The Coastal Post - February 1996
The biggest misconception about the so-called "flat" income tax is that it would somehow destroy the Internal Revenue Service. Mind you, a flat tax would be an improvement on the present, so-called "progressive income tax". A flat tax might slightly reduce the tyrannical power of the IRS in our lives. That is good. But there would still be an IRS. And that would be bad.
For six years I have been suggesting that a standardized national sales tax (replacing the income tax) would be the fairest way to tax the America people. All state sales taxes should be abolished. The rate? I'll stand firm on ten percent. God doesn't ask for more than that.
However, each state would retain complete control of eighty percent of the revenue collected. Twenty percent would be sent from each state to Washington D.C. to fund the federal government. The states would take over the operations of most federal buildings and agencies and become the employers of most of the now federal employees.
The federal government would shrink and the state government would be come more powerful. But that power would be more directly answerable to the people of each state. Something tells me that is more along the design the framers of the Constitution intended.
The income tax would be abolished. Capital gains taxes would be abolished. Inheritance taxes would be abolished. Property taxes would be abolished. True ownership of private property would be restored, and productivity would be rewarded and not punished.
What about the poor being burdened by a national sales tax? Simply make certain items exempt from the tax. No tax returns needed. It all happens at the cash register. No sales tax on food, medical expenses, insurance policy payments, school tuition, or on the purchase price and mortgage of primary residence or the expense of primary housing rental. That leaves the poor with their food, shelter, education, insurance, medical expenses, and income untaxed.
Government exists (at least in the original America ideal) to protect life, liberty and property. Each American deserves equal protection of his life. The cop should not differentiate between Joe Sixpack and Bill Gates when he walks his beat. Our liberty is protected by the court's jury systems and, ideally, the poor man should be treated with the same care and respect as the rich man. Our liberty is also protected by our military forces. A soldier doesn't serve just for certain classes of Americans. He is pledged to protect all. These protective aspects of government are across the board and are due every American.
However, when it comes to protecting private property, a blatant differentiation arises. The property of Bill Gates requires much more protection than my property. And it is here that a sales tax is a marvelously equitable technique to fund government's protection of property. When Bill Gates buys his ten million dollar vacation ranch (remember, primary residence is excluded) he will cough up one million dollars in sales tax (if the rate is ten percent). If Mr. Gates buys a nice big Montana ranch, $800,000 of the sales tax money stays in Montana and $200,000 goes back to Washington D.C.
The key is the local control of assets that are meant to protect the property in each state. Now you don't let Mr. Gates lease his ranch tax-free. He'll pay sales tax on that because his primary home is in Seattle. If he wants to move to Montana permanently, you can bet the Seattle sales tax collectors will pick up the slack on their end. No loopholes. No IRS. The real estate salesman simply make sure that the million is collected and sent off to the Montana State government, just like sales taxes are collected now. In California, every store owner is already a tax collector. And they all work for free! The budget for the IRS is presently more than seven BILLION dollars a year.
We constantly hear that a national sales tax won't pay the bill. And I ask: The bill for what? It's obvious that our federal government has become a bloated, blood-sucking monster. Aggressive and sizeable cuts in spending must happen, regardless of which tax system we operate under.
A consumption tax (sales tax) is a good idea. The gasoline tax is a consumption tax. Mile for mile, it has provided America with the finest road and highway system in the world. Big cars do more damage to highways and bridges. They use more gas. The owners of big cars automatically pay a larger share of tax.
Commerce demands the stability (the obligation of contract) that government and law provide. The heavier the commerce, the more tax is generated to provide the necessary fundamental services that provide social (i.e., economic) stability.
In case you didn't realize it, the rich would like to spend more of their money instead of hiding it away with every new tax scam under the sun. The image of Scrooge McDuck swimming in his vat of cash and coins is funny, but fictional. Certainly the wealthy (and the not-so-wealthy) also want to provide for their family and heirs. So they don't spend all of their money.They save some of it. But savings are reinvested. These investments create more businesses that create more products which create more gross sales which create more sales tax.
As long as there are income taxes, capital gains taxes, inheritance taxes, and property taxes, there can never be true ownership of private property. These devices of government sponsored thievery, forms of eternal extortion, were the main planks in Karl Marx's Communist Manifesto. And that is why the present insidious state of affairs is un-American and unconstitutional.