Topic: Taxation
Immorality of Progressive Income Tax A federal progressive income tax is unethical and immoral.by The Frugal Libertarian
(libertarian)
Tuesday, October 14, 2008
Many people assume that I don't like income taxes because I am frugal. This is not the case. I despise income tax because I believe them to be immoral.
This may be blasphemous to some Libertarians, but I think that a certain level of taxation is necessary and must be allowed in order for the federal government to fulfill its Constitutional responsibilities. The level of this taxation should be proportional to what is actually needed to perform its legitimate, Constitutional functions. Now where me and many other Libertarians will agree is my feeling that a progressive income tax is unethical and immoral way to collect such taxes.
I am certain that most people would agree that stealing would not be considered a moral act, even if what was stolen was given to someone who needed it more than its original owner. Imagine someone walking into your home and taking $10,000 off your table, walking out the door, and giving your $10,000 to someone else. There are few who would stand for this, but every year we allow the federal government to essentially do the same thing with little more than a grumble on tax day. We would fight off a burglar in our home, but do nothing to fight off the government burglar who pilfers from our coffers.
Now some may say that this analogy is absurd since by living within the border of the U.S. you have consented to the taking of your money. I would agree that by living somewhere you are essentially signing a contract, but the contract of the U.S., the Constitution, has long ago been voided by the federal government's breach of that contract. If they do not act within the authority given to them by our most sacred contract, then I have not consented to them taking my money.
So how can taxes be collected in a moral manner? A moral tax would need to be neither progressive or regressive, but instead neutral and then that revenue would need to used to further "legitimate government interest" within the limits of power and authority granted by the Constitution. I believe sales tax on all end products except for food, housing, some transportation, and a short list of other necessities, would be the most neutral of taxes. Such taxes would end the need for a progressive tax and would end the embedded regressive taxes that we all pay.
Since the federal government's true authority lies in maintaining a safe and secure marketplace, those who consumed the most from this marketplace would pay the most for the federal government's service. A poor family who benefits the least from the marketplace would pay the least for the federal government's service. Those who wished not to pay taxes would be able to opt out by not consuming. It only counts as a contract if you have some reasonable way of not signing that contract. A sales tax would create a continuously renewed contract. Each time you consumed you would basically be resigning the contract with the government.
If the federal government acted within its actual Constitutional power and authority, the individual states and local municipalities would be able to create a more efficient social contract, one that citizens could give their informed consent to. If an individual state or local government believed a progressive tax was necessary to provide for the basic welfare of its citizens it could do so as long as it was acting within the power and authority granted to them by their state constitution or local charter. While I believe it to be impossible to give informed consent to such things on the federal level, I do not think it is impossible on a smaller scale. On a smaller scale you can hold the state or local government accountable for any breach of the contract or you could remove you informed consent by moving to a different state or municipality.
I underline informed because I believe consent does not exist without being informed consent. The actions of the federal government are often to far removed from our lives for us to hold them accountable and without accountability there can be no informed consent and therefore no consent at all. That is why we have the Constitution. As long as the federal government acts within the confines of the authority and power granted by the Constitution, than as citizens have given our informed consent. They have not done so in a very long time, so anything they take is without consent and therefore it is stealing and immoral.
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I've thought about the sales tax solution and ultimately decided it would still be more of a burden on the lower and middle class. Consider: a family making the median income of ~40K would end up spending most of their income. Even thoughthe majority of it would be spent on necessities, and discretionary spending would be low, by the end of the year, they would have pretty much spent it all.
Now consider the CEO robber baron who makes 10mil a year. Said individual would have a much higher level of discretionary, taxable spending, but probaly not in a greater proportion when compared to his or her total income than the 40K family. So this person makes 10mill and socks 5mil away. There's no way the 40K family can match that kind of savings.
Lastly, those who have considerable wealth could maintain residences outside the country, or go on buying trip, and simply purchase goods overseas in those instances when it would be cheaper for them. The hip-hop star would simply buy his Bently in the UK and have it shipped back, saving thousands.
