An issue that deserves our attention has recently surfaced in the debates between the Republican Party candidates who hope to unseat Sen. Mark Begich in the Nov. 4 general election. That issue is the 100-year-old income tax system, which can only be described as a ridiculous complex and intrusive mess. It is burdensome to tax filer, destructive to the economy and custom-designed to invite politically motivated abuse and corruption. It is broken beyond repair and the time has come to correct a 100-year-old mistake.
Here are some facts about the income tax for voters to consider. Our founders rejected a tax on earnings three times while forming the U.S. Constitution. The Federalist Papers indicate they believed government could be funded adequately and unintrusively by taxing consumption. Near the end of the 19th century the Supreme Court ruled an income tax unconstitutional. In the early 20th century progressive presidents aggressively advocated a constitutional amendment to allow a tax on income. The 16th Amendment was narrowly passed by Congress and ratified by the states in 1913. At first the tax filing form was simple, and as sold, the rate was very low affecting only the very rich.
Contrast that to what we have in 2014.
In 2014 we have 74,608 pages of tax codes filled with special interests, written by lobbyists, rubber-stamped by legislators that unfairly burden the middle class. The income tax system is administered by America’s largest bureaucracy, the IRS, with a $13 billion annual budget. Both Democrat and Republican administrations over the years have used the IRS to harass and punish those considered political enemies. I suggest you read Frank Chodorov's 1954 classic, "The Income Tax: Root of All Evil."
The income tax is a direct confiscation of earnings by government. Employers must take a government-imposed share of employee earnings before the remaining earnings can be disbursed. The income tax burdens individuals and businesses, penalizes production, saving and investment. Karl Marx was a big fan of the income tax. The Communist Manifesto demands a heavy progressive income tax.
The U.S. has the highest corporate tax rate in the world, which places American businesses at a disadvantage that cannot be overcome in the competitive global economy. This has forced thousands of businesses to flee to offshore locations. It has resulted in the loss of millions of jobs and caused the treasury to lose tax revenue. The global elite are holding a total of $18 trillion in offshore banks. Much of it belongs to Americans who are hiding it from the IRS. Imagine what that money would do to boost the economy and create jobs if it was invested here. The U.S. would become the investment capital of the world if we did not have such a punitive tax system. We could even pay off the $18 trillion national debt. We need to get rid of all of this game-playing once and for all.
Two of the three Republican candidates for the U.S. Senate in Alaska -- Mead Treadwell and Joe Miller -- understand how burdensome the income tax system is on working Americans and how damaging the system is to the U.S. economy. In public debates they have voiced support for a bill pending known as the FairTax® that will replace the income tax and get rid of the IRS, saving Americans over $1 trillion annually in compliance and efficiency costs --$3,300 for every U.S. resident. The replacement bill (S.122 in the Senate and H.R. 25 in the House) is supported by a growing number of candidates around the country running for the Congress and Senate.
My objective in this piece is to encourage voters to familiarize themselves with the FairTax®. It is not in the DNA of those who hold power to voluntarily relinquish it. I’m convinced if voters understand it, they will demand it, and only if demanded will it be enacted into law. It will return the power from the politicians to the people as our founders intended.
The primary opposition to replacing the income tax comes from what is oft referred to as the “Washington Establishment.” Affiliation is informal but the term applies widely to members of Congress, all of whom deny membership. The primary goal of the typical congressperson is reelection. Repealing the income tax would work against reelection of many incumbents as they would lose contributions from K Street lobbyists. If you ask an incumbent why they don’t support the FairTax®, the likely response is “I favor comprehensive tax reform” and/or “the tax laws need to be simple.” Recognize that as lip service. I have been hearing that refrain my entire adult life -- I’m 81.
As long as there is an income tax, lasting reform and simplification ain’t going to happen. We had significant simplification in 1986 during the Reagan administration. Since 1986, there have been 14,000 changes to the income tax laws. To become informed about the FairTax® visit www.FairTax®.org.
Wiley Brooks is the Alaska director for Americans for Fair Taxation. He lives in Anchorage.
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