The 16th Amendment, ratified in 1913, gave congress the ability to confiscate money from the people. Rather than providing an efficient way to generate revenue to run the government, this only served to enable Senators and Representatives to enrich themselves by playing Peter Pan. Since the 16th Amendment, Congress has largely ignored actual needs of the country, in favor of incessantly working toward re-election by promising the “little guy” that he’ll “stick it to the man” to pay for your [local ball park, roads, schools, community centers, etc.]. Meanwhile, out the other side of their faces, they’re selling favors to special interest groups and corporations. All on our dime.
The fix should be simple. Scrap income tax altogether and replace it with a VAT, or consumption tax. (Unfortunately, this will require a Constitutional Amendment). There will need to be serious negotiations and studies completed to determine what items and services are taxable and what are exempt, and what individual exemptions may be allowed, but at its core, this is a progressive, rather than regressive tax because it doesn’t touch anyone’s income. And certain things like food, pharmaceuticals, and housing will not be taxed, or will be taxed after a certain dollar amount so that everyone may file for a standard refund every year, based on criteria like dependents, head of household status, etc. This will be a boon to those who only spend money on what they need. Those who like to have the new toys and expensive clothes and fancy cars will be paying more taxes. And that makes sense.
All this said, the reality is that we’re probably stuck with income tax. But even with income tax, there’s a way to ensure reform, and save taxpayers and their employers a lot of money, while creating accountability for politicians - which is something they sorely need. The automatically deducted income tax remittances are problematic for a few reasons:
- Out of sight, out of mind. Most people have no idea how much they pay in taxes. They count on their net pay. That is just wrong. Employees should be paid everything they’ve earned, and then should file their own taxes.
- Most employers aren’t actually in the business of tax accounting, but this forces them to provide that service. If you remove this responsibility from the companies, they would save a tremendous amount of money administering something that has nothing to do with their core business.
- It hides the theft in plain sight. Because the money is gone before the employee ever receives it, and most employees are fine with that, the government can steal as much as they want.
- The government is the beneficiary of a free loan from millions of taxpayers. The taxpayers who have too much withheld are, in essence, giving a free loan to the government every year. If they put that money in even a simple passbook account, they would earn at least a modicum of interest. But the government just returns it, interest free, after forcing you to prove they took too much in the first place.
If taxpayers had to stroke a check every quarter, or even just once a year, for the taxes they owe, there WOULD be tax reform.
To pay for highways and bridges, and other infrastructure items, we should be allocating gasoline (or whatever fuel is purchased to run motorized vehicles) taxes and auto registration fees. This is what the gasoline tax was intended to do in the first place, but like so many other things, politicians have robbed that bank to pay for their pet projects. And if fuel taxes and registrations aren’t enough, we can implement tolls for upgrade and new construction projects. Those would be tightly regulated to generate a specific amount of money and when that goal is reached, the tolls would be removed.
Finally, much noise is often made about corporate taxes and how corporations are able to get away with not paying their fair share - whatever that is supposed to be. This wrongly assumes that corporations pay taxes. They do not. Corporations may be responsible for actually stroking a check to the IRS for taxes, but it is, in fact, their customers who pay the taxes. Why we even bother with the charade is anyone’s guess. That’s not to say that corporations (and by extension, their customers) shouldn’t help defray the costs of public goods and services that help them operate - like roads and sewers and environmental damage mitigation and the like. But taxes, qua taxes, should be eliminated from the corporate lexicon.