This is excerpted from the first chapter of his book Your Money or Your Life: Why We Must Abolish the Income Tax (The Future of Freedom Foundation).
Some years ago Stanley McGill, 93, mailed a check for $7,000 to the Internal Revenue Service. When he died, his daughter discovered that Mr. McGill had made a mistake. The money should not have been sent. Marian Brockamp explained to the IRS that her father was senile and asked for a refund.
The IRS said no. Requests for refunds must be made within three years.
Mrs. Brockamp took the case to court—all the way to the U.S. Supreme Court.
In the grand scheme of things, that was a small event. The Internal Revenue Service has done far worse in its time. It has harassed and tormented people. It has seized property and frozen bank accounts. It has ruined credit records. It has driven people to suicide. Nevertheless, the Stanley McGill story sums up a great deal about the IRS and the American tax system. The IRS concedes that the $7,000 should not have been sent. Mr. McGill made a mistake. His daughter informed the IRS as soon as she discovered the error. No one questions the facts. But the IRS won’t surrender the money. And the U.S. Supreme Court said the IRS doesn’t have to.
Speaking for a unanimous court, Justice Stephen G. Breyer wrote:
The nature and potential magnitude of the administrative problem suggest that Congress decided to pay the price of occasional unfairness in individual cases . . . to maintain a more workable tax enforcement system.
Congress decided to pay the price? How noble. Except that in this case it appears Congress has forced Mr. McGill’s heirs to pay the price. Why? Because the rights of the individual must not be permitted to create administrative problems for the IRS or to interfere with the maintenance of a workable tax enforcement system.
Yes, that incident occurred in the United States of America.
Imagine if the tables were turned and after Mr. McGill’s death the IRS discovered that he “owed” the government $7,000. Imagine further that Mrs. Brockamp politely replied that the IRS was too late in its request. What would have happened? The IRS would have seized the money and perhaps have made hell out of Mrs. Brockamp’s life. And the Supreme Court would have sided with the IRS.
The IRS—tax historian Charles Adams equates it with “a miniature Soviet state”—is something we have unfortunately grown accustomed to. It is time to put the income tax, and the Sixteenth Amendment that permits it, into historical context and show its implications for morality, the relationship between citizen and state, and the quest for prosperity. The verdict on the tax is not favorable: ratification of the amendment and passage of the tax was a major turning point in the transmogrification of America from republic to democratic despotism. More than anything else, it converted Americans from citizens to subjects.
In carrying out its mission, the IRS is only serving a higher power: the legislators who need a never-ending flow of cash to the federal treasury. They wrote the laws that loosed the IRS on the American people. They can repeal them. Why don’t they? They want the money, pure and simple.
As bad as any taxation is, the income tax is worse. It is aggravated theft, robbery with malice aforethought. Theoretically, all forms of taxation could be draconian. But in practice, the income tax has been more abusive of the people’s rights than other taxes. It lends itself more readily to draconian enforcement. That justifies singling it out for special condemnation. But merely replacing the income tax with another tax designed to raise more than a trillion dollars would be a shallow victory.
The moment the principle of income taxation is granted, the ground is prepared for myriad abuses of the people. If the government is permitted to tax incomes, it will demand reams of personal information about each citizen’s financial endeavors. It will compel people to report on the peaceful financial activities of others. But more than that, it must have the muscle to check that information, to spy on people, to conduct inquisitions, and to punish—hard. Why? Because there is nothing more natural than people’s trying to keep what they worked to acquire. Regardless of their explicit political philosophy, most people are implicit advocates of property rights. They don’t like being dispossessed of their belongings. Even thieves don’t like to be robbed.
Man versus State
Income taxation inaugurates a permanent war between the people, who want to keep what they earn, and the government, which wants as much of it as it can get. The government tries to make the war less obvious by deadening the pain when possible. The withholding tax makes it unnecessary for most Americans to write checks to the IRS; indeed, they eagerly await their refunds. But the war is part of the American psyche nonetheless. All Americans sense that an awesome power lurks, ready to grab an increasing portion of anything they earn. That adversary relationship has far-reaching consequences for a society founded on the principles of the Declaration of Independence, according to which government was the rights-guarding servant and the people the master. But the income tax turns that relationship on its head.
Americans lived without the fears and burdens imposed by the income tax for over 100 years (except in the Civil War era). They built a decent and prosperous society.
The income tax has been a key factor in the growth of government. When enacted, only the few richest people in America paid the tax. It became a tax for the masses during World War II, under that reputed champion of the masses, Franklin Delano Roosevelt. Today, it accounts for over 43 percent of the revenue raised. Payroll taxes for Social Security and Medicare account for about 35 percent. Americans’ incomes have provided a rich vein for the government to mine.
Thus we can see that the income tax has:
- Given the government unprecedented access to the American people’s wealth;
- Provided the rationale for the government to intrude into our personal affairs;
- Reversed the traditional rule-of-law relationship between government and those suspected of lawbreaking;
- Confused “cheating” the government in order to keep one’s own property with cheating one’s fellow citizens;
- Bewildered the American people with constantly changing technical rules that no one can possibly comply with perfectly; and
- Permitted lawmakers to influence our conduct through selective tax deductions and exemptions.
All this has come from the principle that government may tax incomes. That is why repealing the tax, along with the Sixteenth Amendment, is an essential blow in the struggle against power and for liberty.