April
15, 2002 8:30 a.m. Free
the People
Slashing
the income-tax tyranny.
pril
15 brings three things to mind — the day Lincoln died, the day the
Titanic sank, and tax day. Five years ago I wrote about an idea (very
humbly called the Robbins Plan) to end all income taxes for three out
of four working families. The logic of the plan was fairly straightforward
— in 1994 (the latest figures then available) the top 25 percent
of wage earners paid 79.5 percent of the $533 billion collected through
income taxes. The remaining three-quarters of the country paid the rest,
20.5 percent, about $109 billion. At that time both parties were proposing
tax cuts in the $110 billion range, so it made sense to me that this could
best be applied by liberating the bottom ¾ of taxpayers from their
obligations. No income taxes at all for anyone with an AGI under $42,700.
Unfortunately, no politicians picked up on this idea. And note that this
version was scaled back from my original tax plan published a few years
earlier for a flat tax of 0%, very reasonable I thought, and still do.
But politics being what it is, one must compromise.
So
I'm lowering my sights yet again. According to the latest IRS tax data
(1999) the bottom 50 percent of taxpayers — that's around 63 million
people who earn less than $26,500/year — paid a measly 4 percent
of the total tax revenue. Now get this — because income taxes are
only about 52.5 percent of government tax income (the others being employment,
excise, estate, and corporate taxes), we are only talking about a two
percent cut in total taxes. Think about it. For a two-percent cut, half
the taxpayers in the country are liberated. Half of them. It boggles
the mind.
The
benefits of the plan are the same as they were five years ago — more
money for Americans to spend in the way they want, freedom from the stress
of having to file a return, and an extra day off (i.e., not working on
forms). It places money in the hands of the lower-income groups where
the marginal impact is likely to be much greater than cuts at the top.
It has no implementation, overhead or administrative costs, and in fact
by reducing the IRS workload by half would save money. The plan doesn't
have to be done all at once, perhaps phase it in over five years in overall
tax-cut increments of .4%. Folks, those are round-off levels, how hard
could it be?
The
plan is a natural for Republicans. It is faithful to the core anti-tax
principles of the party. It is simple to understand and should have a
lot of voter appeal since it benefits so many people. It is highly visible
— most people would no longer have withholdings on their paychecks.
This suggestion makes a much bolder statement than last summer's tax rebate,
which was nice but was only a one-time offer and a little gimmicky. Finally,
it is bullet proof to the "tax cut for the rich" Democratic
mantra. Call it instead, "broad based working family empowerment."
Sometimes
I fear that a Democrat might latch onto this idea, but I really shouldn't.
The Democratic party is mired in a pro-taxation mindset. This ideological
predisposition permeates everything they propose. They are always trying
to find a way to extract more wealth from the public to redistribute to
their favored groups. The subservience of the income earner to the state
is one of the unquestioned — even unquestionable — premises
of their party. This is illustrated every time they refer to a tax cut
as a "cost" that must be "paid for." When they do
propose a tax cut it is usually so Byzantine and incomprehensible that
few Americans would be able to actually benefit from it, and those that
do would spend more time figuring out why and how they benefit than the
cut would be worth. The fact is, they don't really want anyone to get
a tax cut, and they only propose them to look like they get the point
that America needs tax relief. Brave indeed would be the Democrat who
would sign on to such a risky tax scheme as the one I've proposed, the
primary risk being a majority of Americans getting used to not having
to pay taxes.
So
far as I'm concerned, that risk is one of the plan's most important benefits.
I want people to get used to not being required to pay taxes. When
they begin to enter upper-income levels they will feel the pinch more
and be less willing to vote for politicians who feel they have a right
to take money from the people who earned it, and who think they know better
how to set priorities for spending it. And once the bottom half of taxpayers
have been liberated, Congress can look at the next decile, figure out
what it would take to get them off the tax rolls, and keep moving up the
chain until it's down to the current top 5 percent — who, guess what,
currently pay 55 percent of the taxes.
In
any case, I'm really getting impatient. I feel I have been very reasonable
over the last decade, moving from a 100 percent income tax cut proposal
to a 20 percent cut to 4 percent. It's about time to see some reciprocity.
Come on politicians, do the math, free the people.
— James
S. Robbins is a national-security analyst & NRO contributor.
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pril
15 brings three things to mind — the day Lincoln died, the day the
Titanic sank, and tax day. Five years ago I wrote about an idea (very
humbly called the Robbins Plan) to end all income taxes for three out
of four working families. The logic of the plan was fairly straightforward
— in 1994 (the latest figures then available) the top 25 percent
of wage earners paid 79.5 percent of the $533 billion collected through
income taxes. The remaining three-quarters of the country paid the rest,
20.5 percent, about $109 billion. At that time both parties were proposing
tax cuts in the $110 billion range, so it made sense to me that this could
best be applied by liberating the bottom ¾ of taxpayers from their
obligations. No income taxes at all for anyone with an AGI under $42,700.
Unfortunately, no politicians picked up on this idea. And note that this
version was scaled back from my original tax plan published a few years
earlier for a flat tax of 0%, very reasonable I thought, and still do.
But politics being what it is, one must compromise.
