December 11, 2010
Another Reason for a Flat Tax: Freedom of Speech
During early periods of U.S. history, the country relied on tariffs on imported goods and taxes on internal goods to run the federal government. The first income tax law was enacted to fund the Civil War. At the end of the 19th century, the Supreme Court ruled that the income tax scheme unconstitutional, but by 1913 Congress had amended the Constitution, and now we have what we have.
What we have is a convoluted mess of 71,684 pages of U.S. tax code, not including ObamaCare, which enlists the I.R.S. as one of its federal overseers.
Daniel Mitchell of the Heritage Foundation compares the current progressive tax system with a flat tax system and writes:
A flat tax would treat people equally. ... No longer would the tax code penalize success and discriminate against citizens on the basis of income. Tax burdens would no longer depend on the number of lawyers, lobbyists, and accountants on the payroll.[And] a flat tax would eliminate almost all sources of conflict between taxpayers and the government. Moreover, infringements on freedom and privacy would fall dramatically since the government would no longer need to know the intimate details of each taxpayer's financial assets.
Our current progressive income tax system is inherently problematic in a free society. It slaps the face of equal justice under law and repulses the 14th Amendment's requirement of "equal protection of the laws." "Spreading the wealth around" was anathema to the founding generation, as evidenced by the remarks of Thomas Jefferson:
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.
According to Mr. Obama's own definition (those earning over $200K/$250K), the "rich" make up an integral part of the working middle class. Those just above Obama's arbitrary threshold are largely America's small business owners, the largest segment of job creators in the country. Meanwhile, the truly wealthy often pay a minuscule amount in income tax. Interestingly, Warren Buffett, the third-wealthiest man in the world, says that his secretary pays more in income tax than he.
A progressive, income-based tax system makes sense only in a state-controlled society. People in a society who view their rights as coming from the state are privileged to work for the state. In that context, it's the state's prerogative to decide whether one will work as a doctor or in a factory. In that sense, it's every citizen's "patriotic duty" (to borrow from Joe Biden) to pay whatever the central government requires. If not for the benevolence of government in allowing and providing education and training, the taxpayer would not have a good job in the first place.
But in America, today's factory worker can be tomorrow's CEO. Today's hospital laundry worker can be tomorrow's top physician. In America, people tend to start at the bottom income levels and work their way up to the upper levels via their own investments of time, energy, and money.
Equal protection of the law should require everyone to pay the same percentage rate for taxes. If the income tax rate were 10%, with no loopholes or special-interest deductions, the "rich" obviously would pay much more than the "poor," but everyone would be equal under the law. And a greater incentive would exist to advance on the pay scale.
But there is more than just the fundamental unfairness of penalizing those who earn more with an unequal tax rate.
When the federal government takes a person's money for purposes not authorized by the Constitution, it robs the individual not only of income, but of liberty.
I think most people understand that an income tax system that extorts money to "spread the wealth around" reduces lifestyle liberty. But we should also consider that such a system limits political liberty.
By that, I mean the liberty to speak out against a particular administration without fear of retribution. A system in which a president may use the IRS to investigate and harass political opponents, exacting time and money, is wrong on its face.
A recent AT article reminded me of the remarks of Mr. Obama after Arizona State University declined to award the president an honorary degree. The university cited Obama's lack of accomplishments in denying the customary degree at the president's commencement speech back in May of 2009.
In response to the perceived "snub," the New York Times reported the words of Mr. Obama: "President Crow and the [Arizona State] board of regents will soon learn about being audited by the IRS."
Mr. Obama surely is smart enough to not harass Arizona State after having made such a remark. But in every good piece of comedy, there is an element of truth. If Obama had no power to direct the IRS, the "joke" would have been pointless.
The fact that we have a tax system so vast and complex that it may be vindictively used as a political tool is unconscionable. Couple that with the fact that we have a president with a Chicago-brass-knuckles political background, and we have an environment chilling to free speech.
How many of Obama's political "enemies" have been cowed into silence due to fear of retribution via an unfriendly IRS tax audit? How many signatures are missing from petitions against the administration out of fear of arbitrary retribution? The IRS can ruin a completely innocent person by forcing an expensive and time-consuming defense against a vindictive audit.
We already know that Obama will use every means available to eliminate his political opponents. We already know that Obama will not hesitate in using the Justice Department against his political enemies (see Gov. Chris Christie). We already know that Obama has encouraged his supporters to report the names of people who have made "fishy" remarks with respect to policy disagreement. We already have the surreal Obama speech in which Candidate Obama announced the need for a "civilian national security force" just as "powerful" and "well-funded" as the U.S. military.
What kind of president "jokes" about auditing people? Does anyone really believe Obama wouldn't use the IRS against his "enemies"?
The current tax system robs U.S. citizens not only of their financial liberty, but also of their free political speech. It might be time for the people to demand the fundamental transformation of the tax system.