A New Tax Code

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Switzerland just told the United States that their tax policy was an affront to human rights and that their request to get information on Swiss accounts that may be linked to tax fraud in the US is denied. (link) This is a remarkable defeat for the United States, and a deafening wake up call that our tax code is not only unjust, but in violation of basic human rights.

It’s time to start drawing up a new federal tax code. Before we go much further, though, let’s ask by what authority do we tax in the first place. Keep in mind that governments are created by the people to protect their natural, God-given, unalienable rights. Governments should never impose on those rights, and instead focus only on securing them.

Simply put, government isn’t free, as in price. It costs money to have a government do anything at all. Where does that money come from? It has to come from somewhere.

The Articles of Confederation was an early experiment in a government without taxes. States were asked to pay their fair share into the national budget to defend all the states together. Obviously, some states either couldn’t raise the money or refused to do so. Once one state stopped paying, the other states did so as well. The lesson from this is taxes cannot be voluntary. Either they are just, and thus enforceable, or they are optional, and remain uncollected due to basic human nature.

One source of revenue is the printing of money. Government can have exclusive control over the money supply. As they print money, it affects everyone equally. That is, if there is too much money printed, everyone suffers. If there is too little printed, everyone suffers. If there is just the right amount, then everyone benefits.

How much money should be printed? Economic history and experience tells us that the money supply should grow at roughly the same rate as the economy grows, and perhaps a little faster to avoid the devastating effects of deflation. In other words, err on the side of inflation, but try to match the growth of the economy. There is a natural feedback mechanism with all of this. Print too much money and spend it, and prices become inflated. Print too little, and prices become deflated. It’s not too hard to tell where the money supply is actually going, and the people will feel the pain either way almost before it happens. The government would do well to listen to the people in this regard, printing money until they start complaining about inflation.

If our economy is worth, $14.2 trillion, and it is growing at a very healthy 5%, then that means the government can print about $710 billion dollars. This is nothing to sneeze at. If this were enough to run government, then we wouldn’t need taxes at all.

So, before we even talk about taxes, let’s first talk about cutting the government budget.

First, we must eliminate all non-essential services. The constitution is quite clear on what we can and can’t buy with the federal government. Things like welfare, Social Security, and Medicare are far beyond that scope. They should immediately be canceled.

Whatever services the government provide, it should try to get compensated for it. For instance, if we’re going to use the federal government to build a national highway system, then the federal government should charge tolls on people that actually use that system to recuperate the costs.

Some services cannot have their costs recuperated. For instance, we can’t charge people for the military and justice system. Or can we?

The justice system—yes. Whenever a case is heard before the courts, the people who bring the case should pay for the costs. If justice isn’t worth the costs, then justice shouldn’t be served. In other words, if it isn’t worth the $500 or whatever to get a judge to hear the case, and the several thousand dollars to bring in a jury, don’t do it.

We should charge criminals for their crimes, and have them repay their debt to society for executing justice on them. Obviously, to be fair, we should make the justice system as efficient as possible.

However, there is still some costs that can never be repaid. In these cases, after we have exhausted the free money we get from printing money to feed a growing economy, we have to turn to taxes.

What kinds of taxes are most fair? Most of the taxes we are familiar with today are not fair. They are designed to put all the tax burden on the richest in America, with the intention of taking the surplus and giving it to the poor. This reeks of Robin Hood, but backwards. Remember, Robin Hood took money from the government, which unjustly collected excessive taxes, and returned it to the people. If politicians really were following Robin Hood’s example, they would be plundering the federal treasury to return it to the taxpayers. Instead, politicans who advocate unjust taxes are playing the role of the Sheriff of Nottingham.

The income tax punishes those who earn more money. If anything, those who earn more money do so by benefiting society more than if they had earned less. As long as they are using legal means of persuasion and productivity, we should be thankful that we have high-earners among us.

The estate tax, or death tax, punishes those who are building wealth over the years. Let them determine what to do with the money they have rightfully earned.

Sales taxes punish trade. Trade is the engine whereby wealth is produced. It is a tax on the engine of wealth itself.

Property taxes punish property owners. This drives down the value of property, and drives people who have rightfully earned their property out of their own homes. No land is truly yours as long as the government collects “rent” in the form of property tax.

In short, all taxes are unfair to one group or another, punishing one group and giving another group a free ride.

As long as we treat all people as equal in our country, then we should tax them all equally. A marine fighting for his country fights equally for everyone within the country. He doesn’t fight more for the rich and less for the poor. He doesn’t fight more for the property owner or less for the renter. The police doesn’t secure the assets of the rich more than the poor. This concept of having the rich pay more because they have benefited from society more is absurd.

The tax that is most fair is the same tax whereby the Lord taxed his people Israel. When Moses needed money and supplies to build the tabernacle, the Lord commanded him to tax Israel to obtain what he needed. That tax was a per capita tax. Everyone was required to pay a certain amount of money, and no one could pay on their behalf. The rich and poor alike were required to pay this tax, the exact same amount.

This kind of tax seems unfair to the poor—if the government does anything more than protect the rights of the people. However, if the government is only involved in protecting rights, then it is perfectly just, because the poor have as many rights to be protected as the rich.

What’s great about the per capita tax is that there is a terrific incentive to keep it as low as possible. At the same time, it encourages everyone, everywhere, to earn as much money as they can. The more they earn, the less the tax hurts. Once you’ve earned enough to pay the tax, then you are free to do what you like with the rest of your money. The government has no interest in it, at all.

Perhaps we can allow people time to come up with the money. For instance, you only pay if you have it, but if not, then we’ll just keep a tab until you do. Or perhaps we can allow people to pay early. For instance, if I had the money, I could pay of 100 years of the tax today, and never have the government bother me for the rest of my life. Perhaps we can allow people to loan out money to pay the tax. If you don’t pay it back, then eventually, you’ll have to deal with your creditors, but at least you can divide one large sum into several smaller sums over time.

According to my research, $750 billion should be plenty to provide for a standing army and the federal court systems. If we eliminated all the taxes at the federal level, our economy should grow at well about 5% a year. That would give us, free, about $710 billion. The remaining $40 billion, divided among a population of 300 million, would be $133. That would be the per capita tax for every man, woman and child living in America. My family would owe $931. I have the choice of either paying taxes, or asking the government to print slightly more money, and end up paying more in inflation. Whichever way the people choose, we will end up paying that money.

Now, we have the problem of the national debt. There is a way to pay it off. Today, we allow banks to grow our money supply by printing money they do not have. A bank can loan out many times more money than it actually has. This means, the vast majority of money out there is money that the banks, not the federal government, created. We can gradually reduce the ratio of loans to savings in the banks, and then print money to compensate for the money that will evaporate. We can use that money to pay off the national debt, and still have plenty left over.

We also have the vast tracts of federal land in our parks, as well as office buildings throughout the United States and abroad. As we reduce the role of the federal government, the office buildings will be empty anyway, and we can sell them and use the money to pay off the debt. We can also sell the federal lands back to the people and use the money to pay off our debt.

With a little creative financing, which isn’t creative at all for all the businesses in the world, it will be rather easy to settle our debt and return our government to well within the bounds it should exist in in the first place. It is quite possible to run the federal government without any taxes at all.

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One Response to “A New Tax Code”

  1. Tweets that mention A New Tax Code « Federal Way Conservative -- Topsy.com Says:

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