-Caveat Lector- from: http://www.zolatimes.com/V3.14/pageone.html <A HREF="http://www.zolatimes.com/V3.14/pageone.html">Laissez Faire City Times - Volume 3 Issue 14 </A> ----- The Laissez Faire City Times April 5, 1999 - Volume 3, Issue 14 Editor & Chief: Emile Zola ----- An Artful Way to Plunder? by Michael R. Allen Inadvertently, Senator Pete Domenici (R-N.M.) admitted that he advocates socialism, or at least his own style of it. "This is going to be a classic debate. [Do] we want to give the people of the United States a tax break?" asked the Sunbelt Senator about the 1998 struggle between Congress and the President. In what way did the Senator admit that he favors the rights of the State over the rights of individual citizens? The answer is that Mr. Domenici asks whether or not the Congress will allow taxpayers to keep more of their own money. He obviously has yet to be introduced to the notion that income is earned by the wage earner and not earned and distributed by the State. With politicians such as Domenici leading the "opposition" to the welfare state, who needs the Democratic Party? A government headed by Ralph Nader would probably be leaner and less intrusive than one headed by Senator Domenici, or Senator Trent Lott (R-Miss.). At the least, Mr. Nader would abolish corporate and military welfare more than the aforementioned politicians would do. Domenici's remark shows a deep ignorance of the concept of natural rights. One can understand, of course, why the types of legislators we have in office now are clueless to the concept: natural rights are not canonized on a sacred piece of vellum in a museum. Yet, as legislators, they have an obligation to uphold the Constitution, which though flawed is the most salient defense of natural rights ever used by a human government. As long as both conservatives and liberals focus on technocratic policies, the debates will only focus on two alternative visions of a command society. The libertarian concept of natural rights has been forgotten by most legislators as the welfare state grows. When it is invoked, the concept is often misunderstood and used selectively. The Cato Institute, long a proponent of liberty, held a forum on tax reform last year. Though all the tax plans discussed would be welcome improvements over the current code, they all except one ignored the right to property and income that exists independently of government mandate. Quite frankly, I am a bit aghast that the Cato Institute would allow a gang of political wastrels to present their plans at their forum. None of the plans receives my endorsement, though I favor a temporary tariff while government is in transition from welfare state to constitutional economic government. Even then, my tariff would terminate when the government began charging user fees to citizens for the few services the federal government would manage. And one day perhaps even the latter services could be totally privatized. The flat tax presented at the Cato Institute was a rate of 17 percent, with no deductions, and an exemption for families of four earning $33,800 a year or less. A form of this plan was endorsed by Steve Forbes in his 1996 bid for the Presidency, and has since received much publicity. House Majority Leader Richard Armey (R-Tx.) has promised to introduce the bill in the House when the tax reform debate begins, but when that will be is uncertain. The critique of this plan is obvious: it supports the notion that the government has a right to some of a citizen's income. Unless the rate is reduced, and it is only for a limited period of time before a user fee system is adopted, this plan will not result either in any changes in the size of government or the way in which it collects its operating revenue. Perhaps the plan's creators, who would eliminate capital gains and estate taxes, might extend their defense of these property rights to income, and drop this plan in favor of a modified user fee system after a transition at a lower flat rate. Sen. John Ashcroft (R-Mo.) has a plan that is progressive, but with only four tax rates rather than the current five. He allows for a deduction of Social Security taxes and an elimination of the "marriage penalty." Although these are two laudable goals, Ashcroft retains too much of the current structure and makes the code more complex. Some of his ideas deserve attention, but his overall plan did not even go as far as the flat tax plan. Surprisingly, House Minority Leader Richard Gephardt (D-Mo.) arrived to unveil his plan, which is essentially a revamp of the existing code. His plan would mean a flat rate of ten percent for 70 percent of taxpayers but also few deductions and the treatment of capital gains as income. One good thing to say in defense of Gephardt is that, while he wants a welfare state, he doesn't necessarily want it to be a burden on taxpayers. This tax plan might have made him more attractive for the Democratic nomination for President in 2000, if he had chosen to run. Another surprise is that Senator Edward Kennedy (D-Mass.), the godfather of all leftists, is drawing up a plan similar to Gephardt's. Yet, it is premature to say that opponents of the welfare state are winning in light of these new plans. The underlying notion that there must be an income tax has not been seriously challenged. One plan that does abolish the income tax is the national sales tax envisioned by Senator Richard Lugar (R-Ind.). Lugar would eradicate both the federal income and capital gains taxes. However, his national sales tax rate is 15 percent, which, combined with my local and state sales taxes, gives me a sales tax rate of 22 percent. As Gephardt, of all people, correctly perceived, such a sales tax could affect economic growth and lead consumers to curtail spending. The ability of elderly and poor people to buy needed groceries would be inhibited at this rate. The poor, who do not pay a tax on their income now, would still have to pay this sales tax: they would get a refund only at the end of the year for all sales taxes they had paid. However, what would the impoverished do without their money in the meantime? If one thinks that small refunds are hard to collect today, one should imagine a poor person with no tax accountant trying to get their rather large refunds from tax agents. How about youths, who currently do not make enough to pay income taxes? Would not the equivalent result be that their spending allowances would become subject to such a tax? Mr. Lugar has many unresolved issues to answer, including why he thinks the government should receive 15 percent of all sales in this country. The Lugar sales tax would result in more government revenue and a larger government, and its rate might be increased, causing economic disaster. It would also not challenge the right of government to tax anything in the first place. A slightly better version of the sales tax has been proposed by Rep. Tom Campbell (R-Calif.), which would exempt groceries and medicine, but also would keep a 15 percent rate at the federal level. These plans are pavid attempts to protect the citizen's wallet. All such plans are based upon an egregious error: that government has a right to take property or income. The danger is that one of these reforms might be adopted and the public debate on taxes "closed." Natural rights proponents must make their alternative heard: namely, a Constitutional Amendment offered twice in the last Congress. The aptly-named Liberty Amendment would repeal the Sixteenth Amendment, which granted the federal government the right to tax income. The Liberty Amendment recognizes that the real issue is taxation itself, not the specifics of it. ------------------------------------------------------------------------ Michael R. Allen is the editor and publisher of SpinTech Magazine. His regular column is "Strange Disposed Times." -30- from The Laissez Faire City Times, Vol 3, No 14, April 5, 1999 ----- Published by Laissez Faire City Netcasting Group, Inc. Copyright 1998 - Trademark Registered with LFC Public Registrar All Rights Reserved Disclaimer The Laissez Faire City Times is a private newspaper. Although it is published by a corporation domiciled within the sovereign domain of Laissez Faire City, it is not an "official organ" of the city or its founding trust. Just as the New York Times is unaffiliated with the city of New York, the City Times is only one of what may be several news publications located in, or domiciled at, Laissez Faire City proper. 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