Under the best of circumstances taxes are a necessary evil. When taxes are excessively high, and as unfair as they are now, it stifles initiative, smothers economic growth, suppresses prosperity, and ultimately will lead to the end of the traditional American way of life. Historically during the first one hundred years of this country, taxes were low. No one paid any federal income tax until 1862 and then the maximum rate was 5%. No one was expected to pay more than 15% of their income until 1917. In fact federal income tax was declared unconstitutional by the Supreme Court in 1895 and stayed that way until the 16th Amendment was passed in 1913.
While there were property taxes, excise taxes, tariffs, and various other taxes, most Americans were basically tax free. They kept most of what they earned. As a result the American economy boomed. Slowly that changed. America needed money to fight ever more expensive wars and fund an expanding government. Starting under FDR the federal government began creating federal programs that had nothing to do with defense, and over time these programs, Social Security, Medicare, and numerous other federal and state entitlements have grown demanding ever more tax money to fund them and to pay for the bureaucrats who run them. Progressives will tell you that this is a good thing, but is it?
Consider how much wage earners could have to pay in taxes. Take California, for example. The top federal rate is 39.6%. California’s top state income tax rate is 13.3%. Just those two taxes alone equal more than half of what was earned. In addition California has a state sales tax of 7.5% and many local communities have an added city tax. Add in property tax. Now include all the hidden taxes, the tax on gasoline being the best known of many that includes taxes on firearms, ammunition including arrows, hotel occupancy, car rentals, domestic flights, alcohol, cigarettes and the list goes on. Then there are all the taxes masquerading fees, permits, and licenses. And finally, let’s not forget the combined Social Security and Medicare tax of 7.65%, which you may or may not get back depending on your income and age of death.
What’s worse is that our tax policies taxes are absolutely unfair. It is the height of hypocrisy for progressives to scream about the rich not paying their fair share. Aside from the fact that the top 20% of tax payers pay 84% of all federal income tax, close to half of all wage earners either pay no federal tax or get back an income tax credit for taxes they didn’t pay. It is inherently wrong for some to pay taxes at a higher rate than others. A flat tax or a consumption tax would be fairer. Instead our current tax structure punishes those who earn more and rewards those who earn less. Given that most people who earn more do so through hard work and good choices this punishes those who do the right thing.
When you get right down to it taxes are a form of involuntary confiscation of private wealth by the government. When the tax money goes to what is necessary for the protection of society (firefighters, police, and the military, etc.) most people accept that it is necessary. When tax money goes for things like infrastructure and public education it gets a little more problematic. For instance if just the gas tax money went to build and maintain our roads that would be fair since those who use the roads the most buy the most gasoline while those who drive less pay less. However, when tax money goes to things like public schools those with more children don’t pay more than those with fewer or no children. Those who home school or send their children to private schools aren’t exempted from having their tax dollars taken to pay for public schools. That’s not equitable. When does the public good trump private rights? Finally, how is it right for the government to tax your estate after you die so that the effort you made for your children and grandchildren is stolen from them? That isn’t much different than tax slavery.
We are already seeing the results of all this in the widening income gap between the rich and the poor. The middle class is shrinking. The Pew Research Center reports that 61% of Americans were considered middle class in 1971. Today, in 2105, only 50% of Americans are considered middle class. Social mobility has decreased because high taxes make it harder for entrepreneurs to keep and reinvest their profits to expand their businesses. This means fewer well-paying jobs for those who want to work their way up the economic ladder. Instead tax money goes to expand government and pay the bureaucrats who over regulate business making it still harder to prosper. Social mobility was one of the key reasons America was the land of opportunity. It’s not so much anymore and getting less so all the time.
The Heritage Foundation’s 2015 Index of Economic Freedom ranked us 12th in the world. They wrote, “When President Obama took office in 2009, the United States ranked sixth for economic freedom. Now in 2015, the United States has fallen by six to 12th place.” This is the direct result of progressive policies made possible by high taxes.
For all of its faults capitalism produced wealth for those who worked hard and raised the standard of living for everyone.
Socialism doesn’t have that track record.
Voters absolutely need to keep this in mind when we elect our next president.
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by EagleRising.com