- Jan 17, 2004
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I wrote this in my spare time. Thanks for reading.
The Case for a Head Tax
Of all the tax schemes and ideas there is only one tax that can truly be called fair. This tax redefines the roles that each person takes in the context of government and society and effectively neutralizes them. This tax is the head tax. The head tax is very simple, it is a tax that is a fixed amount(not a percent but a flat fixed amount, for instance $1,000 a year per person) that is paid by every person in the United States (any other country could levy a head tax but for this essay only the U.S. will be discussed) every year. The foundation for the idea of this tax is that a country should be thought of as a club, not a parent, not an advisor, not a caregiver, not a provider of happiness or financial well being. The reason why a country should be thought of as a club is that in many ways a country is a club. It is a group of people who share a lot of the same cultures, ideas, traditions and community ideals. Under this view of government the head tax is the only tax that should be levied.
The dictionary defines the club as: ?A group of people organized for a common purpose, especially a group that meets regularly: a garden club.? Removing the part about meeting regularly you essentially have a group of people organized for a common purpose. The U.S. for the most part is such a group. The U.S. is a group that is organized for the common purpose of living in freedom. At least this is what many people believe the goal that the U.S. is united for. However, let?s examine another common aspect of a club. A club is often a group that charges each member dues on a regular basis. Perhaps the club charges its members dues monthly, quarterly or yearly. These dues allow the member of the club access to the club?s facilities and to be a part of the club?s regular activities. For most clubs these dues are fixed, everyone pays X amount of money in order to be a member of the club. There may be a leader or president of a club, but for the most part the status of each club member is neutral. Each person pays into the club equally and is allowed equal access to the goods and services provided by the club.
Now, the nation under the rule of the U.S. government will be compared to the structure of a club. The U.S. government has unfortunately actually forced the the nation into much more than a club. Today?s government has been constructed with the idea that the government should be a parent or caregiver. People are not the same in the eyes of the government, to the government there are groups of people who need to receive benefits and be cared for and there are other groups of people who must pay in order to have the benefit of living in the U.S. Through the use of the tax code and the manner in which the government hands out benefits and privileges the government has passed these judgments. The passing of these judgments has radical implications in regards to the foundations of democracy and freedom.
Democracy cannot be claimed under such conditions and nor can equality. The government has taken a role that has gone far beyond its club status where it creates benefits for everyone, which are shared equally and receives dues from everyone on an equal basis and therefore it has disrupted its status as a democracy. Everyone having an equal vote is only half the equation when it comes to democracy, everyone also must pay into the government system and receive the same amount in return. When this delicate balance is disrupted groups of people in society can vote for politicians who will enact government programs that are not paid for by the people who voted them into office. Put another way, those who receive government benefits are not necessarily the ones who paid for them even though their votes are counted on an equal basis of those who paid for the benefits. The head tax is the only suitable way to fix this glaring problem with our current pseudo-democracy where the top earners in the nation foot the bill for the rest of the country. Even under other tax schemes such as the consumption tax and the flat tax there will inevitably be a group of people who pay for government and a group of people who do not. If there was a club where certain members who did not pay dues were able to vote for increases in dues there would certainly be members of the club crying foul, and rightfully so.
There is another problem with the current system of government. There is no defined size of government. In fact the government?s size if measured by its revenue (assuming it can only borrow a percent of what it brings in) fluctuates with the GDP. If the real GDP is $1 trillion one year the government will take about 34% of that or $340 billion. Fifty years later if the real GDP is $10 trillion the government will once again take about 34% or $3.4 trillion. However, there is nothing that suggests that the size of the economy and in turn the size of government is related to the cost of government!
If business is booming the cost of government certainly does not increase just because of this boom. In fact, the cost of government will probably go down because the number of people to whom it provides income transfers to will go down as those people find jobs. Therefore, the size of government is not based on any rational or concrete principle. Anyone who isn?t a communist agrees that the government should have a limited size and that the government should only provide a limited amount of goods and services to society on a fixed cost based on what that individual feels should be provided by government. They would make a list of government programs that they feel the government should have. Each of those programs would cost X billions of dollars, national defense, roads, fire and police etc. Add all those programs up and you get Y billions. However, the current system of government has basically decided that it will completely disregard cost and simply attempt to get as much money as the productive, taxpaying people will put up with. This certainly does not meet the criteria of a rational or concrete principle for determining the size of government because it assumes that the size of government should only be limited by the amount of money it can get out of the economy, hardly a rational principle.
