Broken, complicated, corrupted, expensive, destructive and unfair are the words that best describe the federal income tax system after almost a hundred years of being treated like the personal piggy bank of tax lobbyists and members of Congress.
This is not simple pigsty but one that is so complex it cost taxpayers and American businesses more than $300 billion last year in paperwork costs, alone, before a penny of tax was paid. What people owe but don’t pay amounted to more than $350 billion last year—a shortfall that, to make up, increased the average taxpayer’s bill by more than a third.
In Washington, D.C., however, a new American aristocracy made up of political insiders profits richly by buying and selling pieces of the federal tax code. It is routinely used to buy votes and pit Americans against each other, explaining why almost half of the nation does not pay income taxes while the other half carries the entire load. Does such pandering represent the “Achilles Heel” of our Republic and spell inevitable economic ruin?
Our tax system makes members of Congress powerful and tax lobbyists among the richest and most influential in Washington’s elitist ranks. In a nation that threw off the power of pampered aristocrats, they’re back and dining out on our money while the nation staggers under unthinkable and suffocating levels of national debt. Between promises to spend more and more to buy votes and insider deals to sell off more and more of the tax code, We the People are left holding the bag.
Obviously corrupted, our nation’s tax system caters to powerful schemers with access to Congressional tax writing committees at the top and ignores the just plain dishonest down below. More than a trillion dollars a year in America's "underground economy" escapes taxation. Drug dealers, prostitutes and gamblers revel in a taxation dead zone along with at least 10 million illegal immigrants. Millions enjoy the fruits of honest Americans’ labors as their tax dollars go to pay for highways, our nation's defense, schools and every other federal program while they pay no federal income taxes.
In Washington, it’s about Leona Helmsley's advice that “only the little people pay taxes” where Congressional corruption has created a $1.5 billion a year recession-proof tax lobby business. More than 18,000 tax breaks have been written into the code in the last 20 years. This on-going corruption offers promising career paths for staffers and former members of Congress who command seven-figure signing bonuses with private lobbying firms after “public service” in and around our tax writing committees.
They have created a tax system that reaches into and distorts every aspect of American life. Every penny we earn, save or spend must be accounted for to our government. No business decision is made without a tax accountant. We get what is left over after taxes are first taken by government. Insultingly, even death is a taxable event and no new hire is without a tax consequence. Even foreign competitors enjoy a tax advantage over the “Made in America” label but shame for this self-destructive record is hard to find in the Capitol.
Funding the “common good” with our tax dollars includes buying a new fleet of luxury jets for Congress because military transports are not good enough for sensitive Congressional aristocrats. While hiding the cost of government and our taxes from us through payroll taxes and withholding, a spending binge continues out in the open without fear that a reasonable connection between government profligacy and citizen earnings exists in the public mind.
The political class is so confident of this that the idea of a European-style Value Added Tax (aka VAT) has now been arrogantly suggested on top of the income tax. It would further hide the cost of government in retail prices, take more money out of the economy and citizen’s pockets that could be used for jobs and growth but provides the political class with new citizen wealth to advance their own political ambitions and access to perks usually available only to the wealthy. The political elite bank on the idea that most citizens, like modern day serfs, don’t believe they can control a government ironically designed to be directed by the people to serve the best interests of the people.
Our tax system is exhibit number one, for all to see, of what has gone wrong with our government. Fundamental reform ideas ranging from the FairTax, a simple and fair national retail consumption tax to the Flat Tax, Steve Forbes’ idea for far simpler and less expensive tax system require both citizen anger at being so obviously fleeced and the will to take this government back from self-serving aristocrats. That tax rebellion is now under way in the nascent but powerful stirrings of the Online Tax Revolt, which brings together all those Flat Taxers, FairTaxers and Reagan tax cutters who believe that public policy should actually serve the public.
Ken Hoagland is author of “The FairTax Solution”, chairman of the Online Tax Revolt and the FairTax national campaign. More information can be found at: www.onlinetaxrevolt.com and www.FairTax.org. Hoagland's new book is available at most booksellers.
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Ken Hoagland authored, "The FairTax Solution" and is a long time grassroots advocate on tax policy and other issues.