Eliminate the Income Tax

by Don Fredrick, The Complete Obama Timeline, ©2024

(Jun. 22, 2024) — The Trump tax cuts are scheduled to expire on December 31, 2025. If Joe Biden is reelected, he will refuse to make those tax cuts permanent. For the average middle-class taxpayer, that will mean a four percent increase in federal income taxes. For wealthier Americans, that will mean a three percent increase in federal income taxes. (For those tens of millions of Americans who pay no income taxes, they will not care about tax increases inflicted on everyone else.)

Personally, I prefer having no individual income tax. I would also prefer the elimination of the corporate income tax —which is technically paid by consumers through higher prices. The U.S. government survived quite well on tariffs and excise taxes before the introduction of the income tax in 1913. Of course, the government was not the bloated behemoth that it is today, but it adequately performed the most necessary functions of government. (No, there was no federal Department of Education granting student loans until the late 1970s — but we did not then and still do not need it.)

In an ideal world, there would be no corporate or individual taxes and a minimal government funded by user fees, tariffs, and voluntary donations. But if a federal tax cannot be avoided I would certainly support a national sales tax to replace corporate and individual income taxes. A national sales tax would have several advantages:

First, it would ensure that the tax burden would be shared. A monumental number of Americans pay no income taxes, but everyone buys products. The people who currently pay no income taxes obviously have no problem with burdensome income taxes on others. No one on the public dole cares if the tax rate on everyone else is increased. No parasites care about the welfare of the producers — although they should, because an emaciated goose eventually dies and ceases to produce golden eggs.

Second, a national sales tax would make it more difficult for the politicians to pit groups of Americans against each other. “We’ll tax the other guy in order to give you free stuff” will cease to be an effective campaign pitch because the “other guy” will be every consumer, rich or poor.

Third, a national sales tax would be a constant, daily reminder of corrupt and wasteful government. Instead of being angry at the government and the politicians only when they look at their paycheck stub and on April 15, Americans would be angry at the government and politicians every day. A national sales tax would make it obvious to every American every time they buy something that the government is too big and bloated and wastes way far too much money.

Assume a 25 percent national sales tax would be required to support federal spending. Every time a family spends $100 on groceries and has to pay $25 in federal taxes on those groceries it will be angered by that immediate expense. A $200 tax on an $800 washing machine or a $10,000 tax on a $40,000 car purchase would most certainly anger the buyer. That anger would be directed at the politicians.

Instead of poor people resenting the wealthy, or blacks, Hispanics, and whites fighting each other, or rural and urban Americans shunning each other, or Democrats and Republicans arguing about everything, or everyone hating the Jews, we would instead have almost everyone hating the politicians and demanding that federal spending be slashed in order to reduce the national sales tax. If you pay a $200 tax on a new $800 washing machine you might be very upset that $40 of that $200 goes to a bloated defense budget — or that 50 cents of that $200 goes to “cancel” the student loan debt of a Congressional intern making $90,000 per year.

A national sales tax would force the politicians to shift from campaign promises of giving some voters free stuff (at someone else’s expense) to pledges of slashing federal spending in order to reduce the sales tax. Instead of, “Vote for me and I’ll make sure you can get a free abortion,” the politician might pledge, “Vote for me and I will work to end Planned Parenthood subsidies, eliminate the Department of Education, slash foreign aid, and close unnecessary U.S. military bases overseas in order to reduce the sales tax from 25 to 20 percent.”

But do not expect the politicians to eliminate the income tax and replace it with a national sales tax. They are far more likely to support a national sales tax in addition to the income tax – as is done in Europe with the “Value Added Tax” (VAT). Still, we can dream…