If someone were to invent an invention that was so groundbreaking and extraordinary that it netted them $100 trillion they would end up paying about $40 trillion in taxes. Let?s say that the cost of government to regulate this invention was $10 million, the government?s other costs have remained the same and yet it has just received and will spend the vast bulk of the $40 trillion that was taxed away. This increase in the size of government was not based on anything but its ability to take the $40 trillion from the inventor.
A tax system that is not a head tax inevitably creates classes in society. There are the producers, or the payers of the tax and the consumers of the tax or the freeloaders. This creation of classes in turn creates an imbalance of someone?s monetary worth to society. Those who are the producers have a larger monetary worth to society and to the government and those who are the freeloaders have become a monetary detriment to society. This can be illustrated by the Vietnam War draft. When the draft was first started there was something called a student deferment. This deferment allowed those who were in college to avoid the draft, those who were not attending college would end up being drafted. What would be the government?s motive in doing this? It is very clear. Studies have shown that those with college degrees have higher incomes, higher incomes leads to more tax revenue to the government. If the government were to choose who to put at risk in the jungles of Vietnam it would much rather choose to put the poorer, non-college educated men into combat. If the poorer non-college educated men are killed the future tax revenue does not decrease as much as it would if the college educated men are killed. The student deferment was eventually done away with but it was too late, the injustice was already done and the government had demonstrated clearly that it had valued the lives of those in college over those who weren?t as academically successful or who weren?t able to afford to go in an effort to retain future high earners and taxpayers.
The U.S. being the most prosperous and powerful nation on Earth is a desirable place to be. Many people throughout the world wish they could immigrate here and enjoy the benefits that the U.S. economy has to offer. However, let?s suppose that another country emerged that was even more prosperous, had lower taxes, an even higher standard of living and low crime. Some of the top earners in the U.S. would start scratching their heads and wondering if living in the U.S. was really worth it considering they could live cheaper and better in the other country. As has happened to Europe and other nations there would be a ?brain drain? effect, some of the higher earners in the U.S. would leave the country in pursuit of even more economic freedom and their new nation would welcome them with open arms. The problem with other tax systems (including the current one) in creating classes in society is that the people in the upper class become nation shoppers. They have a great incentive to reduce their tax burden, when they leave the country the country has lost a major economic asset.
U.S. citizenship is highly prized by most citizens of the U.S. Other countries? citizenships aren?t often not nearly as attractive because these countries do not offer the opportunities and wealth that the U.S. does. However, the U.S. government has decided that the price of citizenship for some citizens is much higher than it is for others. In fact the price of citizenship for many citizens is actually negative. These citizens who pay little or no taxes still drive on the roads that the taxpaying citizens have paid for. If there are varying prices for citizenship in the U.S. then surely there must be varying criteria for receiving such a prized citizenship. Perhaps if you are a foreigner this is the case, but the only thing that you must do in order to receive U.S. citizenship is to be born on U.S. soil. Different prices for the same citizenship which was given out based on the same criteria? This is not logical by any stretch of the imagination.
Collectivists argue that those who earn more benefit more from being a U.S. citizen and therefore should be taxed more. This is a completely false understanding of economics. High earners generate wealth, they provide very valuable services to society, or else society would not have rewarded them with so much money (this is speaking of honest earners), no sane person would pay the salary of someone who produced nothing for a corporation and they especially wouldn?t fork millions over to someone who wasn?t worth more than millions. What would be the point of paying someone a salary if they didn?t produce more than they were paid? This would be akin to a manufacturing plant that cost more to run than it produced. It doesn?t take a PhD in economics to understand that when an entrepreneur is successful he often creates jobs for society and these jobs generate more wealth for society than the entrepreneur ever receives. Society benefits most from these high earners, not the other way around.
All of the points in this essay should now have shown that a head tax is the only tax that should be levied by a government. This conclusion is based on practical, logical and philosophical reasons. A head tax would remove the class system that the government has imposed on us, would restore the nation to a true democracy, impose a fixed size on government and it would charge everyone equally for the citizenship that they equally enjoy. The size of government would forcibly have to go down, since as it is now on average the government is receiving $10,000 per person. No sane person would impose a tax this high on everyone as there are people not making much more than this (they would literally be starving in the streets). Therefore, a head tax of $1,000 a year would be more realistic. With a population of roughly 300 million people this would bring in about $300 billion a year in tax revenue. Parents would pay for their children?s head tax and government would only provide basic infrastructure for society (it shouldn?t provide anything more in the first place). The Federal Reserve would be abolished as well as all other taxes. The 16th amendment would be repealed and the IRS dismantled. Practically all other government programs would be abolished or drastically reduced in size. People would choose their currency be it gold, silver, sea shells or sticks of wood although the head tax would have to be paid in gold or silver. This is a collectivist?s nightmare but it should be the dream of any who truly desire freedom.
