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Posted: August 20, 1999
1:00 a.m. Eastern

Scrapping the slave tax

Why is it that those who work hardest to deny the connection of “economic” and “moral” issues are also the ones who use money to manipulate the moral lives of Americans? The Bush/Forbes vote auction in Ames, Iowa, last weekend was just the latest example of corrosive big money at work in our political process. What could have been a genuine and informative test of grass roots support became instead a Roman circus of dancing girls, free banquets, and deluxe free transportation, as the money candidates worked hard to import enough well-fed and happy bodies to pump up their vote counts. The cause of self-government suffered as a result, as even Lamar Alexander can attest.

In Ames, as in the political life of the Republic, money matters precisely because of its effect on the moral foundation of our life. Economic policy should be judged first in view of its effect on the character of this people. Let’s turn away from the circus in Ames and consider the relation of money and character on a larger, and more important stage.

In case anyone is seriously tempted to be content with the modest gestures toward tax cuts that Republicans are chattering about in Washington, let’s remember that there is only one version of tax reform that is adequate for a free country: We must abolish the income tax and replace it with the tax system that was intended by our Founders — a tax system that leaves our people in control of 100 percent of their dollars, reinforces the deep habits of responsible liberty, and puts in place a permanent and effective impediment to the unlimited fiscal ambitions of our government.

Abolition of the income tax must be the premier goal of moral conservatives in the area of tax policy, and we must pursue this goal above all because of its moral dimension. The tax issue is a moral issue because it raises fundamental questions about the way American citizens will insist that they be treated by their government. The income tax is a slave tax, and accepting it will eventually replace the American spirit of ordered liberty with a materialistic servility. We should eliminate the tax code, repeal the 16th Amendment, and fund the government through tariffs, duties and excise taxes (i.e., sales taxes) as the Founders intended for good reason.

Most people already pay state and local sales taxes, and so their implementation at the federal level would not be the wild and risky innovation some opponents imply. But even if it is difficult, the benefits would massively outweigh the effort. Just for starters, restoring tariffs and duties to their proper role will make foreign populations who benefit from access to the U.S. market share the burden of supporting the governmental system that guarantees its existence.

But the important reasons lie deeper. Under a national sales tax, our income will be exposed to taxation only AFTER we make the decision about how to use it. Instead of waiting upon the whim of politicians and bureaucrats, we will control our own tax burden by controlling the amount and pattern of our consumption. And in larger economic terms, an excise tax system would impose natural limits on the rate of taxation — excessive rates would shrink revenue just as surely as excessive prices shrink the revenue of producers of consumer goods. The government’s revenue from taxation would depend on the voluntary choices of millions of citizens, and a government that couldn’t elicit from those citizens their agreement to make taxable purchases would simply have to do without the corresponding revenue — a tax cut “passed” by the people directly, not the Congress! This is what the Founders intended to be our economic situation — ordinary citizens in the driver’s seat of the economic patterns of their own lives.

Liberty from the income tax would mean, of course, liberty from the IRS. We would no longer have our privacy invaded by a government that was interested — officially and legally — in rummaging about in our business to find out how much we make, where and how we make it, and what we do with it. These questions used to be considered private business, but now the government of this supposedly free people can ask them at its pleasure, compelling satisfactory answers with the threat of jail and confiscation. Such systemic bureaucratic intimidation is fundamentally contrary to any substantive notion of political liberty. By contrast, under a sales-tax system we would not have to report the facts of our individual economic situation or choices to a living soul.

The servile presumptions built into the income tax system have already had a deeply corrosive effect on the quality and extent of the responsibility we take for our own lives. The distance the income tax has already taken us down the road to servitude can be demonstrated by considering how rarely it is that we even question the government’s right to know how much money we make. We blithely file our income tax every year, straining to report with accuracy and completeness to anonymous clerks at a federal agency matters that we don’t expect any but our closest friends to ask us about, and which we probably would not discuss with our own children. Has it occurred to us sufficiently to ask what right or legitimacy there is to this fiscal exhibitionism?

The income tax is objectionable not only for economic reasons, and because the Founders took care to exclude it from the Constitution. It is also bad because it is based upon a premise that destroys one of the material foundations of privacy, and therefore of liberty. How can there be political liberty if there is no sphere of privacy beyond the reach of government? And how can there be such a sphere of privacy without a protected source of material support for it?

A free and vigilant people should never have tolerated this totalitarian beachhead for a moment. The income tax is an inherently communistic tax, precisely because one of the prerequisites of freedom is a sphere of privacy. It is based upon the premise of the preemptive claim of the government to full knowledge of the material foundations of private life. But when we allow any aspect of our lives to be treated as intrinsically the concern of the government, we implicitly accept the role of government to judge and control that aspect. The only reason government has to know about something is in order to regulate and control it. And so in granting in principle that the government has a right to know everything about our economic life, we have granted its right to control it as well. And if we intend to deny the government comprehensive control over our economic life, we will have to deny its claim to comprehensive knowledge — which is the essence of the income tax.

Inevitably, then, the decades of implicit acknowledgment that we are not sovereign in our personal economic lives have been like a universal solvent, dissolving the private and personal resolve each of us should have to control responsibly the actions we take in the acquisition and expenditure of wealth. The habits of American liberty run deep and have shown impressive resiliency. But habits, though long-lived, can finally die. Eventually the logic of the slave tax will work its way through the whole man, and we will make our peace with servility. Unless, that is, we root the thing out soon.

The issue is not the fairness or amount of the tax burden. The tax itself is the problem. The income tax must be replaced with a tax structure the first premises of which are the capacity of American citizens to make their own economic decisions responsibly, and the intrinsic role of such economic responsibility in the formation of the character necessary to preserve liberty. Men and women not fit to control their wages are not fit to control their government — this is the logic of the dilemma, and we must act accordingly.

If the moral case against the income tax is made forcefully and well, it will carry the day. The economic case against the tax is, of course, also overwhelming. And a further case can be made that technological developments will soon make the entire structure as much a relic as the doomed attempt of the Soviet Union to prevent its people from communicating among themselves. It is likely that the question is not whether to replace the income tax, but how to prepare for its collapse.

But these complementary arguments must not distract us from the fundamental one — a free people that pays slave taxes to its government is willingly training itself for bondage.

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