Let’s overhaul the tax system.

June 5th, 2008 by Terry Pearson

Around April 15th, most aware of their tax burden. But by the middle of summer, we are usually worried about other things.

Even though we are crippled by taxes throughout the year, we don’t see the true amount until the numbers are crunched in April. After the taxes are processed, we receive a refund. Ironically, some people think this is a gift from the government. In reality, it’s more like a thief returning your possessions after being caught with your stuff.

I was looking at the issues page at BobBarr2008.com and I saw that he said the following:

It is not enough to eliminate the income tax. We also must repeal the 16th amendment, which authorizes Congress to levy an income tax. Without doing so, there would be an ever-present danger that a future Congress would attempt to bring back the income tax on top of the Fair Tax or any other alternative to the income tax.

I tend to agree with him, but on one exception. I do not feel that it is the U.S. congresses role to tax us at all.

Ideally, no individual citizen, or business entity, should ever be put under the burden of the United States government except in cases where the individual is directly working with, or working against, the Federal Government. Then, they should only be regulated to the extent of their relationship with the federal government.

Right now you are probably asking how the federal government could raise funds if it could not tax the citizens. The answer is simple. The federal government should levy funds directly from the states.

Think about it. The United States is part of numerous alliances that are paid tribute to support their bureaucracies, yet we don’t pay a NATO tax or U.N. tax. This is because the U.S. government shields its citizens from these entities. In the same way, a person’s state should shield its citizens from the federal government. When the people of a state pay direct taxes to the federal government, they give up their state’s sovereignty.

Right now, tremendous portions of our nation’s regulatory needs are duplicated at the state and federal level. One of the largest instances of this is the department of the Internal Revenue Service. The IRS audits and monitors over 130 million individual tax payers. That statistic does not even include businesses. Each state also monitors those tax payers.

So with just individual tax payers (no businesses), and with services duplicated, there are in over 260 million people that are contacted and monitored by various government entities. This means that a lot of money is wasted on the duplication of services.

A better solution would be to have the states collect whatever taxes are needed, then pay the Federal government. Then the states will receive a bill from the Federal government, and it is up to them to find a way to pay it. If they wish to charge income taxes, that is OK. If they prefer consumption taxes, that is OK too.

This “market” of tax collections will allow citizens to find a place where they feel most comfortable with the tax system, and will reduce the regulatory (read “harassing”) power of the federal government. It will restore the concept of federalism to our republic.