The IRS and the federal tax code have enabled the blessings of government on a scale never envisioned by the Founding Fathers. Consider the vital contributions to the current status of the federal government and its future prospects for growth made possible by the tax code, generally, and progressive taxation, in particular.
First, the incredible growth of the federal government over the course of the 20th century would not have been possible without the bountiful confiscations of all-encompassing, progressive income taxation.
Before the 16th Amendment was ratified in 1913, social activists and internationalists had the “yen, but not the ken.” Income taxation was the necessary breakthrough. Expenditures of the federal government grew from 3.6 to 25.6 percent of national income over the course of the 20th century. By the end of the century, income taxes provided 80 percent of federal revenues. Those who love government should revere our all-encompassing system of income taxation.
Second, the federal tax code was designed to promote “social justice” by redistributing income through progressive taxation of incomes and inheritances of the wealthy to reduce the burden of the poor.
In practice, the redistribution of incomes from progressive taxation over the past 40 years has failed to materialize; as the share of income taxes on the top ten percent of incomes has risen 15 percent, the after-tax income share of the remaining 90 percent has declined 13 percent, leaving those less wealthy relatively worse off. However, “social justice” has been achieved to the extent that its advocates in the media, government, and academia now enjoy the power and privilege they have wrested from the wealthy.
Third, the transition from a simplistic family-based and locally controlled America to a modern individualistic and centralized welfare state was principally enabled by the revenues of income taxation and was assisted by incentives and disincentives written into the tax code.
As the New Deal and, later, the Great Society unfolded, Americans were told that they were fighting a “War on Poverty.” In reality, the social engineers were transforming America into a modern social democracy, liberating women from the “bondage of marriage,” confirming government as the “true parent of the child,” and relieving families of responsibility for the aged. Taxation and the redistribution of its proceeds provided incentives for unwed motherhood, penalized marriage, and made the aged wards of the state. Marriage rates and births within marriage plummeted, while divorce rates and unwed motherhood soared, as did the cost of institutional care for the aged. The “modernization” of American society was boldly advanced by these innovations and by the income taxation that supported them.
Fourth, the IRS has proved to be a far more philanthropic supporter of foreign economic development than the Marshall Plan, in the form of relative tax subsidies to imports.
The border-adjustable value-added taxes employed by America’s principal trade competitors function as de facto tariffs on imports from the United States and provide subsidies for our competitors’ exports to us. Territorial taxation favors the relocation of corporate headquarters abroad. This has resulted in an alarming decline in U.S.-based manufacturing, the rising acquisition of U.S. enterprises by overseas competitors, and a trade deficit that has transformed the United States from the world’s largest creditor to the world’s largest debtor. But global citizens can take comfort in the prosperity that the American brood sow is transferring to the foreign piglets it suckles. And those who govern, live off government, or direct the service sector can enjoy low-cost imports and cheap services provided by displaced workers—until the credit runs out.
Fifth, Americans have been liberated from their Protestant ethic of frugal saving to enjoy profligate consumption by the disincentives of multilayered, progressive taxation of savings and investment.
High marginal tax rates discourage savings and investment and encourage Americans to “eat, drink, and be merry,” in contrast to the relative frugality of earlier generations. However, foreigners are eager to save and invest in the facilities necessary to export to the United States, and to reinvest their trade surpluses in our assets and the debt instruments by which we buy now to pay later. History has been reversed; we now sell Manhattan Island in order to buy trinkets, and we hope that there will be no consequences.
Sixth, the IRS has made important “beachheads” for government in superceding the rule of law, by evading due process; by inequality before tax laws; by invasion of privacy; and by making laws and regulations sufficiently complex so that compliance is rendered arbitrary and enforcement, selective.
Legal tactics employed by the IRS—such as the assumption that taxpayers are guilty until proven innocent, requiring the accused to testify against themselves, and ex post facto levies—open new horizons to the enhancement of the powers of government. Arbitrary enforcement and selective levies and abatements further augment government’s powers over submissive taxpayers. The sheer bulk of IRS laws and regulations make compliance nearly impossible.
Finally, would-be “tax reformers” should properly be seen as dangerous reactionaries, who would uproot the arbors that have yielded the fruits of social democracy and the promise of a New World Order. Instead, they seek the return of America to the primativision of limited government, individual rights and responsibility, and locally controlled, family-based society, where free markets allocate the rewards of productivity to the detriment of social justice.
These radicals should be shunned as the enemies of the tax code, which provide the shackles that condition us to be cooperative subjects rather than unruly citizens and bind us together as a progressive, postmodern society, prepared for the New World Order.