ABOLISH THE FEDERAL INCOME TAX
Outlays for President Obama’s federal stimulus programs (to make work) are slated to exceed $787 billion. The money goes to finance government jobs in education, housing, health care, law enforcement, the arts, Americorp, highway construction, public transit, environmental and water projects, and energy projects. Once the funds are expended the jobs will disappear unless next year another stimulus package is passed, adding to the national debt. In short, the make work jobs cannot compare with private sector employment because they neither create sustainable wealth nor provide for long-term employment. They are dead end investments. Economic recovery is largely unaffected by the stimulus programs. The best way for the economy to recover is for those who earn wealth to retain it rather than pay it to the government for redistribution to the politically favored. Retention of wealth will ensure that funds are spent in direct response to consumer demand for goods and investments, bringing about a true economic recovery, sustained economic growth, and a massive increase in employment. Feed government and you will grow an anemic economy. Allow the private sector to feed itself and you will grow an ever expanding economy capable of lifting the standard of living to new heights. Obama’s planned economy rests on deprivation of individual liberty, while tax reform that seeks to ensure that Americans retain wealth rests on maximization of individual liberty. If given freedom, taxpayers will succeed in transforming the American marketplace into one of wealth that benefits all Americans.
2010 tax revenues to the federal government will equal approximately $2.5 trillion, of which $1.08 trillion comes from the individual income tax. The federal government derives revenues from income taxes, payroll taxes (including social security taxes), corporate income taxes, excise taxes, estate and gift taxes, remittances from the Federal Reserve, customs duties, and miscellaneous fees and fines. While government receipts for 2010 are $2.5 trillion, the Obama Administration has caused it to spend $3.456 trillion in that year, adding approximately $1 trillion dollars to the nation’s $14 trillion national debt.
Median household income in the United States is about $50,000 for 2010.
The typical taxpayer will pay about $12,500 in income taxes in 2010. Imagine what would happen if the federal government discontinued collecting income taxes this April 15. Imagine if the typical American taxpayer retained, rather than paid to the government, $12,500 each year.
Overnight the market would reawaken as consumers and producers realized that they would be awash in capital for use as they, not the government, sees fit. Pent up demand for goods and services would suddenly be satisfied. Every segment of the economy would expand from increased spending and savings. The home construction, tourist, hotel, automobile, large appliance, and luxury goods industries would suddenly experience a huge infusion of capital catapulting them into new heights of industry and improvement. Now hiring signs would dot the landscape and unemployment would drop dramatically.
Tax revenues from the corporate income tax would increase as would taxes from excises, customs duties, and fees and fines. Outlays for government social services would drop dramatically because there would be far fewer people on welfare and dependent on government services. Freedom would expand greatly as people would retain funds needed to achieve their dreams. Rather than a society enslaved to the dreams of politicians who would direct how best to spend other people’s money, the society would be liberated, enabling each individual to finance his or her own dreams.
Because Americans could expect year after year to retain wealth earned (the typical taxpayer retaining $12,500, adjusted for inflation, year after year into the future), levels of savings and investment would rise dramatically, pushing interest rates down and fueling an expansion in available funding for small and medium size businesses, the engines of greatest employment in America.
The President is not ignorant of this option, he has antipathy for it. His antipathy arises from a dislike of private markets. His ideal is not a free state but a corporatist one where government in collusion with industry leaders enacts anti-competitive restraints that keep competition to vested interests low and exploit tax revenues to serve the interests of those in office and those who will employ politicians when they leave office.
President Obama has consciously chosen the least likely way to achieve economic recovery—dead-end investment in government make work jobs that have no rational relationship to satisfying consumer demand. While the way he has chosen is least likely to achieve economic recovery, it is most likely to increase political power at the expense of individual liberty.
The cost of Obama’s make work programs is astronomical. To sustain the modest gains in employment from the President’s stimulus plan will require annual expenditures adding to the nation’s $14 trillion dollar debt in the amount of $1 trillion. As soon as the federal government stops funding the make work jobs, those who went to work will be unemployed again. As soon as the government stops funding the make work jobs, the federal funds pumped into the economy will disappear leaving all of those contractors who were paid once again without contracts to sustain their own expansion of the work force. The only way to create and sustain wealth is for the American people to do it in an environment of freedom where they can retain the money they have earned and direct its expenditure. Planned economies have never worked, and Obama’s planned economy is failing miserably in everything except the destruction of liberty.
To make matters worse, Obama has returned to his soak the rich campaign, aiming to increase taxes on those earning $250,000 or more each year. He would increase the payroll and social security taxes for the wealthiest as the economy struggles to lift itself out of the recession. That move will not only fail to generate any meaningful increase in revenue, but it will cause the most capable entrepreneurs in our country to lose more of the revenue they need to save, invest, and employ. It will thus hinder economic recovery and increase unemployment.
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Ron Paul is among the very few people of impeccable integrity and vision in Congress. He has never compromised his principles to achieve partisan gain. He votes in accordance with those principles, which mirror those of our nation’s founders, regardless of the political fall-out. He has advocated elimination of the federal income tax for years but only now are those in the Republican Party beginning to appreciate an emerging truth: Ron Paul was right all along. The Republican abandonment of principle since President Reagan left office is at the root of the party’s problems. Voters should unite behind Ron Paul and demand an end to the federal income tax as essential to a revitalization of the nation’s economy.
© 2011 Jonathan W. Emord - All Rights Reserved