Lowering corporate tax rates and allowing individuals to keep more of what they earn is obviously better than not doing so. Eliminating double taxation when someone dies is morally the right thing to do. These sort of changes are welcome and will undoubtedly lead to more economic growth than we’ve experienced over the last decade. However, there are far more problems with our system of taxation that need to be addressed if we’re to ever restore anything resembling the Constitutional Republic intended by the founders.
The amount that Americans are taxed is worth addressing but it’s really a symptom of a larger problem. Taxation is a source of political power. Arguably it is THE source political power today. As the Supreme Court wrote in 1819, “The power to tax is the power to destroy.” The corollary to that is that the power to tax is also the power to spare from destruction. The federal government picks winners and losers in more ways than just subsidies.
The only reason our tax code consists of some 70,000 plus pages of regulations (about 6,000 of which were added by President Obama) is that taxation is political currency for the powerful. The right loopholes helping the right powerful interests can buy another term in office and more opportunities to wield power.
The purpose of federal taxation should be to pay for that which is necessary to exercise the enumerated powers in Article I, Section 8 of the Constitution. The federal government has long since burst the seams of that straightjacket and now the federal government involves itself in virtually every aspect of our lives. The tax code has become the federal government’s favorite tool for modifying the behavior of Americans. Those who value individual liberty should push back against this, but even among the self described small “l” libertarians you’ll find people (some of you reading this may fall into this category) who will rationalize why the government should give them a prize for doing things like growing a particular crop, taking on a mortgage, or having children.
Every unjust act of government benefits someone. It is not made just because you happen to be that someone.
Some will say that taxation is theft, and that’s arguably true when the government fritters away our money on frivolous and wasteful endeavors. However, only an anarchist can really say that taxation is intrinsically theft because it would be akin to saying that there are no legitimate functions of government for which we should pay. That’s a caricature the left paints of conservatives but few if any on the right argue for zero taxation and zero government. What I think really does qualify as theft is our system of progressive taxation.
Progressive taxation flies in the face of individual liberty. Why? Because the basis for progressive taxation is the false idea that an individual’s right to property—his right to keep what he earns—is not a human right but a right granted by government using a sliding scale. The progressive system says that the person who earns more has less of a right to keep it than a person who earns less. Not many people are going to get too upset at the injustice because it’s popular to think that one’s rights become fewer as one grows wealthier. No matter how much schadenfreude you experience from seeing the rich get soaked, allowing the government to dictate who has or does not have which rights is a dangerous idea to accept.
Few in the GOP who pay lip service to the Constitution are willing to challenge the eat the rich mentality. Otto Von Bismarck famously said, “Politics is the art of the possible,” meaning that in any negotiation you’ll never get everything you want. It’s a common sense statement that has been expressed by many people in different ways. The problem is that it’s an idea that has become a cliche and in some cases a crutch. The Republicans too often use this notion as a reason to begin every negotiation already having compromised too much.
The Congress and President Trump may engage in some economically beneficial tinkering with the tax system and tax rates this year, but I don’t think any of it qualifies as genuine reform. Real reform would return taxation to its purpose of funding the government, not controlling the behavior of citizens and benefitting cronies. Real reform would push for recognition that everyone’s right to keep what they own and what they earn is equal and not dependent on how much they own or how much they earn.
Unfortunately, we have strayed so far from our founding principles that the chances of this debate even occurring are virtually zero.