The Case for a Head Tax
Of all the tax schemes and ideas there is only one tax that can truly be called fair. This tax redefines the roles that each person takes in the context of government and society and effectively neutralizes them. This tax is the head tax. The head tax is very simple, it is a tax that is a fixed amount(not a percent but a flat fixed amount, for instance $1,000 a year per person) that is paid by every person in the United States (any other country could levy a head tax but for this essay only the U.S. will be discussed) every year. The foundation for the idea of this tax is that a country should be thought of as a club, not a parent, not an advisor, not a caregiver, not a provider of happiness or financial well being. The reason why a country should be thought of as a club is that in many ways a country is a club. It is a group of people who share a lot of the same cultures, ideas, traditions and community ideals. Under this view of government the head tax is the only tax that should be levied.
The dictionary defines the club as: ?A group of people organized for a common purpose, especially a group that meets regularly: a garden club.? Removing the part about meeting regularly you essentially have a group of people organized for a common purpose. The U.S. for the most part is such a group. The U.S. is a group that is organized for the common purpose of living in freedom. At least this is what many people believe the goal that the U.S. is united for. However, let?s examine another common aspect of a club. A club is often a group that charges each member dues on a regular basis. Perhaps the club charges its members dues monthly, quarterly or yearly. These dues allow the member of the club access to the club?s facilities and to be a part of the club?s regular activities. For most clubs these dues are fixed, everyone pays X amount of money in order to be a member of the club. There may be a leader or president of a club, but for the most part the status of each club member is neutral. Each person pays into the club equally and is allowed equal access to the goods and services provided by the club.
Now, the nation under the rule of the U.S. government will be compared to the structure of a club. The U.S. government has unfortunately actually forced the the nation into much more than a club. Today?s government has been constructed with the idea that the government should be a parent or caregiver. People are not the same in the eyes of the government, to the government there are groups of people who need to receive benefits and be cared for and there are other groups of people who must pay in order to have the benefit of living in the U.S. Through the use of the tax code and the manner in which the government hands out benefits and privileges the government has passed these judgments. The passing of these judgments has radical implications in regards to the foundations of democracy and freedom.
Democracy cannot be claimed under such conditions and nor can equality. The government has taken a role that has gone far beyond its club status where it creates benefits for everyone, which are shared equally and receives dues from everyone on an equal basis and therefore it has disrupted its status as a democracy. Everyone having an equal vote is only half the equation when it comes to democracy, everyone also must pay into the government system and receive the same amount in return. When this delicate balance is disrupted groups of people in society can vote for politicians who will enact government programs that are not paid for by the people who voted them into office. Put another way, those who receive government benefits are not necessarily the ones who paid for them even though their votes are counted on an equal basis of those who paid for the benefits. The head tax is the only suitable way to fix this glaring problem with our current pseudo-democracy where the top earners in the nation foot the bill for the rest of the country. Even under other tax schemes such as the consumption tax and the flat tax there will inevitably be a group of people who pay for government and a group of people who do not. If there was a club where certain members who did not pay dues were able to vote for increases in dues there would certainly be members of the club crying foul, and rightfully so.
There is another problem with the current system of government. There is no defined size of government. In fact the government?s size if measured by its revenue (assuming it can only borrow a percent of what it brings in) fluctuates with the GDP. If the real GDP is $1 trillion one year the government will take about 34% of that or $340 billion. Fifty years later if the real GDP is $10 trillion the government will once again take about 34% or $3.4 trillion. However, there is nothing that suggests that the size of the economy and in turn the size of government is related to the cost of government!
If business is booming the cost of government certainly does not increase just because of this boom. In fact, the cost of government will probably go down because the number of people to whom it provides income transfers to will go down as those people find jobs. Therefore, the size of government is not based on any rational or concrete principle. Anyone who isn?t a communist agrees that the government should have a limited size and that the government should only provide a limited amount of goods and services to society on a fixed cost based on what that individual feels should be provided by government. They would make a list of government programs that they feel the government should have. Each of those programs would cost X billions of dollars, national defense, roads, fire and police etc. Add all those programs up and you get Y billions. However, the current system of government has basically decided that it will completely disregard cost and simply attempt to get as much money as the productive, taxpaying people will put up with. This certainly does not meet the criteria of a rational or concrete principle for determining the size of government because it assumes that the size of government should only be limited by the amount of money it can get out of the economy, hardly a rational principle.
If someone were to invent an invention that was so groundbreaking and extraordinary that it netted them $100 trillion they would end up paying about $40 trillion in taxes. Let?s say that the cost of government to regulate this invention was $10 million, the government?s other costs have remained the same and yet it has just received and will spend the vast bulk of the $40 trillion that was taxed away. This increase in the size of government was not based on anything but its ability to take the $40 trillion from the inventor.