We already see a form of this when it comes to corporate spending. Corporations aren't taxed on money earned overseas as long as those profits are not returned to the US. So you have companies setting up branches on foreign countries and then investing in those branches instead of back in the US.
Ultimately, it would have to be some form of sales tax xombined with an income tax in order to ensure the wealthy end up paying their "fair share" (whateveer that might be).
Posted By: The Frugal Libertarian
Date: 2008-10-15 05:27:03
Dave,
I think I addressed the issue of a sale tax being more of a burden on lower and middle classes. "Necessisties" would not be taxed. Also, a national sales tax would not need to be high. Remember, I believe the federal government should only tax proportional to what they need to perform their Constitutional duties. Even if we had no income tax the federal government would be able to return to the 2000 budget and still have enough, without replacing the income tax with anything. This is why I do not support the Fair Tax, because it does nothing to address the issue of the federal government taking too much money.
You did raise a good point about the rich people buying things overseas and shipping them home. I think there would need to be some sort of "entrance" tax to prevent this.
I have no problem paying taxes based upon a sound monetary system where taxes actually make up revenue for the government's operating budget however, a fiat monetary system doesn't require taxation for revenues. That fact was, of course, expressed by a former FED Chairman of the New York FED. He stated very clearly that there was only a few reasons for taxation and none of them have to do with revenues. The first reason, of course, is to enforce the use of fiat money, the second is to redistribute wealth and then then next is to maintain social control over the population. The entire system is not only fraudulent, but it should be considerd criminal, a scam that helps create a feudal system of peonage by providing the oligarchy both power and wealth to control and maintain their position of power.
Personally, I'd go the opposite way: widen the areas taxed by making it a Financial Transactions Tax, and making the percentage as low as possible.
Imagine a 1% FTT - when your company puts your cheque in the bank, the gov't gets 1%. When you take money from your bank, another 1%; when you make a purchase, another 1%.
Meanwhile, the rich guy would be paying the same; even if his bank is sending the money overseas.
(BTW, that claim about being able to cut the income tax and replace it with nothing by cutting spending to 2000 levels sounds like a fudge. It doesn't take into account either the loss of purchasing power of the dollar in 8 years, or the current deficit.)
Howdy Folks,I see a need for two definite actions that, like an acid and a base, are explosive for politicians when mixed. I need to see a Tax and Slash party. In my fantasy world, I would see a flat tax on all entities. It would be a percentage applied to anything that can earn money, a citizen, a civil organization, a church, a corporation, etc. At the same time, I would severely reduce Federal government through the elimination of a number of agencies (full disclosure: I worked for the Fed in public affairs for 14 years. It is amazing what they spend money on. Why, the purchase cost of promotional give-away items alone like pencils, hats, pins, coins, etc. etc. is likely larger than the GDP of many counties) such as the IRS, NASA (I love NASA though), Education, large swaths of Agriculture and so on and so on.Anyhow, that's my perfect world. Tax and Slash and I think a flat tax across the board on everything would help solve the problem (also, when is the government going to admit that Social Security is just a wealth redistribution program?) I just recently found this board and really enjoy the columns that I read here.
A "percentage" of one's earnings cannot be a Flat Tax, by definition. It is only less regressive. The sales tax concept is at least fairer. What about a head tax or a poll tax? You would pay a set amount simply for being in this country. In a truly limited and Libertarian government, this amount would be very small.
I came up with something similar. Here's how it would go...
3/4% sales tax. Period. On everything. Not just consumer goods like state sales tax, it would be on everything at all levels. That means every little widget that goes into a thingamajig that get manufactured into a doohicky is taxed at 3/4%. I figure the federal coffers would be overflowing and the economy would be booming after about 2 years of this. The tax would provide incentive for efficiency and be low enough to promote a whole lot of production, consumption, trade, labor, investment and even savings. Thoughts anyone?
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