Dan Popp
Just taxes -- Principles 9 and 10, conclusion
An American tax manifesto
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By Dan Popp
April 15, 2009

We have said that taxes are rightly due to fund government's God-given mission of protecting lives and property; and we've hauled several kinds of taxes before the bar of justice. Finally, let's look at two more principles, along with a summary and possible applications.

Principle 9: Taxes on Savings Are An Economic Cancer

The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital... the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy. John F. Kennedy (Democrat)

We're told that Americans don't save enough. Setting aside the important questions of what is "enough," and who decides what is enough, it's hardly surprising that people don't line up to be punched in the face. We always get more of what we subsidize and less of what we tax even our reality-challenged politicians know that. When they graciously forbear to tax some kinds of savings, there's a mad scramble to put money into IRAs, HSAs, 401(k)s and any other tiny oases in the endless desert of government confiscation.

When you save, you make money, the bank makes money, and some homebuyer or builder or entrepreneur takes some risk that will probably add value to the community. What is government's response to this win/win/win scenario?

Strangle it with taxes, of course.

Taxes on interest hobble the incentive to save. Less money put into savings in an economy means that there is less capital available for loans. So lending criteria must be pulled tighter. Prospective borrowers are turned away. Bank shareholders and bank tellers and bank janitors lose, too.

If your elected representative really cared about "growth in the economy," he wouldn't be ripping off the gardeners.

Principle 10: All Taxes Cost Everyone (the Poor are Hit Hardest)

Every diminution of the public burdens arising from taxation gives to individual enterprise increased power and furnishes to all the members of our happy confederacy new motives for patriotic affection and support. Andrew Jackson

The popular idea that I can improve my life by hiking the taxes of someone else is short-sighted, at best. All taxes move money from the more-productive private sector to the much-less-productive government. Plus, as we've seen, unequal taxes artificially skew the prices of things. When values are distorted by taxes whether those values are retail prices, energy costs, wages or anything else goods and services cannot flow freely to their most valued uses. The whole economy is less efficient, which means a lower standard of living for you.

You may not "believe" in "trickle-down economics," but the boat-builder disemployed by the luxury yacht tax believes. It's not a matter of faith, but of math: When your boss gets a bill from the IRS, the money has to come from somewhere. He's either paying you less, reinvesting less in the company, buying less, or saving less all of which shrink your opportunities as a participant in the same economy.

The burden of taxes always falls hardest on the poor. The wealthy, by definition, have more options. They can hire attorneys and tax experts; they can move accounts offshore and otherwise shelter their money from aggressive taxes. They know which law is oppressing them, and where the loopholes are.

Those of more modest means generally don't know why, "a dollar just doesn't go as far as it used to." They are ripe for the demagogue who will tell them that all their problems are caused by Racism, or the Jews, or Wall Street or the Multinational Corporations. When the misled masses use what power they have their vote to punish their supposed oppressors, they grind themselves down with their own envy as government takes more money and more freedom from everyone.

Yes, there must be taxes. But we shouldn't let politicians pretend they're using the tax code to stick it to the evil, greedy rich. Whomever they stick, everyone bleeds.

Conclusion

A government which lays taxes on the people not required by urgent public necessity and sound public policy is not a protector of liberty, but an instrument of tyranny. Calvin Coolidge

While reading this, you may have wondered, "If we eliminate so many taxes, how will the Government get enough money to function?" This is the mode of thought that has brought us to our current looking-glass unreality. Your family doesn't get to determine how much money you'd like to have this year, then rob the neighbors until you get that amount. Your lifestyle is limited by the sum of money you can earn (and keep) by lawful means. It should be the same for the Government. The money collected via a just system of taxation should be the maximum available to fund government operations.

To oppose that idea would be to advocate injustice in order to enable tyranny wouldn't it?

I should note here that when well-intentioned alternative tax plans promise to be "revenue neutral," they seem to condone this genie taxation. The Government dreams up any amount it wants, makes a wish, and just milks the cow until the bucket is filled. That's wrong.

