Last Thursday, April 18, was Tax Freedom Day. According to the Tax Foundation, which has calculated Tax Freedom Day since 1971, this “is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year.” During this year, “Americans will pay $2.76 trillion in federal taxes and $1.45 trillion in state taxes, for a total tax bill of $4.22 trillion, or 29.4 percent of income. April 18 is 29.4 percent into the year.”
Thanks to the tax increases of Obamacare that took effect at the beginning of the year and the “fiscal cliff” tax deal (the American Tax Relief Act of 2012) passed by the lame-duck Congress, Tax Freedom Day came five days later than last year
Sixty-nine (64%) of the 108 days that the typical American must work to pay his tax bill are to cover federal taxes: personal income tax, corporate income tax, excise taxes, Social Security tax, Medicare tax, and other federal taxes. The most egregious, of course, is the personal income tax. Many place the blame on the Sixteenth Amendment that paved the way for the current income tax system. But it is a myth that the government could not tax incomes before the Sixteenth Amendment (see Sheldon Richman’s “Beware Income-Tax Casuistry“). The problem, then, is not the Sixteenth Amendment, but the Constitution itself.
The Constitution is not just an imperfect document; it is a flawed document. Although it is often viewed as written to limit the power of the federal government, just the opposite is true.
In a speech before the Virginia ratifying convention on June 5, 1788, Patrick Henry, asked: “Had the delegates who were sent to Philadelphia a power to propose a Consolidated Government instead of a Confederacy?” The United States were at this time under the Articles of Confederation. According to Article XIII, no alteration could be made to any of the Articles “unless such alteration be agreed to in a Congress of the United States, and be afterwards confirmed by the legislatures of every State.” It was resolved by Congress on February 21, 1787, that “it is expedient that on the second Monday in May next a Convention of delegates who shall have been appointed by the several states be held at Philadelphia for the sole and express purpose of revising the Articles of Confederation.” The stated purpose of the Philadelphia Convention was to revise the Articles of Confederation, not to write a new Constitution – a new Constitution that centralized power in, and increased the power of, the national government. The Anti-federalists were certainly correct in their assessment of the proposed Constitution.
With its countenance of slavery, assumption of the right of eminent domain, and ambiguous clauses (general welfare, commerce, necessary and proper), the Constitution from the very beginning had loopholes in it that were dangerous to individual liberty. Even so, I seriously doubt that the Federalists could have envisioned or would have approved of their new government becoming the monstrosity that it now is.
But all this being said, things would certainly be a thousand times better than they are now if the U.S. government simply followed its own Constitution. There would be no programs like Medicare, Medicaid, food stamps, Social Security, NSLP, WIC, SSI, SCHIP, Head Start, and TANF. There would be no agencies like the FDA, EPA, TSA, NIH, Freddie Mac, Fannie Mae, FCC, FHA, Amtrak, Consumer Product Safety Commission, FTC, OSHA, CPB, NEA, NEH, and ATF. There would be no Departments of Education, Agriculture, Labor, Commerce, Homeland Security, Energy, Housing and Urban Development, and Health and Human Services. And, of course, there would be no Appalachian Regional Commission.
It is strange that libertarians, who recognize that the Constitution is a flawed document, are the ones pointing this out, while conservatives, who claim to revere the Constitution, fail to see that most of what they support as legitimate government functions under the Constitution are actually illegitimate.
There are, however, some parts of the Constitution that libertarians – and anyone else who cherishes individual liberty, private property, and a free society – don’t want the federal government to follow at all. Like the first statement in the Constitution under the powers of Congress in Article I, Section 8, which reads:
The Congress shall have power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts, and excises shall be uniform throughout the United States.
And then there is Article I, Section 9, Clause 4, which states, “No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” And of course, the Sixteenth Amendment: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
The worst part of the Constitution is any part that mentions the taxing power of the federal government. As Chief Justice John Marshall wrote in McCulloch v. Maryland (1819), “The power to tax involves the power to destroy.” Congress can destroy the lives and livelihoods of Americans by taxing them in any way and in any amount – and not be in violation of the Constitution.
The government of Cyprus just taxed bank accounts. There is nothing in the Constitution that would prevent the government of the United States from doing the same thing. We already have federal taxes, not just on income, gifts, and estates, but also on gasoline, airline tickets, alcoholic beverages, tobacco products, and firearms. Many in Congress want to tax commerce conducted on the Internet.
But don’t all taxes have to be to “provide for the common defense and general welfare of the United States”? That is certainly what the Constitution says. Yet, they are regularly used to pay for the fighting of offensive wars and the specific welfare of government bureaucrats, privileged contractors, and recipients of government benefits.
The tax code doesn’t need to be reformed, flattened, simplified, or made fairer; it needs to be repealed. In a free society, individuals are able to keep everything they earn and decide for themselves what to do with it instead of the government deciding for them. Just because the Constitution says the Congress shall have the power to lay and collect taxes, doesn’t mean that the Congress has to do so. But how could it be otherwise that the worst part of the Constitution brings out the worst of human nature?