Man the Barricades!

I just did my 2007 taxes. Such a waste.

Here's the thing: we shouldn't have an income tax. I don't mean we should replace it with a national sales tax or a consumption tax or anything. It's just plain a bad idea and it needs to be abolished.



For a start, I know some of you misguided souls believe the state actually contributes something to society, and I'm not going to argue that in this post (though the contribution is often dubious in my view).

Let's assume, for the sake of this discussion, that every item in the 2008 Federal Budget is necessary, is efficiently used and accurately accounted for, and that everything it buys is essential to life as we know it continuing for even one more year. For the duration of this post, we'll pretend it's all money well spent, maybe even an investment that pays huge dividends. Whatever. Pretend.

In the first place, it's none of the government's business how much money you make. Or how you spend it. This is a matter of privacy.* When they allow you to deduct mortgage interest from your income, the effect is to punish those who rent. Or who have their home paid off. It's your money, and if you decided to live in a tiny shack that was paid off and spend your money instead on, say, a top fuel dragster, that should be your business. I imagine owning and maintaining a top fuel dragster (or whatever) does as many good things for the economy as owning a home. Somebody has to make those silly decals, roll bars, parachutes and so on.

Which speaks to the destructive nature of the income tax. It takes money out of your pocket that could be saved, invested or spent in the economy. Which would be a good thing. That economic activity pays off with even more economic activity. And all economic activity is, really, is people doing stuff. Smart, stupid, meaningless, profound, don't presume to judge: going 300 miles an hour within a quarter mile might be shockingly important. One of my goals for this year is to break the sound barrier with a mid-power rocket, so who would I be to call some gearhead a gearhead?

Think about it like this: anything you tax, you'll get less of. This is why anti-smoking zealots love hikes in the cigarette excise tax. You want people to have less income?

One reason** the income tax does not need to be replaced by another tax is the government does not spend tax dollars.

When you earn a paycheck and deposit in the bank, you spend that money. If you 'deficit spend,' you have to find a lender to underwrite this, and those lenders always want to be paid back. They're rather insistent about it if you haven't noticed. So even your deficit has a limit.

The mistake is to pretend the Federal Government spends money on the same basis. But as Ron Paul points out, the Federal budget in 1976 was a mere $300 billion, and the coming year is looking to be a $3 Trillion year. Have revenues from taxation tenfold in the same timeframe? In 2006, net personal income tax revenue was slightly less than $1 Trillion according to the IRS. I've had trouble finding the corresponding 1976 number because the IRS web site stats only seem to go back about ten years. I did, however, find an article that questioned whether the Ford budget was unrealistic in calling for a $52 Billion budget deficit.

The deficit would be the amount collected minus what's spent, but of course there are excise taxes, import duties and so on that contribute to the pool of 'available' money. This is if you assume the government is spending tax revenues and not simply adopting a fraction of the economy as essentially nationalized.

All the Federal Budget represents is the percentage of the GDP that's appropriated by the government. In order for your tax dollars to be spent, the spending would have to be related in some way to the available revenue.

So it's high time we drop the fiction. If we can't get rid of fiat spending, we can't get rid of it. Without going to hard currency (i.e. backed by a finite resource such as gold reserves), I'm not sure it's possible to make our Supreme Soviet accountable. But at least they could leave the legitimate (read private sector) economy alone.

I still say if we outlawed withholdings so everyone had to write a check this time of year, we could get rid of this nasty income tax altogether. Maybe get rid of the nasty government that uses it for dubious social engineering aims as well.

*Explain to me this: A thirteen year old girl shows up at a clinic for an abortion. Her pregnancy is absolutely proof she has been sexually abused, yet even her parents may not be notified of the situation, let alone law enforcement. This is because, supposedly, her right to privacy trumps not only the life of her child but even her own right to not be molested. Yet the government asks you about such intimate details as gambling losses and what you spent for babysitting to calculate your supposed responsibility to the treasury?

**The other reason, of course, is being what it is, government will find a way to make even the fairest taxation scheme unfair. Those with power and influence will out, every time.