In this second discussion of my main campaign issues, I will deal with the immoral income tax.
As you know, if I were elected Governor of Oregon, I would attempt to completely abolish the personal income tax, and abolish the corporate income tax below the Adjusted Gross Income level of all Oregonians. The reason can be found in the following quote by that Great Libertarian and key initiator of the American Revolution, Thomas Jefferson.
Jefferson said in his Inaugural Address, “What more is necessary to make us a happy and prosperous people? Still one more thing, fellow citizens, a wise and frugal government which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”
In this wonderful quote, Jefferson eloquently summed up the Libertarian Minarchist’s concept of how our government should run, and the Libertarian, or Classical Liberal, philosophy. But key to the understanding of the immorality of the income tax is his phrase, “shall not take from the mouth of labor the bread it has earned.” This clearly means that the income tax is immoral because we have an “Inalienable Right to the Fruits of Our Labor”. The defense of Inalienable Rights is at the heart of the Natural Law philosophy of Jefferson, and if we are to have a Jeffersonian Republic, it is absolutely necessary that this Inalienable Right is not assaulted.
Clearly, any money earned from labor should not be taxed. And if you use that money to earn more money, say by renting it out, or buying something which you later sell for more, it is merely an extension of the money you earned from labor, and thus is completely equal to money earned from labor. This would make the interest and capital gains portion of ones income as immune from taxation as what you earned digging ditches, and, thus, taxing interest and capital gains is fully as immoral as taxing direct labor.
As we know in modern America, the income tax has two other extremely negative and anti-Capitalist elements in it.
Firstly, is the immense waste of energy, money, and time, which complying with the income tax forces Americans to endure. This vast dissipation of human energy, which could go into activity in the Free-Market, enriching those who engaged in it and the entire country as a whole, leaves us all immensely poorer. America would be far more prosperous if all that human energy were put into productive activity, or enjoyed as leisure.
Secondly, if you earn money legally, it is nobody’s business what you do with it, as long as that activity is also legal. In other words, the income tax is a vile violation of the Inalienable Right to Privacy, which Jefferson’s beautiful Bill of Rights protected and defended. This is as serious a usurpation of our Inalienable Rights, as is the wastage of our human energy.
Now, those who disagree with my interpretation of Jefferson’s inaugural speech above might counter with the following quote from Jefferson to Madison, made in 1785:
“Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.”
The progressive income taxer will jump on this quote as a vindication of his immoral income tax, but he conveniently overlooks the second sentence about unemployed poor and uncultivated lands.
There would be very few unemployed poor if the minimum wage law were abolished. This violation of the Inalienable Right to Contract, which so disproportionally unemploys Black and Hispanic Youth, to the benefit of Union Workers, who can, by this tactic, exclude a vast segment of the labor force from competing with them, is another anti-Libertarian crime by the modern state. Switzerland has no minimum wage law, and its unemployment rate is 2.8%, (ILO estimate is 4.1%), far lower than ours or the European and British socialist governments.
So, for the progressive income tax to exist at all, it would first be necessary for the minimum wage law to be abolished. Then, almost all surplus-labor would be cleared by the market, as wages fell to a level that would employ everybody who wanted to work, without any coercion. However, I doubt very much if the wage level would fall much below the current minimum wage, if at all, although it might fall for very easy labor like house-sitting or baby-sitting. Men would be absolutely free to contract their wage scales.
Secondly, the progressive income tax supporters overlook the inclusion of “uncultivated lands” in the above quote. Currently, we have farm subsidies, those immoral giveaways to the corporate rich at the expense of the general taxpayer, championed and promoted by the Democrats and Republicans, which actually pay people not to cultivate lands in a world of starving people. It is clear from this that as long as we are paying people not to cultivate land, the income tax, or the progressive income tax, should not exist in America.
Additionally, I believe Jefferson did not take into consideration the disincentive effect of the progressive or graduated income tax on the total productivity of a society. What of the masterful brain surgeon, who could do a hundred surgeries a year, who decides, because of the progressive income tax, that he will only do forty a year because that will throw him into a higher tax bracket, and he could spend half the year on vacation, rather than waste his time paying the salaries and bloated pensions of government officials. The disincentive effect in this case will cost several score Americans their lives.
But how are we then to tax ourselves, so that very basic functions of government, like apprehending murders and tree thieves, and jailing them for extended periods, are to be carried out? Certainly not through an individual income tax.
But there are problems with other forms of taxation. The sales tax hits the poor far harder than the affluent. If there were one tax the Left should be against, it is the sales tax. Yet we see the Left touting this as a wonderful tool for financing overpaid government officials. Moreover, it throws the entire onus of collecting the tax on the backs of business, and especially small business. The corporate giants can easily handle the extra work, but it burdens and even destroys small businessmen, who should not be forced to be the government’s tax collectors — another form of involuntary servitude.
Additionally, if you do favor the income tax, you should distinguish between the flat income tax (with no deductions), and the progressive income tax. Obviously, the flat income tax is both fairer, and would greatly simplify and largely eliminate a vast wastage of American human energy, which could better be spent in market activity.
But here also the key is at what level the income tax is set. A progressive income tax that went from 1% to 3% would be far better than a flat tax of 25%.
Ultimately, the only fair tax is the poll tax, which hits all citizens equally (and perhaps foreign residents and visitors should be charged a daily tax equivalent to what all Americans pay daily to the military for protection. Foreign visitors are getting the security benefits of our military spending without paying for it). You’d think that if the Left really believed in the “equality of all citizens”, they would fully back the poll tax. But when Margaret Thatcher tried it, it initiated the end of her political rule.
The only other possibility we see is a corporate income tax on the largest corporations, since Inalienable Rights apply only to Individuals, and corporations are not individuals, but notional legal fictions which don’t actually exist. A corporate tax on the largest corporations would merely be passed on to the consumer in the form of higher prices, so ultimately the consumer would pay it anyway. But it would streamline our taxing mechanism, and save vast sums of energy and money for Individuals, small businesses, and small corporations, while not violating Jefferson’s injunction against the taxation of labor.
There is no doubt that taxation is theft by the State through coercion, but it is also true that we cannot have a Minarchist, or minimal, government without some type of revenue being generated for the government to pay government workers. The key is probably to keep the level of government expenditure at the very lowest level consistent with its Jeffersonian, Libertarian, principles.
One thing we know for sure: the income tax is taking bread from the mouth of labor which it has earned, and that is surely immoral. —
Paul Grad, Libertarian Candidate for Governor of Oregon
Libertarians check the box. Democrats, Republicans, and Communists, can write me in.