In the libertarian world, there is little room to argue in favor of a better tax system. This is mostly due to the fact that, like Socialists, many Libertarians have an uncompromising Utopian view. There is little room for compromise with this group, only pure liberty, no government, right now.
The problem with this is that it neglects reality and the fact that to preserve liberty, the institutions that do so must be preserved. The control of these institutions could be transferred from government to the people, but they must be preserved. By destroying the institutions of charity, marriage, infrastructure and all the others that enable citizens to maintain and multiply their liberty, liberty is greatly threatened.
This idea is evident in the founding of America. Rather than pulling the rug out from under the feet of the citizens, the founding fathers created a system that would allow people more power over their government and to prevent tyranny. They did not destroy all of the institutions of tyranny and power in one moment; instead, they created a framework that would multiply liberty and destroy tyranny piece by piece. In order to preserve the opportunity to truly end tyranny, they had to allow slavery and oppression of women to create the foundation for the termination of these institutions of tyranny.
The same must be done with the Income Tax.
In order to move toward pure freedom and no taxes, America must take steps in the right direction. The Fair Tax is the best way in today’s world to move the country towards more freedom and no taxes.
The three main reasons are:
#1: More Liberty
The Fair Tax is a tax on consumption, rather than income. This means that the people will be saying that the government may take a share of commerce between parties because they do protect the ability to have free exchange in the American Market, but that it cannot take a share of income, which is the result of an individual’s productivity. The Income Tax is a message from the government that they are entitled to the results of productivity of its people, thus claiming partial ownership of each person.
People will also not be able to be swayed in their purchase decisions by deductions. Rather than giving to charity as a write-off, people can do it out of their own free will because they will be pocketing all of their paycheck. Instead of complicated 401k programs, college savings funds, and other tax-exempt savings funds, people can choose the best way to invest their money. The combination of freer choice of buying and saving will produce freer markets, and will spur growth and innovation.
#2: More Wealth
There will be an increase in wealth among all people. Because the government will not be taking the taxes out of peoples’ paychecks before it hits their bank account, people will have more wealth to work with each paycheck. Being able to choose when to create a taxable exchange would allow people to navigate the market and reduce these to maximize their wealth.
They can also save and pass on their wealth without Capital Gains Taxes, Death Taxes or Gift Taxes. Under the Fair Tax, if one wishes to save money, instead of it being taxed twice, it is taxed only once: when its spent. This means that if someone works hard, saves money and lives their whole life with discipline, they will not be penalized with more taxes by the government. It will also allow for the poor to build wealth, rather than remain poor because it hurts them to try moving into the middle class due to reductions in government assistance.
Most importantly, the message goes from government attacking production to consumption. Everyone knows its a lot easier to spend money than to make money. That is why people are not working as hard as they should for what they want and taking on debt to fund their consumption. This tax system would allow people to keep what they earn, incentivize saving and investing, as well as curb debt spending and over consumption. What happens when Americans are creating more wealth and decreasing debt? They become wealthier.
#3: No IRS
Everyone hates dealing with the IRS. They use their power and reach to meddle in the lives of law abiding citizens over a mistake on an endless form. Then, they hide behind bureaucracy and claim ignorance of their unnavigable series of extra processes on top of the world’s worst tax code.I have an anecdote for you on this. This year when filing taxes, I made a mistake on my form. When correcting it, my dad and I put both of our tax forms, with a letter explaining the issue, in our envelope together and sent them a check to pay off the extra taxes that I would owe after the correction. The IRS sent me a letter a month later saying that I owe them that amount plus interest. Upon further investigation, over many phone calls and different representatives, we found out that they had credited my dad’s account instead of mine. I then had to pay them that money plus interest and wait for their return to hit my dad’s account before he could give me my money back. That is simply wrong, and citizens should not have the burden of complying with a tax code. The government should have the burden of ensuring that they steal the money that they want to steal.
There are not many statistics or numerical arguments in this blog as you may have noticed. That is because this is a philosophical argument in favor of a tax that does not allowed government to claim ownership of its people or use the tax code to dictate their behaviors. This is not saying that the Fair Tax is a final solution, but I step in the right direction for liberty minded people. This would give people more opportunity, pull them off the dependency of the government, and truly reward innovation and productivity.
This could be an answer for pulling back the growth of the American government by not letting you pull the lever’s of the tax system to hide its growth. It would give citizens the chance to experience what freedom really is because they would not be making decisions based on how the IRS would view it. It is not perfect, but it is the best way to maintain the institutions that are currently protecting freedom while still taking back liberty on the political stage.
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