Copyright 2011 by John T. Reed
The original Constitution says all federal taxes must be head taxes, that is, every citizen pays X dollar a year (other than customs duties and such).
Article I, Section 9 Clause 4:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
The first income tax was declared unconstitutional by the U.S. Supreme Court because it was not in proportion to the census (same amount to be paid by each person).
This “problem” was “fixed” by the XVI Amendment which says,
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
The XVI Amendment was unconstitutional spiritually and un-American but constitutional amendments are, by definition, constitutional.
Must have minority rights and the rich are a minority
To have a democracy, with majority rule, you must also have minority rights. Otherwise, the majority will vote for such things as taking all the money and other assets of the minority. Without minority rights, 50.1% of Americans could vote to confiscate all the wealth of the richest 49.9%.
The problem with the XVI Amendment is that it does not protect the wealthiest minority from having their income confiscated by the least wealthy, but more numerous, majority.
This calls to mind the following famous quote:
A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.
Original authorship of this is disputed. I am not interested in getting into that.
We have now arrived at that point in the U.S. The bottom half of the nation pays no federal income tax other than for Social Security. The top 1% pays 38% of the total tax revenues; the top 25%, 86%, and so on—and the American people in polls want tax rates raised on the rich to avoid the impending bankruptcy!!
Obviously, the American people—or at least the low-budget democratic majority that rules—have lost their minds. I would have thought they would be embarrassed that they are paying zero other than Social Security and sponging off the rich who are paying almost all of the income taxes.
Nope. The financial bottom half of the American people are shameless. They are insatiable when it comes to confiscating the hard-earned income of the $250,000 or more families. There is no amount or percentage of your income that they will not support taking. And when they get done taking income, they will start confiscating assets. You think I exaggerate? You think they are going to let autistic gay black seniors who love whales, however imaginary, eat cat food so you can keep your second home?
I have the solution.
Repeal the XVI Amendment
That puts us back to a head tax. I request one tiny new amendment. It would say something like the following:
All persons above the age of 24 will pay the following annual federal tax:
Age, tax
25 to 29 $8,737.85
30 to 34 $10,162.06
35 to 39 $11,399.17
40 to 44 $11,546.04
45 to 49 $11,956.38
50 to 54 $12,222.44
55 to 59 $11,286.99
60 to 64 $9,673.30
65 to 69 $7,434.87
70 to 74 $5,840.37
75+ $4,286.08
I would not index this. To do that would encourage Congress to cause inflation. See the Alternative Minimum Tax if you doubt that.
Same tax revenue as now
How did I arrive at these figures? I assumed we want to raise $2.2 trillion, the current amount of U.S. tax revenues.
Then I ascertained the percentage of persons over the age of 17: 75.4% in 2009.
That means we had 231,478,000 adults.
Then I divided the total current tax revenue of $2.2 trillion by the number of adults, i.e., 231,478,000 and arrived at the the figure of $9,504.14 per adult tax needed.
That is the average tax each U.S. adult resident must pay to produce a total tax revenue of $2.2 trillion.
Since people’s incomes vary rather strongly by age, I got that breakdown.
I then adjusted the amount each age group should pay by calculating the percentage of the average ($51,511) that they earned. That gave me the above table. It simply reflects how earning power grows by age until the early 50s, then declines. I gave persons aged 18 to 24 a pass because many are in education programs in those years and because the income table started at age 25. Below age 25, I expect that incomes are not uniform within the age group but vary so widely that it would be impractical to come up with a tax amount for that age.
The average tax needs to be $9,504.14 and with my table, it would be assuming each age group had the same number of people. Of course the different age groups do not at present have the same number of persons because of the Baby Boom and the echo of the Baby Boom and all that. But I am just trying to arrive at a general number for discussion. I will leave it to demographers to be more precise.
So what this table does is specify the amount each adult above age 24 would pay per year in federal taxes. This is NOT an income tax. It is a head tax, an existence tax. If you exist, you pay it. How much you make matters not.
This would end the federal income tax and the whole industry that deals with it. You would pay the tax you owe on your birthday so the government would have a steady stream of money coming in year round rather than a big shot on April 15th. Having one tax-due-date is inefficient.
If the average American over 24 sent $9,504.14 in, the federal government would receive $2.2 trillion—same as now under the income tax.
This would eliminate all deductions, loopholes, tax on corporations, tax breaks, the filing of a return, tax preparation industry, need to keep tax-related records and receipts, audits, etc., etc. The whole 8,000-page Internal Revenue Code would cease to exist.
In other articles, I have said that we should shut down Social Security, Medicare, Medicaid, Obamacare, unemployment insurance, and almost all cabinet departments that did not exist in the nineteenth century. If we did that, the $2.2 trillion of tax revenue would provide much money to pay down the national debt. When that was completed, I would hope for another Constitutional amendment which simply said that the U.S. government could not borrow money at all, period. At that point, these annual tax amounts could be lowered dramatically, and should be.
These cuts may sound outlandish. Nope. They are going to be imposed on the American people anyway by the bond market when the U.S. government goes bankrupt which is probably going to happen in the next ten years, maybe the next ten months. Watch.
The rationale behind the head tax is simple. The federal government provides the following services that cost money to provide:
• military
• federal courts
• FBI
• State Department
• CIA
• regulation of air and water pollution
• regulation of harvesting of migratory animals
• Interstate highway system
All other activities of the federal government should be ended immediately as I said above and in other articles.
