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.
