If you’ve been paying any attention to the politics of the Republican Presidential Primary, you may have heard Ron Paul give one of his favorite one liners when talking about the income tax especially us individual tax. I’m paraphrasing because I can’t find the actual quote, but it goes like this:
Some people complain that 50% of Americans pay no federal income tax. I say we’re halfway there.
Think about that for a minute. Zero income tax.
When you make money, you get to keep it. All of it.
Wouldn’t that be nice?
0% Income Tax Has Been Done Before
There is historical precedence for eliminating the income tax entirely. With a few exceptions during wars, there was no federal income at all in America until 1913. That’s well over a century of 0% income tax.
The government had other methods of income, just as it does today, and individual income was not taxed. What a concept!
Contrary to what some may believe, the government wouldn’t go broke today if we repealed the income tax. In 2011, the government collected $2.3 trillion in revenue, where only $1.1 trillion of that was from personal income tax. If the size of government is reduced, we could easily eliminate the individual income tax and run the entire federal government on $1.2 trillion. Heck, that’s all the government spent in 1982; just 30 years ago.
Now that we know America could exist without an income tax, it’s important to understand why America should exist without an income tax.
The Government Doesn’t Own a Free Person’s Income
There are plenty of economic reasons it should be eliminated, but I will save that discussion for another day. The main reason the income tax should be eliminated is that people cannot be free when government has unlimited power to tax income.
The government sets the tax rate, which means they tell people how much money they are allowed to keep. Telling someone his tax rate is 35% is no different from telling someone you’ll let him keep 65%. In America today the government owns 100% of our income, and is “nice” enough to allow us to keep some of it.
You may think I’m being ridiculous. There’s no way the government would take 100% of our income!
Did you know the highest tax bracket in in 1944 was 94%? The government took $0.94 of every single dollar earned in that tax bracket and only allowed the person actually doing the work to keep $0.06.
I don’t know about you, but I don’t consider myself “free” when my government is one vote away from taking 94% of my income.
But the Government Does Own YOUR Income
As the laws are on the books today, the government owns 100% of your income. There is nothing stopping them from reinstating the 94% tax bracket, and there’s nothing stopping them from raising it even further to 100%. The only reason you get to keep anything you make is because politicians have decided not to implement 100% income tax rates.
That doesn’t sound like freedom to me.
photo credit: 59937401@N07