Other than retaining the gasoline/diesel taxes that logically pay for highways according to how far you drive, everyone should pay the same tax because they all get the same protection from the military, the same access to the federal courts, and so on. No one is allowed to have more access to courts and in the case of things like the military, there is no way to apportion benefits. We all benefit the same from the military, courts, State Department, and so on.
The poor?
What about the poor? About 13% to 17% of Americans fall under the poverty line at any given time.
I am not going to go into that here. It’s another subject. Since it is only about 13% to 17%, and it would probably shrink if we stopped subsidizing them, it is not a deal breaker. I would eliminate the minimum wage and other laws that discourage hiring in general and the poor specifically. See my article on my miracle jobs program. I would leave it to families, friends, and other private charity to take care of the remaining poor.
You cannot get blood out of a stone and you do not want to lock people into poverty with a tax they cannot pay. On the other hand, you cannot subsidize poverty without getting more of it. You always have to make sure that those who can work have incentive to do so. Laws like unemployment insurance are currently well known to cause people who could get jobs to reject them because it is more attractive to them to stay home and collect tax-free unemployment insurance benefits.
Unpaid federal age taxes could become a lien against the deadbeats. Collection activities like wage garnishment and till tapping for the self-employed would work as they do now on child support and other judgment debtors with relatively little income. That is, they would be left enough to live on and enough to give them incentive to continue working, but no more.
But the poor tail should not wag the national tax policy dog.
Stable revenue source
California has gone on a jag of increasing tax rates on the rich and lowering them on the middle class to finance the state. However, they have learned that such a narrow, Marxist tax base fluctuates wildly up and down. The rich generally are people who are in a position to profit from good times. That means they suffer in bad times. By using an income tax biased toward the rich, the state of California gets the same: lots of revenue during booms and far less during recessions.
When you combine that with the propensity of politicians to spend to the hilt in good times and their inability ever cut anything any time, you have a formula for bankruptcy.
With a head tax, the government’s revenues would be as stable as they could be. The only difference between hard and good times would be an increase in delinquency in hard times. With experience, the government could adjust the penalty for delinquency to the point where people would put money away for a rainy day. Also, the government could force people who were delinquent in the past to pay monthly or some such until they had a certain number of years of on-time payments. I did this sort of thing as a landlord, company commander in the Army, and high school football coach. You tweak the punishment until it achieves the desired performance. The punishment must make the misbehavior regret his misbehavior and resolve never to do it again. It must inspire the others in the group to wince and be glad they had not misbehaved and resolve not to do so in the future. There will always be a certain hard core group of delinquents—drug addicts, alcoholics, and so on. Just treat them like deadbeat dads, which they probably also are. The rest of us will have to pay a little more because of them, but the last damned thing we need is a government program to try to save all the bad people of the nation with education, retraining, government jobs, etc.. That will never happen. If they want, private charities can get off on trying to help them.
Everyone pays about the same over their lifespan
This tax law would, over the course of a normal life span, collect the same amount form each resident of the U.S. That would be a fair tax to pay for the limited services supplied to each member of the public equally. Warren Buffett does not get any more national defense than a plumber. There is no logical or moral basis for making him pay any more.
The notion that the rich should pay more is simply the non-rich picking the pockets of the rich. Logically it conflicts with the equal-protection clauses of the constitution, although that is legal since the XVI Amendment post-dates those clauses.
Most rich in America were not born that way. All have equal opportunity to get rich. When they do, they will be able to give much to charity if they wish. But whether they do or not is no one’s business in a free country. If you think the rich get a better deal, become one of them. This is America.
As you can see in the table, the tax rate is about 20% on the average income. If your income is lower than average, your tax rate is higher, and vice versa. But isn’t that true of all your other expenditures like housing, transportation, food, clothing, and so on? Why should taxes be different?
This, with the addition of the age adjustment, is the federal tax code of our Founding Fathers. One of them, James Madison, is my cousin. He and I share an ancestor named Nathan Underwood, Jr. My paternal grandmother was an Underwood. James Madison was the fourth president, husband of Dolly, and is known as the “Father of the Constitution” and the “Father of the Bill of Rights.” So my eagerness for a return to the Constitution may be genetic.
Remember how I started out this article. Majority rule MUST be tempered by minority rights. This tax code that I am proposing creates the minority right of protecting the top 49.9% in terms of income from having their income immorally confiscated by the 50.1% voting majority at the bottom of the income spectrum. It is necessary to protect both the wealthy minority from the greed and theft of the voting majority, and to protect the moronic majority from myopically killing their nation’s economic Golden Goose.
One of the most famous tax quotes from a Supreme Court decision is this from McCulloch v. Maryland, 17 U.S. 316 (1819):
The power to tax is the power to destroy.
Chief Justice John Marshall
This decision is the source of the law that says the federal government cannot tax interest paid by states or local governments and vice versa. In other words, the federal government cannot tax the states and local governments because the federal government must not have the power to destroy the state and local governments, and vice versa. But the basic principle applies as well to taxes on the rich and the idea of an income tax that treats people with different income levels differently. The poor and middle class cannot have the power to destroy the rich. At present, they do.
John T. Reed
