Read The Revolution Online

Authors: Ron Paul

Tags: #BIO010000

The Revolution (9 page)

I cannot finish a discussion of looting without mentioning the income tax. In another chapter I explain my opposition to the military draft, an institution based on the idea that the government owns its citizens and may direct their destinies against their will. The income tax implies the same thing: government owns you, and graciously allows you to keep whatever percentage of the fruits of your labor it chooses. Such an idea is incompatible with the principles of a free society.

Robert Nozick, the renowned twentieth-century political philosopher, minced no words when it came to the taxation of earnings from labor. How, he demanded to know, was this any different from forced labor? In America, the average citizen in effect does unremunerated work for the various levels of government for the equivalent of six months out of the year. People who favor this system should be honest about what they are saying: we have the right to force you to work against your will. Strip away the civics-class platitudes about “contributions” to “society,” which are mere obfuscations designed to engineer the people’s consent to the system, and that is what the income tax amounts to.

Frank Chodorov, a great stalwart of the old Right, put it this way:

The citizen is sovereign only when he can retain and enjoy the fruits of his labor. If the government has first claim on his property he must learn to genuflect before it. When the right of property is abrogated, all the other rights of the individual are undermined, and to speak of the sovereign citizen who has no absolute right of property is to talk nonsense. It is like saying that the slave is free because he is allowed to do anything he wants to do (even vote, if you wish) except to own what he produces.

With a consensus not yet established behind the abolition of the income tax (although I have never ceased voting and speaking on behalf of such an outcome), I have done my best to eliminate income and other taxation in as many specific cases as possible, in order at least to make dents in the edifice in the meantime. For instance, I have proposed, for all those whose income consists largely of tips, that income in the form of tips be exempt from income taxation. I have proposed that America’s teachers be granted tax credits, thereby increasing their salaries. I have proposed that people with terminal illnesses be exempt from Social Security taxes while they struggle for their lives. (There is surely no moral justification for taxing people who are trying to maintain their very lives.)

What we should work toward, however, is abolishing the income tax and replacing it not with a national sales tax, but with nothing. Right now the federal government is funded by excise taxes, corporate income taxes, payroll taxes, the individual income tax, and miscellaneous other sources. Abolishing the income tax on individuals would cut government revenue by about 40 percent. I have heard the breathless claims about how radical that is—and compared to the trivial changes we are accustomed to seeing in government, I suppose it is. But in absolute terms, is it really so radical? In order to imagine what it would be like to live in a country with a federal budget 40 percent lower than the federal budget of 2007, it would be necessary to go all the way back to . . . 1997.

Would it really be so hard to imagine living in 1997 again? In return, we would have an economy so robust and dynamic that it would doubtless shatter even my own optimistic expectations. And we would once and for all have repudiated the totalitarian assumptions at the heart of the income tax.

How, by the way, did we ever let ourselves be talked into such a thing? The income tax was first proposed for several reasons. The tariff, from which the federal government received most of its funding, was for a variety of reasons bringing in a decreased revenue. At the same time, federal expenditures were going up, thanks in part to an increase in the military budget.

An alternative had to be found. At the time, many Americans viewed the tariff as an unfair tax that burdened them as consumers and benefited big business by sheltering it from foreign competition. A tax on incomes, the argument went, would at last force the rich to pay their share. And that’s just how the income tax was pitched to the people: tax relief for you, in the form of lower tariffs, and a tax increase for the rich. Do not worry, people were told. Only the richest of the rich will ever pay the income tax.

That phony promise didn’t last long. Within a few years, tax rates had shot through the roof, and classes of people who had thought they would never be taxed found themselves paying as well. And by the 1920s the tariff was raised again anyway, so the people wound up getting the worst of both worlds.

Now, plenty of politicians talk a good game about low taxes, and some even claim to want to decrease spending as well. Few seem to mean it, if their voting records are any indication. But if we want more economic freedom and a healthy and robust economy, serious inroads need to be made into federal spending. Otherwise, tax cuts will simply lead to more borrowing, more inflation, and the continued decline of the dollar. As I write, we are paying about $1.4 billion every day just for the interest on the national debt. Because our government refuses to live within its means, every single day we spend $1.4 billion and receive absolutely nothing in return.

But instead of talking seriously about how we might restore fiscal sanity to the federal budget, the political establishment tries to distract us with phony issues like the debate over “earmarks,” legislative provisions that direct federal money to local projects. One need not look very hard to find examples of abuses of earmarks. But even if all earmarks were eliminated we would not necessarily save a single penny in the federal budget. Earmarks are funded from spending levels that have been determined before a single earmark is agreed to, so spending levels remain the same with or without earmarks.

By eliminating earmarks designated by members of Congress, all we would accomplish would be to transfer the funding decision process to federal bureaucrats and away from elected representatives. In a flawed system, earmarks can at least allow residents of congressional districts to have a greater role in allocating federal funds—their tax dollars—than if the money is apportioned behind locked doors by bureaucrats.

The real problem, and one that was unfortunately not addressed in 2007’s earmark dispute, is the size of the federal government and the amount of money we are spending in these appropriations bills. Cutting even a million dollars from an appropriations bill that spends hundreds of billions will make no appreciable difference in the size of government, which is doubtless why politicians and the media are so eager to have us waste our time on this.

There is a danger that supporters of limited government will focus on this trivial question and neglect the much more important and difficult battle of returning the federal government to spending levels more in line with its constitutional functions. Without taking a serious look at the actual total spending in these appropriations bills, we will miss the real threat to our economic security.

