WANT ECONOMIC PROSPERITY? ABOLISH THE INCOME TAX!
This month, February 2013, marks the 100th anniversary of, arguably, the largest transfer of economic power from We the People to the U.S. federal government. When the 16th Amendment was 'ratified' one century ago, the government suddenly had what it viewed was a license to tax citizens based on income. Before the 16th Amendment, there were a couple of brief wartime instances in which the federal government taxed incomes (though, only about the top 10% had to pay), which taxes were tolerated only because they were temporary. There are reasons why we should not be celebrating this 100th anniversary, reasons from multiple angles, and I will attempt to present some of those angles here.
First, one could discuss the fairly well known controversy and mystery surrounding the legality of the16th Amendment. Article V of the U.S. Constitution controls the amending process, and requires that three-fourths of the states ratify any amendment proposed by Congress. The number of states comprising the U.S.A. in 1913 was 48, thereby requiring 36 states for ratification. It was proclaimed in February of that year that 38 states had ratified the 16th Amendment. According to the book The Law That Never Was, by William J. Benson, not one of the states had legally ratified the amendment. According to the author, state legislatures were prohibited from changing the wording to any resolution proposed by Congress, and 33 of the states had in some way made alterations, many being plain errors such as spelling or wording changes. This doesn't seem too harmful, but the law is the law. Perhaps more significant, though, and able to make the claim by themselves against the legality of the 16th Amendment, are the actions of four states in particular: Kentucky, California, Minnesota, and Oklahoma. Kentucky's senate voted against the resolution, but federal officials claimed the state had ratified it. California's legislative assembly never recorded any proposal to adopt the amendment. Minnesota did not submit documentation that it had ratified the amendment, but the Secretary of State claimed Minnesota did. Oklahoma's senate changed the wording to such an extent that it had an entirely different meaning than the original language by Congress. If even just 3 of these instances are viewed as illegal or illegitimate ratification processes, then, at most only 35 states actually ratified the 16th Amendment, and it is not a true amendment to our constitution.
Next, related to the legal discussion, even adopting the premise that the 16th Amendment was properly ratified, it is interesting that the word "income" is not defined in the IRS tax code. The Constitution defined income as profit or gains, implying business profit or investment earnings, rather than wages or salary. This seems to suggest the IRS is making up the rules as it goes. Semantics? Maybe, but shouldn't something that is to be taxed be clearly defined by the tax code?
Third, I believe our Founding Fathers have been rolling in their graves for the last hundred years or so. They understood that taxing individuals on their private incomes would result in economic disaster. In the late 1780s, an original tax plan was enacted by Congress, that only taxed "goods, wares, and merchandice, imported into the United States". Note that these taxes were not on U.S. citizens. James Madison stated that "... a national revenue must be obtained, but the system must be such a one that, while it secures the object of revenue it shall not be oppressive to our constituents." In Jefferson's Second Inaugural Address, in 1805, he said, "...the remaining revenue on the consumption of foreign articles, is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States?"
Over the decades, the federal income tax system has grown so complex that millions of us have to seek professional help just to file returns and to comply with the tax code. The IRS employs more agents than the FBI and CIA combined - think of the cost of maintaining such a system!
I say we Americans deserve a better, more efficient taxation system, and one which would result in economic growth. Honestly, I would settle for a much simpler income tax, such as a flat (or nearly flat) tax structure that allows the taxpayer to file the paperwork on a form approximately the size of an index card. But philosphically, something that takes power out of the hands of the politicians is my favorite alternative, which is why I encourage you to learn about The Fair Tax (H.R. 25, S.13), which would require the repeal of the 16th Amendment. The Fair Tax would be a national consumption tax on retail sales, and would only apply to the purchase of new goods and services for personal consumption, at the point of purchase. Every time a consumer makes a purchase, he or she would be reminded of how much the government takes. Federal income taxes on wages and salaries would not be withheld from paychecks, so each employee would take home their full pay. Any time Congress wants to increase the tax rate, it would be instantly seen by millions rather than hidden and concealed until tax filing time. If the government were to attempt to increase in size and scope, Congress would try to increase the tax rate, and, being visible instantly, We the People would have an automatic vote through consumption choices we make.
The bottom line is to not become reticent about the income tax. The only reason we accept it is that it is what we have been familiar with our whole lives. While any government loves raising revenue with income taxes, it is not in the best economic interest of the individual or the country.
