The Federal Income Tax and Our American Democracy

Divisive Forces

Racism and religious bigotry are not the only significant divisive forces in America's democracy. Another such force is the Federal income tax system, which pits individuals and groups against each other and the Federal government.

The system generates anger, frustration, and rebellion. It provokes unhealthy forms of competition as well as unethical and illegal behavior. It discourages saving, reinvestment, and initiative: factors critical to maintaining a healthy, vigorous, and competitive market-oriented economy.

So contentiously divisive has the system become it has spawned a horde of imaginative entrepreneurs to assist otherwise honest Americans to flout it and in the process become law-breakers.

The deep and disturbing fissures in American society rent by the Federal Income tax system are long-standing and worsening. One of their most serious consequences is the discouragement, even denial of citizen opportunity for participation in the democratic process. Originally intended only as a revenue-gathering mechanism, the Federal income tax system has become a contrivance for putting into effect measures to bring about social change, to reward or punish, to alter local economies, and to be stow favor on special interests. The system, in other words, has be come a means of political manipulation of the democratic process in ways that subvert citizen responsibility for participation in the workings of our democracy. There is growing acceptance of the contention that the American democracy is run by the few for the benefit of a few.

Americans are Willing to Pay

In principle, Americans are quite willing to pay Federal tax. Criticisms couched in terms of dollars paid really reflect dissatisfaction with political manipulation of the tax system and its consequences.

With some fundamental changes, the Federal income tax system would be a positive force in the working of our democracy, For example:

• The system should be a revenue-gathering device only. All other uses should be eliminated.

• There should be no deductions except for personal exemptions.

• All individuals receiving personal income should be required to file a tax return.

• The tax levied on personal earned and unearned income should not discourage saving and reinvestment.

• Application of a graduated tax rate formula should not discourage incentive.

The above-described simplified Federal income tax system would force all other current uses to become subject to separate legislative initiatives that would be openly debated and voted upon. No longer hidden in a bewilderingly complex law, these separate legislative initiatives could be tracked, evaluated, and judged as part of the normal democratic process.

Everyone Must File

Requiring all individuals receiving personal income to file a tax return would provoke greater interest in and participation in the democratic process. A system no longer containing provisions for taxing business profits would relieve consumers of price increases (resulting from taxes passed on by business) and the national economy from unnecessary inflationary pressures; and it would eliminate disincentives while encouraging reinvestment and initiative.

Sans Deductions

Without any deductions, the system would eliminate inequities that lead to confrontation between individuals and organizations; and it would generate rebirth of charitable giving based upon human conscience — thus helping to build a kinder and gentler nation. The system also would provoke changed attitudes and new thinking, resulting in renewal of the nations's competitiveness in a rapidly changing world, and would reinvigorate the spirit of American democracy.

© Copyright 1989
Institute for domestic Tranquility