A tax system that is not a head tax inevitably creates classes in society. There are the producers, or the payers of the tax and the consumers of the tax or the freeloaders. This creation of classes in turn creates an imbalance of someone?s monetary worth to society. Those who are the producers have a larger monetary worth to society and to the government and those who are the freeloaders have become a monetary detriment to society. This can be illustrated by the Vietnam War draft. When the draft was first started there was something called a student deferment. This deferment allowed those who were in college to avoid the draft, those who were not attending college would end up being drafted. What would be the government?s motive in doing this? It is very clear. Studies have shown that those with college degrees have higher incomes, higher incomes leads to more tax revenue to the government. If the government were to choose who to put at risk in the jungles of Vietnam it would much rather choose to put the poorer, non-college educated men into combat. If the poorer non-college educated men are killed the future tax revenue does not decrease as much as it would if the college educated men are killed. The student deferment was eventually done away with but it was too late, the injustice was already done and the government had demonstrated clearly that it had valued the lives of those in college over those who weren?t as academically successful or who weren?t able to afford to go in an effort to retain future high earners and taxpayers.
The U.S. being the most prosperous and powerful nation on Earth is a desirable place to be. Many people throughout the world wish they could immigrate here and enjoy the benefits that the U.S. economy has to offer. However, let?s suppose that another country emerged that was even more prosperous, had lower taxes, an even higher standard of living and low crime. Some of the top earners in the U.S. would start scratching their heads and wondering if living in the U.S. was really worth it considering they could live cheaper and better in the other country. As has happened to Europe and other nations there would be a ?brain drain? effect, some of the higher earners in the U.S. would leave the country in pursuit of even more economic freedom and their new nation would welcome them with open arms. The problem with other tax systems (including the current one) in creating classes in society is that the people in the upper class become nation shoppers. They have a great incentive to reduce their tax burden, when they leave the country the country has lost a major economic asset.
U.S. citizenship is highly prized by most citizens of the U.S. Other countries? citizenships aren?t often not nearly as attractive because these countries do not offer the opportunities and wealth that the U.S. does. However, the U.S. government has decided that the price of citizenship for some citizens is much higher than it is for others. In fact the price of citizenship for many citizens is actually negative. These citizens who pay little or no taxes still drive on the roads that the taxpaying citizens have paid for. If there are varying prices for citizenship in the U.S. then surely there must be varying criteria for receiving such a prized citizenship. Perhaps if you are a foreigner this is the case, but the only thing that you must do in order to receive U.S. citizenship is to be born on U.S. soil. Different prices for the same citizenship which was given out based on the same criteria? This is not logical by any stretch of the imagination.
Collectivists argue that those who earn more benefit more from being a U.S. citizen and therefore should be taxed more. This is a completely false understanding of economics. High earners generate wealth, they provide very valuable services to society, or else society would not have rewarded them with so much money (this is speaking of honest earners), no sane person would pay the salary of someone who produced nothing for a corporation and they especially wouldn?t fork millions over to someone who wasn?t worth more than millions. What would be the point of paying someone a salary if they didn?t produce more than they were paid? This would be akin to a manufacturing plant that cost more to run than it produced. It doesn?t take a PhD in economics to understand that when an entrepreneur is successful he often creates jobs for society and these jobs generate more wealth for society than the entrepreneur ever receives. Society benefits most from these high earners, not the other way around.
All of the points in this essay should now have shown that a head tax is the only tax that should be levied by a government. This conclusion is based on practical, logical and philosophical reasons. A head tax would remove the class system that the government has imposed on us, would restore the nation to a true democracy, impose a fixed size on government and it would charge everyone equally for the citizenship that they equally enjoy. The size of government would forcibly have to go down, since as it is now on average the government is receiving $10,000 per person. No sane person would impose a tax this high on everyone as there are people not making much more than this (they would literally be starving in the streets). Therefore, a head tax of $1,000 a year would be more realistic. With a population of roughly 300 million people this would bring in about $300 billion a year in tax revenue. Parents would pay for their children?s head tax and government would only provide basic infrastructure for society (it shouldn?t provide anything more in the first place). The Federal Reserve would be abolished as well as all other taxes. The 16th amendment would be repealed and the IRS dismantled. Practically all other government programs would be abolished or drastically reduced in size. People would choose their currency be it gold, silver, sea shells or sticks of wood although the head tax would have to be paid in gold or silver. This is a collectivist?s nightmare but it should be the dream of any who truly desire freedom.
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