The Income Tax is the Root of All Evil
We’ve been told most of our lives that money is the root of all evil, or the love of money is the root of all evil, depending on a person’s interpretation. In the Christian Bible, 1 Timothy 6:10 in the old King James version says “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.”
How can money itself be evil, as some people’s misinterpretation of this claims? Yet everybody wants money. Does that mean everybody is evil? It isn’t worth going down that path trying to unravel distorted logic.
What then, is “love for money”? Modern society revolves around money, everybody values it, everybody needs it to function as a member of society. Is it the same as greed? Conservative Christians support free markets and capitalism, yet their own religion condemns “love for money”. Is there some point where a person values it too much? Who decides what value someone places on money is too much? A good defining line would be if a person is willing to steal or defraud others for money. Clearly sticking a gun in someone’s face demanding their money is wrong. Entering a business transaction where one person intends to not meet their end of the agreement isn’t quite as obvious as waving a gun in someone’s face, but we could agree that isn’t right.
That brings us to government. How are we to pay for government services? Taxation has been around as long as civilization and rulers existed. A portion of a farmer’s produce, or mandatory time laboring for the king was how taxes were raised before modern economic systems. Then industrialism came along; corporations and capitalism raised living standards for most people while changing the fabric of society. Fewer people were needed on farms, factories needed workers, the owners got rich. Workers of the world were persuaded to unite under Marxism to even out the wealth of society.
During the rise of capitalism, socialism became popular with the poorest segment of society. European nations became more socialist in nature, creating social welfare schemes that placated the majority. Lincoln had tried an income tax to pay for the Civil War, but it was declared unconstitutional, a direct tax imposed on people rather than a transaction prohibited in Article 5 of the Constitution. The USA adopted the income tax in 1913 with ratification of the 16th Amendment. Initially it was supposed to affect the very top income earners. . After a few decades everyone but the lowest earners were paying income taxes. Taxes weren’t deducted from workers paychecks until WWII, where it was intended to be a “temporary” war-time necessity. Gradually people were conditioned to expect government to take money from them every payday; that was the natural order of things in people’s minds. People have become compliant tax slaves for their government.
The 2nd plank of the Communist Manifesto is the graduated income tax. It was intended ostensibly to put Karl Marx’s credo of “from each according to his ability, to each according to his need” into practical application. The less you earn, the less you pay in taxes. The more you earn, the more you pay. The income tax theoretically puts this principle into action, but it hasn’t evened out the wealth gap, it made it worse. Rather than helping the working class become financially secure, income taxes deprive them of the ability to save, invest or spend their own money they way they choose. A few thousand dollars means little to people with large incomes, for someone with a marginal income a few thousand dollars can make a big difference.
In a free market economy, workers should keep the money they earn. Government would take nothing from their paychecks. Everything they earn is theirs. A basic libertarian principle is respecting each person’s property; a person’s wages is their property.
Government should be funded in the most inobtrusive manner possible. The U.S. federal government was originally funded with excise taxes and import duties. Excise taxes are basically a sales tax; when the USA was founded excise taxes were levied on whiskey, sugar and tobacco. Import duties, or tariffs, provided the majority of funding for the new federal government. It was relatively easy to collect because the ports where goods were imported were the easiest place to account for them. While any form of taxation distorts the market to some degree, indirect taxes aren’t ideologically intended to punish individuals who “make too much”, it is a way to raise revenue. Our nation grew and prospered for more than a hundred years with just these indirect taxes on transactions in place.
Collecting income taxes is essentially an elaborate gun in your face. We are told to fear the IRS, lest they garnish our wages or take everything we own, or send us to prison. Is this how a nation dedicated to individual freedom should conduct its own revenue system? We are told to not be greedy, yet government itself demands money it hasn’t earned, like a criminal waving a gun in the victim’s face.
Income taxes harms the economic order of a country when loopholes and regulations create an almost incomprehensible tax code that distorts the market. The best example is health care. When employer provided health insurance was made non-taxable (Another story in itself about wage and price controls.), it set the stage for a whole new bureaucratic maze for paying for health care. Instead of the consumers shopping around for the best price, a third party was involved for paying for that service, which ended any market discipline on the part of consumers and providers. Sure, insurance companies negotiate group discounts, but that still doesn’t enforce the ultimate price determined by consumers and producers directly negotiating with each other.
Notice how 401ks and IRAs are tax deductible, an example of political insider influence on tax code. While investment and saving is definately a good thing, when money is funneled to Wall Street because of the tax code it gives an enormous benefit to a small subset of the population.
When government has too much money, it wastes much of it on endevours contrary to freedom: perpetual wars, programs to make people dependent on government, insider transactions to benefit a few influention people. Libertarians want to limit government, reducing the amount of money it collects is one way to do this.
People are alarmed about the rising wealth inequality and blame it on capitalism. The income tax isn’t a capitalist characteristic, it is a central feature of socialism that has been introduced into our economic political system to benefit a few at the top. Many of the very rich pay little or no income taxes, and those are the people the political left thinks should pay the most, yet the political left punishes the working class with income taxes.
Am I arguing against schools, police, national defense, and all the things that income taxes pay for? No, I want to see the income tax ended, not the essential government services a free country needs to exist. All of the things we expect government to provide are topices for another day. There are eight states without an income tax, those states continue to exist and function just fine without confiscating their citizens wages.
What is the alternative to the income tax? I propose a national sales tax, capped at 5%. Essentials like food and clothing could be exempt. Sales tax is fair and the amount is known for consumers, unlike income taxes where each person’s circumstance is different. The more you spend, the more you pay. Wealthy people who buy expensive luxury items would pay more tax than average income citizens who buy regularly priced goods.
Sales taxes, and other taxes on transactions, at reasonable levels to not unfairly influence the market for some people’s benefits would be preferable to taxing people’s incomes from the viewpoint of individual liberty. Workers trade their labor in exchange for money from their employer, a pretty straight forward free market transaction. So should the employer/employee wage transaction be considered to be an indirect tax and therefore subject to indirect taxation? Politicians would certainly use this argument to raise taxes. The flat tax on income is a common suggestion, but it still equates to tax slavery. Psychologically ingraining people with the notion that their productive efforts make them indebted to the institution that should defend their liberty is a contradiction. Let people keep the money they earn, fund government with indirect taxes.
Citizens are now revenue generating tax slaves for the government. How else can it be described? We exist so government can take our money, and so the few elites at the top who have direct influence on government policies can make an enormous profit from the national treasury.