SLASH TAXES TO 1% -- REALLY?

Here’s a tax reduction proposal everyone should love:

· No tax at all on your first $95,000 income ($125,000 if filing jointly)

· 1% tax on income above $95,000 (or $125,000 if filing jointly)

· An extra 1% super-tax for those making more than $600,000 per year

· The super-tax increases to 6% for those making $16 million per year.

Too good to be true? Maybe it is -- today.

But that’s the tax we had in 1913, the year the 16th Amendment was adopted. The first IRS Form 1040 exempted all income below $3,000 ($95,000 in 2024 money). Out of a population of 97 million, only 358,000 had to file a return.

You ask, how could the federal government function on so small a budget? The answer is, the federal government was limited in scope, for the most part, to those powers delegated to it by the people through Article I, Section 8 of the Constitution. George Washington began his administration in 1789 with only 350 federal civilian employees. That number had grown to 388,000 by 1913, but that’s only a fraction of the approximately 3,000,000 federal civilian employees today – and that’s not including postal employees, active and reserve military personnel, and state and local employees.

Monsters have to be fed, and Big Government requires money to fuel it. The income tax authorized by the Sixteenth Amendment is the mechanism that produces the fuel to feed the bureaucracy.

In contrast to 1913, the average person today pays about 13.3% of his net income in federal income tax. But that’s only federal income tax. Add to that Social Security, Medicare, plus state and local income tax, sales tax, gas tax, property tax, and more, and government takes about 28.4% of the average person’s income. That means we spend a good portion of the year working just to pay our taxes to government at all levels, and only after that has been paid is the money we earn truly our own.

Florida businessman Dallas Hostetler developed the concept of Tax Freedom Day, the day the average citizen has worked long enough to pay his taxes and may now start to earn money for himself. As government has grown, and the portion of our payroll we can keep for ourselves has shrunk, Tax Freedom Day has moved later and later on the calendar.

In 1910, before the federal income tax, government consumed 5% of our income, so Tax Freedom Day was January 19. Most of that 5% was at the state and local level. Robert Nisbet has observed that no one who lived before 1913 can really understand the nature of traditional American freedom, under which one could live almost one’s entire life without contact with the federal government. April 15 was just another day on the calendar.

By 1920, after the income tax came into effect and after the budget was increased to finance World War I, government consumed 12% of the average person’s income, so Tax Freedom Day had to be moved to February 13.

The New Deal programs of the 1930s greatly increased the size and scope of government, and taxes were needed to pay for those programs. So our tax burden increased to 17.9% by 1940, and Tax Freedom Day became March 7. The welfare state grew after World War II and taxes consumed 30.4% of our income in 1980, so Taxpayer Freedom Day became April 21. President Reagan held the line on federal growth but did not decrease it as much as he had hoped.

Despite saying “The era of Big Government is over,” Bill Clinton brought government to its peak (33%) in 2000, and Taxpayer Freedom Day became May 1. George W. Bush achieved some reductions 2001-2009, they inched back up under Barak Obama 2009-2017, back down a little under Donald Trump 2017-2021, and back up under Joe Biden. This year (2024), Taxpayer Freedom day is April 16.

So where do we go from here? If the radical Democrats get their way, government will continue to grow, taxes will increase, the share of our paycheck that goes to taxes will expand, and Taxpayer Freedom Day will become later and later on the calendar.

You will know you’ve lost your freedom when Taxpayer Freedom Day coincides with New Year’s Eve!

So what can we do to move Taxpayer Freedom Day back to January where it belongs?

Get back to the Constitution! The Constitution limits the powers of the federal government to those which we the people have delegated to it through the Constitution most of which can be found in Article One Section 8. All other powers, according to the Tenth Amendment, are reserved to the States, or to the people.

Whenever we consider a new federal program, we should ask as the threshold question, is this program authorized by the Constitution? If not, end of discussion, unless and until the Constitution is amended.

For example, as I write (March 21, 2024), President Biden is announcing a new program that will forgive student loans for 78,000 government employees, costing the taxpayers $6 billion dollars. Ignoring for the moment the unfairness of requiring taxpayers who never had the opportunity to attend college to pay taxes for those who went to college on loans they now won’t have to pay back, where does the Constitution authorize any federal involvement in education except military training? The answer is, nowhere. The student loan programs should never have been started.

All public officials, elected or appointed, take an oath to support and defend the Constitution of the United States. We need to remind them that the Tenth Amendment is part of the Constititon they have sworn to uphold, and we will not vote for them unless they promise to follow the Constitution as they perform their duties.

At least eight state legislatures -- North Dakota, South Dakota, Idaho, Alaska, Tennessee, Louisiana, Washington, and Oklahoma – have adopted State Sovereignty Resolutions that nullify all federal actions outside the enumerated powers of Article I, Section 8. Alabama should join them.

Also, don’t be a dunderhead who jumps with joy when he receives a tax refund. This isn’t a gift! All they’re doing is giving back a portion of the money they’ve withheld from you and held interest-free. And it’s deception, because when tax is withheld from an employee’s paycheck, most employees don’t even realize it’s been withheld. Withholding tax ought to be abolished!

And finally, why do we pay taxes April 15, and then vote seven months later in November, when we aren’t thinking about taxes? Why not move Tax Day to the day before the election? If taxes were fresh on our minds when we vote, we might think twice about voting for legislators who call for Big Taxes and Big Government.

Col. Eidsmoe is Professor of Constitutional Law for Oak Brook College of Law & Government Policy (obcl.edu) and Senior Counsel for the Foundation for Moral Law (morallaw.org). He may be contacted for speaking engagements at eidsmoeja@juno.com