Friday, May 09, 2008

Income Taxes Are Immoral, Economically Unsound

Income taxes are immoral, economically unsound; By Travis Lee Rubeck; Herald Journal.

HT: WL at Columbus Townhall

“By taxing a person's income, the state is claiming ownership rights to the private wealth of its citizens. This claim is contrary to the moral philosophy on which America's political-economic system is based.

“In the Declaration of Independence, Thomas Jefferson made it clear that Man should not live for the State; the State should exist to serve Man. The Constitution of the United States of America carries this philosophy into a practical outline for the just government of a free society.

“Neither of these essential documents acknowledges the right of the state to seize any portion of a law-abiding citizen's wealth. Instead, emphasis is laboriously given to the means by which the state can protect the individual rights of its citizens. The only exception is the Eminent Domain clause of the Constitution, which provides for ‘just compensation’ whenever it is implemented.

The only moral justification for any form of government is the protection of individual rights. No individual has a right to another person's property. Income is wealth, and wealth is property. Since neither the state nor the individual has a right to the property of private law-abiding citizens, any income taxation is unjust and unconstitutional. To support income taxation is to acknowledge that citizens are not entirely private and must sacrifice their productivity to the ‘needs’ of the state.

“This philosophy is not only unjust, it is economically unsound and detrimental to American prosperity. GDP is the most accurate measure of the absolute and relative power of any nation. Nations that can buy security are as powerful as those who have large standing armies. If a nation seeks stability, improving GDP is the goal.

“The economic interference of government should be limited to that which stimulates the economy. The state should create the best economic atmosphere possible for production and consumption.

“The founding economic policy of the U.S. is free-market capitalism. Adam Smith's The Wealth of Nations was the prime philosophical influence behind American capitalism. The law of supply and demand dictates a natural economic balance between producers and consumers that requires no government intervention. This law is widely accepted as an economic certainty among the academic community.

“Income taxes discourage the productivity of profit-motivated individuals. As a result, the price of all consumables increases as the level of productivity decreases. This stagnation affects all consumers, regardless of their wealth.

The U.S. remains the only world superpower, despite the crushing weight of a tax code, that discourages and even punishes productivity. Economically unsound tax policies hold the U.S. GDP at a level far below the potential of American producers and consumers. This is unacceptable if we are to remain the world's greatest nation.

“In order to fund the federal protection of our rights, however, there must be some form of taxation. A voluntary consumption tax is the only method of taxation that is in accordance with the fundamentals of American political-economic philosophy.

“When properly implemented, a consumption tax fully funds the civic duties of the state. It is also completely voluntary, as people are only taxed when they make a purchasing choice. American capitalism is such that big earners are often big spenders. When consumption is taxed, big spenders foot the tax bill for those who choose thriftiness and frugality.

“This does not affect production; it only discourages inefficiency in producer-consumer trade. When kept at a minimum, such a tax encourages frugal consumption. According to the law of supply and demand, the wiser the consumer, the more efficient the producer, the better the product, the more valuable the product to the consumer, the more consumption of the product, the more tax revenue, the better protection of individual rights, the more liberty. Liberty was perhaps THE founding principle of American Society.

“In Congress, there is now a bill called ‘HR 25,’ which lays out the plans for such a system of taxation. I encourage people of all political beliefs to research this bill, commonly known as ‘The Fair Tax.’”

Comment: Great article Mr. Rubeck! However I disagree with the author on one point, in that consumption tax is not the only way to adhere to American political-economic philosophy. Ron Paul recommends that we cut spending and rely on the import-export tax. This is the way our country operated prior to 1913, and he also points out that if the income tax was removed and was not replaced, we would still have enough tax revenue coming in to keep the government running as it is now. However, one argument made by FairTaxers is that the consumption tax would allow for a gradual elimination of taxation upon the citizenry, which could be phased out down the road also.

But back to the article; the author is spot on concerning the immoral nature of the income tax. I recently got called ‘a Kool-Aid drinking lefty’ by a SOBAlliance blogger, oh yeah and a ‘twit’ as well, because I told him the same thing in reference to his support of the flat tax. This really demonstrates the hurdle we face for any tax reform plan because there are so many people in this country, not only on the left but the right as well, that have no concept of the moral and ethical issues surrounding taxation.

Given that, the collectivist have done an exceedingly good job convincing most Americans that a government has any and all right to tax you as it sees fit. And I would like to point out that at the last meeting of the Trilateral Commission, yes there is such a thing, they called for global taxation ability because they believe we, the USA, are not paying our fair amount of money to the United Nations. And while this may be just a group of blowhard internationalists, many of our elected officials agree with this idea, namely Barrack Obama, Hillary Clinton, and John McCain.

Again we really have some serious hurdles to get over before we return to an environment of liberty and freedom, and limited government. But with citizens like Mr. Rubeck, Americans for Fair Taxation, and Dr. Ron Paul we may be turning the corner.


Anonymous said...

A good post. However, as I see it, we will need to do two things before we can go from an income tax to a consumption tax. First, we will need to repeal the 16th Amendment. Second, we will need to lower the income tax and government spending to a point where, when switched to an equivalent consumption tax, we don't develop a massive underground economy due to tax evasion.

The tax evasion tipping point for a sales tax, according to Bruce Bartlett, is about 10 percent. Presumably, that would also apply for a full consumption tax on goods AND services. (The Fair Tax, by comparison, is 30 percent.)

We have our work cut out for us.

Mike P.

wl said...

Turning back the tide of 95 years isn't easily done. Current federal expenditures per capita is $18,000, 41% of the people's income on average.

Yes, we have our work cut out for us.