The kind of spending cuts we obviously need will not be easy, since our government has encouraged so many Americans to become dependent on federal programs. These programs cannot survive much longer without a financial collapse. Our national debt, now nine trillion dollars, does not include the unfunded liabilities to programs like Social Security and Medicare that will come due in the coming decades to the tune of another $50 trillion. It is simply impossible to fulfill those promises. The level of taxation necessary to fund a figure like that would destroy the American economy and dramatically shrink the productive base from which those funds could be drawn.

David Walker, the comptroller general at the U.S. Government Accountability Office, tells us that Social Security and Medicare are headed for disaster because of demographic trends and rising health care costs. The number of younger taxpayers for each older retiree will continue to decline. The demand for “free” prescription drugs under Medicare will explode. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare.
Forty percent of our entire private-sector output
will need to go to just these two programs. The only options for balancing the budget would be cutting total federal spending by about 60 percent, or doubling federal taxes.

Furthermore, Walker asserts, we cannot grow our way out of this problem. Faster economic growth can only delay the inevitable hard choices. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.

Issues like these are predictably portrayed as contests between generous souls who want to provide for their fellow men on the one hand, and misers and misanthropes who care nothing for the suffering of their fellow citizens on the other. I should not have to point out that this is an absurd caricature. The fact is,
we do not have the resources to sustain these programs in the long run
. There is no way around this simple fact, a fact politicians consistently ignore or conceal in order to tell Americans what they think their fellow countrymen want to hear.

In the short run, in order to provide for those we have taught to be dependent, such programs could survive. My own suggestion is to fund this transition period by scaling back our unsustainable overseas commitments, saving hundreds of billions from the nearly one trillion dollars our empire is costing us every year, and in the process streamlining our overstretched military and making it more efficient and effective. That is the only place where we can easily save money, applying some of the savings to these domestic programs and the rest to debt reduction.

Our out-of-control welfare state also helps account for the scope of our illegal immigration problem. When you subsidize something, you get more of it, and by offering free medical care and other services, as well as the prospect of amnesty, we get more illegal immigration. Meanwhile, hospitals have begun closing as our states and localities struggle to pay the bills. That is one reason that the libertarian economist Milton Friedman once said, “You cannot simultaneously have free immigration and a welfare state.” John Hospers, the Libertarian Party’s first presidential candidate and the author of its Statement of Principles, has taken the same position.

And once again, the state divides rather than unifies. There would be far less hostility toward immigrants if the perception did not exist that they were getting something for nothing, while the rest of America struggles to make ends meet. There would likewise be less hostility if we had a more robust economy—which we absolutely would if we followed the advice in this book. When, thanks to government policy, the economy is shaky, as it is now with the housing bubble bursting and inflation on the rise, it is all the easier to hold up immigrants as the scapegoats for people’s economic woes, thereby letting the incompetents and shysters who make our economic policy off the hook.

Excessive government spending has done more than just put us in debt. Charles Murray offers us a useful thought experiment that illustrates the welfare state’s enervating effects on our communities and our character. Imagine that the programs that constituted the federal “safety net” were all of a sudden abolished, and for whatever reason could not be revived. And pretend also that the states chose not to replace them with programs of their own, which they almost certainly would. The questions Murray wants us to focus on are these: How would you respond? Would you be more or less likely to volunteer at a food bank? Would you be more or less likely to volunteer at a literacy center? If you were a lawyer or physician, would you be more or less likely to offer pro bono services?

We would all answer yes to these questions, wouldn’t we? But then we need to ask ourselves: why aren’t we doing these things already? And the answer is that we have bought into the soul-killing logic of the welfare state: somebody else is doing it for me. I don’t need to give of myself, since a few scribbles on a tax form fulfill my responsibility toward my fellow man. Do our responsibilities as human beings really extend no farther than this?

In the days before Medicare and Medicaid, for instance, the poor and elderly were admitted to hospitals at about the same rate they are now, and received good care. As a physician I never accepted Medicare or Medicaid money from the government, and instead offered cut-rate or free services to those who could not afford care. Before those programs came into existence, every physician understood that he or she had a responsibility toward the less fortunate, and free medical care for the poor was the norm. Hardly anyone is aware of this today, since it doesn’t fit into the typical, by-the-script story of government rescuing us from a predatory private sector. Laws and regulations that inflated the cost of medical services and imposed unreasonable liability standards on medical professionals even when they were acting in a volunteer capacity later made offering free care cost prohibitive, but free care for the poor was common at a time when America wasn’t so “governmentish” (to borrow a word from William Penn). We have lost our belief that freedom works, because we no longer have the imagination to conceive of how a free people might solve its problems without introducing threats of violence—which is what government solutions ultimately amount to.

In
From Mutual Aid to Welfare State: Fraternal Societies and Social Sercices, 1890–1967
, historian David Beito uncovered some of the story of how people once cared for their needs in the absence of massive bureaucracies and the financial chaos and moral hazard they inevitably cause. Beito focuses particular attention on fraternal organizations, which in decades past provided all kinds of services for their members that we now assume must be handled by government. With strength in numbers, such organizations were able to negotiate with doctors and get very inexpensive health care as well.

On the other hand, just about everyone is unhappy with the health care system we have now, a system some people wrongly blame on the free market. To the contrary, our system is shot through with government intervention, regulation, mandates, and other distortions that have put us in this unenviable situation.

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