TM

Murray Sabrin April 15^th, 2003

Another year has gone by and the United States, the "land of the free", still has a Marxist income tax system. Our income tax system is similar to the one advocated by Karl Marx in The Communist Manifesto. In his manifesto Marx laid down ten planks that would lead to a communist society, one of which (Number 2) is "A heavy progressive and graduated income tax".

Although America's first income tax in 1913 exempted 98% of Americans, and the rates ranged from 1% to 7%, it didn't take long for the highest tax rate to skyrocket to 77% during World War I (1917). After the top marginal tax rate dropped to 25% during the 1920s, President Hoover raised rates to bring in more revenue as the Great Depression unfolded. FDR also raised taxes, with the highest rate reaching 94% during World War II.

Eventually, the top marginal rate was lowered to 28% in 1986 under the Reagan administration's tax reform push, leaving the tax code with only two "brackets" 15% and 28%, making the federal tax code the least progressive since its inception.

President George "Read my lips, no new taxes" Bush increased tax rates in 1990 and then Bill Clinton raised rates again in 1993. Even after the current President Bush lowered tax rates in 2001, the top marginal tax rate is now just under 40%. In short, the tax code has become more "progressive" in recent years.

The federal income tax fulfills another Marxist concept, "From each according to his ability to each according to his needs". How so? Households with incomes above $200,000 pay 32 percent of all federal individual income, payroll, and excise taxes. Households with incomes between $100,000 and $200,000 pay 24 percent of these taxes.

By contrast, a growing share of lower-income households pays no federal income taxes. In 2001, 36 percent of U.S. households, most earning less than $40,000, had income tax liabilities of zero, a figure that is up from 30 percent in 1990.

In short, middle and upper middle income individuals and households have become the cash cows for America's welfare state--the redistributive society, where government milks the successful to subsidize everyone. Yes, even upper income individuals get government subsidies--Medicare, business subsidies, farm subsidies, you name it, the federal government is--as Ross Perot pointed out in the 1992 presidential campaign--bribing people with their own money.

And the federal government has been very successful convincing enough Americans that the welfare state is here to stay. In addition, very few people, at least publicly, advocate the abolition of the income tax. Why? It has become politically incorrect to advocate wanting to keep your own money to pay for the necessities of life and provide for your own retirement.

Nevertheless, we can have a test of the American people's real preference for the welfare state. We can have a referendum, if you will, on the welfare state. We are told that our tax system is based on voluntary compliance. OK. Let's have all income earners voluntarily comply with the payment of taxes. Based on informal polling of students over the years, not one yet has said he or she would "volunteer" to pay his or her "fair share".

Why? Most people believe they are getting ripped off by the federal government, and they would be better off keeping most, if not all, of their income.

Earlier this year Congressman Ron Paul wrote the following:

"I’m in favor of cutting everybody’s taxes – rich, poor, and otherwise. Whether a tax cut reduces a single mother’s payroll taxes by forty dollars a month, or allows a wealthy business owner to save millions in capital gains, the net effect is beneficial. Both either spend, save, or invest the extra dollars, which helps all of us infinitely more than if those dollars were sent to the black hole known as the federal Treasury. The single mother desperately needs those extra dollars, and that’s why we should reduce or eliminate her payroll taxes. As for the wealthy business owner and whether he "needs" the extra dollars, I’ll simply relate the old adage of the man who said "I’ve never had my paycheck signed by a poor man."

For the American people to reclaim their lost liberties and enjoy sustainable prosperity both the income tax and the welfare state must be abolished. The American people and businesses pay $200 billion to comply with the income tax code. This burden as well as the one trillion dollars in income taxes paid to the federal government must be lifted off the backs of productive individuals and private enterprises. Anything less will just perpetuate our Marxist income tax system and stifle our economy.

A vibrant free enterprise economy requires liberty. And liberty demands that the people's income no longer be plundered.

Murray Sabrin is a USA Daily columnist as well as professor of finance at Ramapo College of New Jersey, where he is executive director of the Center for Business and Public Policy, and the author of Tax Free 2000: The Rebirth of American Liberty. He was the New Jersey Libertarian Party candidate for governor in 1997 and after rejoining the GOP after 25 years, sought the party's nomination for the United States Senate in 2000. He is vice-chairman of the Republican Liberty Caucus.

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