{Published April 7, 2010, in the Colorado Springs Gazette}
It’s time to abolish the federal income tax. What should we replace it with? Absolutely nothing.
There are a number of reasons to get rid of the income tax. It is a terrible intrusion into the private lives of Americans. One’s income is one’s personal business, and Americans should not have to provide information about their incomes to a governmental agency for the privilege of staying out of jail. It also creates the impression that resources belong first and foremost to the collective. Only after you pay your “cut” are you graciously allowed to keep what is left over to take care of yourself and your family.
The income tax creates perverse incentives, punishing those who create the most wealth. If you choose to work harder, you will be penalized more. As one successful entrepreneur has written, society doesn’t mind if you make a million or two over the course of a lifetime. But if you try to make that much money in a year or two by busting your hump, most of it will get taken away.
Nor is the “fairness” argument compelling. Supposedly, the theory goes, people who have higher incomes have been rewarded more by “society,” so it is fair that they give more back. But income is not given. It is merely money traded for something else. The huge majority of those who report $200,000 of income have not been given it as a gift. They have instead traded $200,000 worth of goods or services in exchange. It’s not fairness that drives the income tax. It is envy.
But wouldn’t the abolition of the income tax starve our national government into oblivion? Everybody “knows” that state and national financial crises are because we’re not taxed enough, right? This argument was made on these very pages a few weeks ago. A writer begged to pay more taxes as a way to solve our current budget woes. Interestingly, in that article the words “tax” or “taxes” occurred 19 times. The words “spend” or “spending”? Zero. That, dear readers, is the problem behind those who say “Tax me: I’m public-spirited. You’re not.”
Let’s look at the current federal budget. It assumes $2.4 trillion in revenue, $1.1 trillion of which came from the income tax. That means that without the income tax the government will have a mere $1.3 trillion in revenue to fund its operating expenses. The budget also calls for spending $3.6 trillion, 50% higher than revenue. For the sake of argument, let’s keep that factor constant. Scaled to an income tax-less budget, that would give Congress about $2 trillion of spending authority.
Would a budget of $2 trillion mean the end of civilization as we know it? Illegal immigrants flooding our borders? Daily suicide bombings? Starving children in the streets? To answer this question, we might ask when the last time was that our government had to operate on a $2 trillion budget. The answer? 2002. To abolish the income tax and keep the same proportion of spending, all we’d have to do is return to the first term of the Bush presidency.
Of course, this little thought experiment will never actually happen. Everybody “knows,” particularly liberal Democrats, that deficits are caused by those mean, greedy tea partiers who have the temerity to suggest that they, and not Washington, know best how to spend their money. Like so much of what people know, it isn’t true.
The rhetoric of sacrifice to close the deficit by reluctantly but patriotically supporting tax increases is very powerful. But the reality of every single budgetary crisis is that tax increases *never* fix deficits. Spending always increases faster. Runaway spending caused the crisis in California. It may cause Greece to collapse, it is endangering other European nations, and it is threatening to Europeanize America. Shared sacrifice is necessary, all right. But it must come from cuts in spending.
Abolishing the income tax would not only return billions of dollars to productive investment in the private sector and get Americans back to work, but it would force an honest look at the real problem: the scope and size of government spending. Think about that this April 15th.