Freeman

ANYTHING PEACEFUL

A Diabolical Tool

Ready to get rid of the income tax?

MAY 21, 2013 by LAWRENCE W. REED

Polls have shown for years that Americans think the current federal income-tax system is “unfair.” And that was before the disgusting IRS targeting of conservatives, libertarians, tea party activists, Christians, and reporters the Obama administration doesn’t like. A large majority of the country favors a “complete overhaul” of the system. Even former IRS Commissioner Shirley Peterson has said, “We should repeal the Internal Revenue Code and start over.”

It’s not as though Americans weren’t given fair warning. Guess who made these remarkably radical statements about the very idea of a federal income tax more than one hundred years ago:

1. “. . . an abhorrent and calamitous monstrosity. . . . It punishes everyone who rises above the rank of mediocrity. The fewer additional yokes put around the necks of the people, the better.”

2. “. . . a vicious, inequitable, unpopular, impolitic, and socialistic act. . . . the most unreasoning and un-American movement in the politics of the last quarter-century.”

3.  “. . . can only be collected by prying into the private affairs of the people by arbitrary methods hateful to the citizens of the republic.”

Those were the words of the Washington Post, the New York Times, and the Chicago Tribune respectively, commenting in 1894 on the first income tax to be passed by Congress.

This vitriol was aimed at a proposal to levy a mere 2 percent tax on income in excess of $4,000—which would be at least $70,000 in today’s dollars. Because of that large $4,000 exemption, 98 percent of Americans were completely exempt from income taxation. One year later the Supreme Court ruled this tax to be unconstitutional, and so ended America’s first peacetime experiment with an income tax. It would take a constitutional amendment—the 16th, passed in 1913—to give Congress the legal power to shackle us with another one.

In 1909, when the 16th Amendment was being debated, the New York Times criticized it, saying, “When men get in the habit of helping themselves to the property of others, they cannot be easily cured of it.” History has proven that prediction to be correct, though I doubt that it bothers the New York Times as much today as it did in 1909.

After the 16th Amendment was ratified, an income tax was imposed, starting in 1913 with rates ranging from 1 percent to 7 percent, and the top rate applying only to incomes in excess of $500,000. By 1916 that top rate had risen to 15 percent, on income in excess of $2,000,000. Before Woodrow Wilson left office in 1921, the top rate was in excess of 70 percent. It exceeded 90 percent at its peak in the early 1950s. Though the top rate now is about half as high (but creeping back up), tax rates themselves are a sideshow compared to the intrusive tyranny the IRS has become. It is the proctologist you never, ever want to see.

The first 1040 form—instructions and all—took up only four pages. Today, there are thousands of pages of incomprehensible tax forms and instructions. American workers and businesses are forced to spend at least six billion man-hours every year figuring out their taxes. Last week in testimony before Congress about the targeting scandal, IRS Commissioner Steven Miller with a straight face uttered what ought to become both the understatement of the century as well as the official epitaph of the IRS when he said the agency “provided horrible customer service.”

America’s experience with the federal income tax confirms the prophetic wisdom of John Marshall almost two centuries ago: “The power to tax involves the power to destroy.”

The federal income tax system is burdensome and stupid. It’s a diabolical tool against the people’s liberty. Let’s finally muster the courage to get rid of it—and the entire IRS “workforce” of 95,000 lackeys too shameless and unmindful to protect our liberty.

ABOUT

LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

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