To recap, these are what I've proposed as principles of a just tax system. I hope you'll continue to examine them, debate them, and pass them on to others who may be tired of Newspeak words like, "compassion," "fairness" and "patriotism" used to justify robbery, slavery and tyranny.

1. There must be a limit on government's power to tax

I think this implies a constitutional amendment restricting the type and percentage of taxes that can be levied by all governments.

2. Income taxes violate private property rights

That same amendment must forbid all income taxes. After reading the founders' views and examining some very good information on John Locke, I have come to see that income taxes are the root of many contemporary evils. They are an open door to your treasure; those in power can just walk in and take as much as they want.

A government that confiscates your property through income taxes is hardly fulfilling its divine commission to protect property rights!

3. No taxation without representation

I certainly respect others' position that we should return to the Constitution's original, "duties, imposts and excises." And if we could eliminate all taxes besides these, that would be a giant leap forward. But it would still leave the government free to manipulate businesses and consumers through selective taxation, and still put corporations under the yoke of taxation with only limited, expensive and corrupting means of representation.

Since, as it seems to me, all business taxes are in effect sales taxes, a uniform sales tax might be more efficient. It would cut the dirty ties between commerce and Congress, and it would deprive government of a weapon of injustice.

4. No hidden taxes

As the saying goes, "Sunshine is the best disinfectant." Those who prefer to work (or tax) in the dark are probably doing something that wouldn't be tolerated if it became public knowledge. Let's print the cost of government right there on the register receipt for everything you buy. Then let's talk again about revenue neutrality.

5. No representation without taxation

If we agree that it's wrong for the rich to oppress the poor, then it's also immoral for the poor to force their will on the rich. With just taxes, everyone pays (or rather, everyone sees the taxes he's paying), so all have a stake in good, efficient government and a stake in keeping taxes down. The class war is phony and destructive. It's time to declare it a quagmire and demand an exit strategy.

6. Each dollar must be taxed only once

It's amazing to me how many of our problems were solved by the founders, only to be unsolved later by more muddled generations. Thomas Jefferson asked, "Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many new hands?"

7. Taxing power must not be used for social engineering

If you wouldn't put up with government dictating exactly which socks you wear, why would you allow it to restrict your choices indirectly, through taxes?

8. Progressive taxes are both unfair and unjust

The premise, "it's only right to take (exponentially) more from those who have more," has gone unchallenged for too long. Producers are whiningly described as, "those who have benefited most from our system;" as if their abundance was a gift, or perhaps even graft; instead of payment for taking risks, and for using their talents to improve the lot of fellow human beings.

9. Taxes on savings are an economic cancer

...and another invasion of private property rights that should be rejected categorically.

10. All taxes cost everyone (the poor are hit hardest)

William J. H. Boetcker wrote something that should be recited daily by every "public servant":

    You cannot bring about prosperity by discouraging thrift. You cannot help small men by tearing down big men. You cannot strengthen the weak by weakening the strong. You cannot lift the wage-earner by pulling down the wage-payer. You cannot help the poor man by destroying the rich. You cannot keep out of trouble by spending more than your income. You cannot further the brotherhood of man by inciting class hatred. You cannot establish security on borrowed money. You cannot build character and courage by taking away men's initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves.

Picture a tax code that was not a "code," indecipherable even to the Secretary of the Treasury; but a simple, constitutionally-limited percentage added to every retail purchase. Imagine further that the Federal Government had nothing to do with this tax. Washington would have to go to the states with its hand out every April 15th. No government employee or anyone else would know how much you earned, saved, or spent. What if there were no politicians pitting one group of citizens against another; no "sweetheart deals" for companies that "pay to play;" no double-, triple- and quadruple-taxing; no Big Brother-like control of your choices; no confiscation of what is rightfully yours?

That's a wonderful and a more just, world.

Will these principles alone rein-in government usurpation of power? No. Unjust and unwise taxes are only half the problem. The criminal irresponsibility of Congress in spending money not yet taxed from people not yet born, is the other half. But without re-establishing these or similar principles, I believe there can be no return to the America set up by the founders the America that once promised, "liberty and justice for all."

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© Dan Popp

 

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