The Myth of Fair or Easy Taxation

We can expect to hear calls around this time for tax reform. Some say we need to make the tax code so simple that you can fill out your return on a postcard. Looking at the 1040 forms going back to 1913, it appears as though the Income Tax form was never that simple.

Some say that we need a flat tax, or a “Fair Tax.” These are impossible. Taxes cannot be neutral or fair in any sense, and when the federal government is spending trillions every year, there is no way to extract that much from a population equitably or without violations of privacy.

A national sales tax would break down the division of labor, turn each state and retailer into a national tax collector, and move us closer to a system of money even more closely tracked by government. It would also be unconstitutional. A flat tax would not be flat if it included vouchers for the poor, and it would be terribly vicious if it did not.

The American Revolutionaries didn’t just want more convenient or even simply nominally lower taxes. When the Molasses Tax was cut by 50% in 1764, they smelled a rat. They suspected, rightly, that it was a British trick to get more revenue by making enforcement easier. They did not want an empire, with its writs of assistance and wars. It was government power, especially in violation of civil liberties and peace, that the colonists most resented.

Many of today’s tax protesters carry this radical legacy forward, but many others are confused about the underlying problem. Government power is the problem. War and the national security state are the problem. The French-Indian War gave us the taxes of the colonial era. The Civil War gave us the Income Tax. World War I meant a much higher tax and World War II meant tax withholding. Today Americans are still filing for 2008, to pay for Bush’s expansionary government and wars abroad.

If you resent the taxman, work for much less government in all areas, especially those that have historically meant the most abuses of our property rights and free economy — the national security state, corporatism, and the police state. Taxation is always theft, no matter the form, and the state is the central problem.