimum wage, if we didn’t know what people’s incomes were. But everyone’s earnings would go a lot farther.
There would be no way to operate the Social Security program as it exists today. We would have to tax differently – tax consumption – to pay for a lot of things, including old-age indigence programs, Medicare, Medicaid, and public assistance.
Imagine if the government based its budget on what it expects to need to spend, rather than on the revenues it expects from our incomes. Imagine how the political debate would change, if there could be no endless discussion of what income percentage is the “right” one for the tax burden.
Many of our entrenched political problems – including our mind-boggling $220 trillion in unfunded out-year entitlements – are traceable to the institution of the income tax a century ago, and in fact would be literally impossible without it.
Governments are always looking for ways to hold the people in harness and confiscate things from us, but we don’t have to help our governments do that. I urge everyone to pay his taxes according to the law of the land as it is today. But at least think about how things could be different. Just think about it.