The final act of the Democrat majority on the House Ways and Means Committee was to make public several years of Donald Trump’s tax returns, which the Committee obtained after a prolonged legal battle. The tax returns confirmed that, despite being one of the richest people in America, Donald Trump paid very little in federal income tax. In fact, in at least one year he paid under a thousand dollars.
Trump’s success in minimizing his tax liability without ever being audited is surprising only to those who think IRS audits are mainly used to catch rich “tax cheats.” According to data released by the Syracuse University Transactional Records Clearinghouse, in 2022 lower-income taxpayers were five and half times more likely than millionaires and billionaires to be audited! This is because low-income taxpayers cannot afford to hire top-notch tax attorneys and accountants to help fight the IRS, so they are more likely to give in to the agency’s demands.
Despite claims of the Biden Administration and its Congressional allies, the $80 million in additional funds provided to the agency as a part of the misnamed “Inflation Reduction Act” will likely increase the tax agency’s targeting of low- and middle-income Americans.
Proponents of a flat tax or national sales tax argue that such a system would ensure millionaires and billionaires paid their “fair share” of taxes. Saying we must all pay our “fair share” of taxes assumes we have a moral obligation to the government that can only be fulfilled by turning over as much of our income as our so-called “public servants” demand. This is not the case. Individuals have a moral duty to support their families, and to support private charities if they wish. They do not have a moral duty to support the government.
Tax reform proponents also complain that the current tax code contains too many loopholes that cause economic distortions and inefficiencies. It is true that the current tax system promotes inefficiency, but this is caused by the income tax itself, not the loopholes. Conversely, loopholes actually promote economic efficiency by giving taxpayers the ability to spend more of their money the way they prefer, rather than allowing politicians to spend it. As economist Thomas DiLorenzo put it, “private individuals always spend their own money more efficiently than government bureaucrats do.”
Some have expressed concerns that the use of President Trump’s tax records as part of the Democrat and Deep State effort to discredit him sets a dangerous precedent that will lead to increased use of tax information as a political weapon. The sad fact is that ever since its creation, politicians have used the IRS as a tool for punishing political opponents. As an IRS agent told the head of conservative organization who was being audited after calling for the impeachment of then-President Bill Clinton, “What do you expect when you target the President?”
The major problem with the income tax, and the reason it must be eliminated, not merely “reformed,” is that it is rooted in the idea that the government has first claim on our income. This idea is incompatible with a free society. Furthermore, the income tax must also be repealed because the force of the IRS, along with the fraud of the Federal Reserve, is one of the two foundations of the welfare-warfare state that erodes our liberty and prosperity. The only way to avoid 1984 is to repeal 1913.
The Best of Ron Paul, MD
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Dr. Ron Paul is a former member of Congress and Distinguished Counselor to the Mises Institute.
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