Taxed Enough Already

I find it ironic that the very reason the early patriots and founders of our great nation fought for and declared independence in 1776 has come full circle and returned to haunt us. That’s right, the issue of taxation is baaack.  Our government has been gumming things up across the country and we have former Senator Joseph Bailey (D-Texas) to thank for proposing a federal income tax back in 1909.  This is a nightmare we just can’t shake and politicians see it as a blank check to keep spending money.  Since that time, members of Congress have used the income tax mechanism to choke the life out of the American people while spending like there’s no tomorrow.  We simply cannot continue down this path if we are to survive as a nation and if we are to regain economic prosperity.  Just as our ancestors in the 1760s reached a breaking point with taxation, today’s citizens are similarly strained.  A storm is brewing and lightning will strike.

I believe we need to repeal the 16th Amendment, abolish the Internal Revenue Service, and institute the Fair Tax.  This will take some hard work, time, and effort to combat the K‑Street lobbyists and the senators and representatives who are married to the current tax code system because it gives them immense power and wealth.  It’s time to show these profligates to the door.  The days of indiscriminate taxing because “that’s the way it’s always been” are over.

I think it’s important to understand how we got into this mess in the first place.  We have no one to blame but ourselves, so it is up to us to dig ourselves out.  Like most government-run schemes, and it is a scheme, the longer that politicians can make you believe that you or I “owe” a “fair share,” the longer they can keep their hands in our wallets. President Obama is good at talking about the people’s “fair share,” but he never explains to the American people what constitutes a “fair share.” We have been lulled into thinking that the only two things you can always count on are death and taxes.  I say it’s time to make death the only thing that humans cannot change.

Back in 1909, Senator Bailey couldn’t make the National Income Tax come into being all by himself.  Once proposed, the Republicans thought they would call the Democrats’ bluff by allowing the proposal to go to a vote.   After the bill passed in both the House and the Senate, Republicans believed that the individual states would never ratify it.  They were wrong, and on February 3, 1913, the 16th Amendment established Congress’s right to impose a federal income tax. The Republicans bet the farm—our farm—and lost.

The only hurdle remaining for money-hungry politicians was to get the American public to buy into the idea that it would be “easier” for everyone if such a tax was automatically withheld from each person’s paycheck on a pay-as-you-go basis.  Congress adopted the federal withholding tax system in 1943.  This system was based upon a plan authored by Bernardsley Ruml, who at the time was a director and Chairman of the New York Federal Reserve Bank. Since the adoption of the 16th Amendment, politicians recognized that taxation and the Internal Revenue Service (IRS) could be effective and lucrative weapons against the citizenry.  American workers have become more akin to serfs, giving huge amounts of money to the lord of the manor.

The IRS is a government agency like no other and it wields incredible amounts of power.  It is a citizen’s and businessperson’s worst nightmare.  I call it “the beast.”  Recently, the agency has lived up to that name, publicly thumbing its nose at Congress by refusing to turn over government documents.  Its spokespersons claimed that a computer hard drive crash prohibited it from compliance, a deception later exposed by Judicial Watch and the Freedom of Information Act.  It is the only federal agency that aggressively and simultaneously assumes the roles of judge, jury, and executioner against the American people and American businesses in Orwellian fashion.  I believe that the IRS must be eliminated.  It will take men and women of great strength and moral conviction to accomplish this task.

It is estimated that in 2010, 141 million Americans filed tax returns with the IRS, which equates to approximately one-half of the U.S. population. Considering the high number of illegal persons presently residing in the United States, I’m not sure that we can trust the numbers being reported by the government insofar as who should be paying income taxes.  Since many working age citizens are currently unemployed or are only employed part-time, they do not contribute to taxation revenue. The federal government is unable to state with any degree of certainty or accuracy the number of workers currently paying (or obligated to pay) income taxes under existing law.  That said, our nation’s appetite for spending is the second half of the much larger problem.  According to CCH Standard Federal Tax Reporter in 1913, the tax code was 400 pages in length.  According to the same source, today’s Federal Tax Code is 73,954 pages long.  Does anyone besides me see a problem here?

A couple of years ago I read two fascinating books, The Fair Tax Book, by Neal Boortz and Congressman John Linder, and The Fair Tax Solution, by Ken Hoagland.  Based on reading these two books, I am convinced that any tax should be uniform across the free market spectrum and based upon what you purchase, not what you earn.  This is why I support the repeal of the 16th Amendment, the end of the IRS, and the institution of the Fair Tax.

My eyes were opened when I discovered just how much tax I pay every two weeks. In fact, to see if I was an anomaly, I asked a friend how much tax he paid each pay period.  He said he took home X number of dollars.  I said, No! How much tax is actually withheld from your check?  Sheepishly, he admitted he didn’t know.  That was a “wow” moment for us both, but it drove each of us to print out our leave and earnings statement and scratch out the numbers.  For approximately $4,500 gross pay, there were $1,100 in taxes withheld, or approximately twenty-five percent.  Ask yourself the following question: If a bank told you it would keep for itself $25 out of every $100 you deposited, would you keep your money with that bank?  The answer is a resounding “no.” If that is the case, why would we be ok with the government taking our money, when we adamantly stated we would not let a bank do the same thing?  The government knows that we are onto its secret, and it is going to do its best to hold on to our cash.  Don’t plan on the government simply agreeing to implement a Fair Tax.  Both K-Street and the Feds are going to fight a two-front battle to hold onto huge sums of money.

Recently, we’ve heard the term “inversion” mentioned by the media. According to the Fair Reform for Growth website (www.fairreform.com), inversion is defined as:

Inversions, as commonly performed today, occur when a U.S. business purchases or merges with a non-U.S. company, and the newly combined organization is based (for legal purposes) overseas, as explicitly authorized under U.S. tax law.

Congress passed legislation that was signed into law by the President in 2004 which updated the tax code to precisely set the conditions under which inversions can occur. (26 U.S.C. § 7874, 2004)

Since the 2004 update, the Treasury Department and Internal Revenue Service have issued multiple notices, rules and regulations to implement the law. (Internal Revenue Bulletin 2006-27, Internal Revenue Service) (Notice 2009-78, Internal Revenue Service) (Internal Revenue Bulletin 2012-28, Internal Revenue Service)

President Obama has gone so far as to say that businesses that are part of an inversion are being “unpatriotic” because they [the businesses] are not paying their “fair” share. Mr. Obama misunderstands both the law and corporate business practices.

America has an unusually high corporate tax rate of thirty-five percent (and more than thirty-nine percent when state corporate taxes are figured in), which should concern every American citizen.  Economics 101 tells us that CEOs are only beholden to their boards and their shareholders.  Boardroom decisions are made based upon the bottom line and not on a futile attempt by our government to shame a corporation into changing its business practices by playing the patriotism card.  Maybe that tactic works in Chicago among community organizers and the Saul Alinski disciples, but on Wall Street, they pick up their toys and go elsewhere. The progressive approach to taxes and wealth redistribution is anti-business and it sends jobs overseas.

Progressives have an insatiable appetite for spending.   Reckless, out-of-control spending has driven this nation deeper and deeper into the national debt ditch.  Progressives have placed their ideology before the needs of the nation.  We cannot continue printing money and taxing citizens further into the financial abyss.  I believe the road to prosperity must include abolishing the IRS, repealing the 16th Amendment, and instituting the Fair Tax; it’s that simple.  In sum, the time has come for politicians to remember that they work for the people and that “we the people” do not work for the government.

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