Ways To Make April 15 Just Another Day
By W. James Antle III (04/11/04)
They are working overtime at H&R Block and accountants are trying to make sense of the Byzantine federal income tax code for their clients in time for the April 15th deadline. That dark day when America’s lowly taxpayers must account for the past year’s economic activities and make sure they have forked over the proper amount of income to the government is fast approaching.
During the 2004 presidential election cycle, a debate about tax policy is inevitable. There will be talk of raising taxes and cutting taxes, increasing revenues and offering tax relief, people who are not paying their “fair share” and overtaxed “working families.” But is unlikely that either of the major candidates will seriously propose anything to April 15 a day like any other rather than a day of infamy for America’s most productive.
That doesn’t mean the rest of us can’t dream. Herewith, I offer several suggestions with no practical chance of passage in our current political environment that would nevertheless help taxpayers and their wallets to live in peace together on that dreaded Tax Day.
Move the day on which federal income taxes are due from April 15 to Election Day: Let’s literally make April 15 a normal day rather than Tax Day. As it stands right now, politicians buy votes buy promising huge government programs that would benefit various voting blocs. Electioneering amounts to little more than promising the electorate a free lunch, or confiscating one side’s wealth to pay for another side’s goodies.
The costs of prescription drug coverage, national health insurance, additional weeks of unemployment benefits and other enlargements of the welfare state are seldom discussed much less considered. What if voters had no choice but to contemplate them by seeing the price tag of big government on the very day they went to the polling stations? It might make some of them think twice about falling prey to the high-price promises of smooth-talking charlatans who seek only to deceive them out of their wallets.
End withholding: One of the main reasons the postwar growth of government has been so palatable to taxpayers is that during World War II, the federal government instituted tax withholding. This efficiency measure takes taxable income right off the top of workers’ paychecks before they even see the money. This makes their tax burden appear less painful because they never grow accustomed to the wealth they have lost in the first place.
Worse, under this system many taxpayers overpay. True, they get their money back in refunds. But this is only after the federal government has had use of these funds interest-free for up to a year. On top of this, many people view their tax refunds as a gift from the government rather than a repayment of a loan without an interest.
Imagine instead if Americans had to pay for government by writing monthly checks the same way they paid for rent, automobiles and other major expenses. They would play a firsthand role in calculating how much government was costing them rather than simply seeing the benefits being paid out to them.
In order to return to the Founders’ system of limited government, withholding must go. Milton Friedman was wrong on this one.
Limit federal spending and taxation, not just borrowing: There is much to be said in favor of a balanced budget amendment. But the deficit is far from the only cost the government imposes on the economy. Every dime the government spends must be taken from the private sector, regardless of whether the method is taxing, borrowing or inflation.
A real amendment or law that would mandate fiscal discipline wouldn’t simply allow politicians to raise taxes to try to cover deficits. It would curb the root cause of the problem, the level of spending. Ideally, the federal government would only spend money on things authorized by the U.S. Constitution. However, an improvement in our current climate would be to limit the growth of the federal budget to population growth plus inflation.
This is not an impractical limitation. Several states currently do it. The TABOR restrictions in Colorado helped the state avoid the deficits and fiscal meltdown that so many other statehouses faced as the economy slowed in recent years. Instead of wallowing in red ink and raising taxes to try to balance the budget, taxpayers continue to receive refunds paid to them out of the budget surplus. A concrete check on expenditures is the only real solution to fiscal irresponsibility. It is also the best way to minimize the tax burden on hardworking citizens.
Illustrate the true cost of even small federal programs to real taxpayers: Ken Adelman had a sensible suggestion in a column for the Washington Times about ten years ago. Each federal program should be evaluated based on the number of people who on average would have paid their entire income tax bill to finance it.
Say the average annual income tax payment is $4000. A $200,000 federal program studying cow flatulence or the mating habits of fruitflies doesn’t sound like much. But when you consider that about 50 taxpayers paid their entire income tax bill for the year on such nonsense, this puts it in perspective. You try explaining to the plumber in Brooklyn or the cabbie in Hoboken why he paid so much money to the federal government for a polka music museum in some committee chairman’s district.
Abolish the federal income tax: Of course, all of these proposals are gimmicks compared to cutting off the hydra’s head. Each year, Rep. Ron Paul (R-Tex.) sponsors the Liberty Amendment, which would repeal the 16th Amendment and rescind the personal income tax. Economic growth, personal privacy and individual freedom would all be greatly expanded by its enactment. Each year, the Liberty Amendment languishes as politicians fear starving unconstitutional government programs.
Some conservatives favor replacing the income tax with some form of national consumption-based tax. Others, ranging from Howard Phillips to Alan Keyes, prefer replacing the income tax with nothing and instead funding the federal government with fess, tariffs, duties and imposts. Sound unrealistic? This was in fact America’s original tax system and raised sufficient revenue for most of our nation’s history before 1913. This unfortunately is possible only under a regime of constitutionally limited government.
The odds of any of these ideas are no better than the prospects for politics being rated much higher than prostitution as a noble profession in most people’s minds. Thus, I mailed in my tax forms and eagerly await my refund check. But it doesn’t hurt to remember as you rush those 1040s off to the Post Office that there is an alternative to the current arrangement.
Some might even say it was the original plan.
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