Gross Minus Net Equals Zero: Repeal the Sixteenth Amendment

by | Jun 20, 2004

When I worked in Saudi Arabia as a technical consultant in the 1990s, my coworkers and I were astounded upon receiving our first paycheck: we actually were paid the full amount we had earned. Gross pay minus net pay equaled zero. Never before or since in my lifetime has such a thing happened. Since every […]

When I worked in Saudi Arabia as a technical consultant in the 1990s, my coworkers and I were astounded upon receiving our first paycheck: we actually were paid the full amount we had earned. Gross pay minus net pay equaled zero. Never before or since in my lifetime has such a thing happened. Since every working person in the United States deserves such a delightful, fulfilling experience I would like to submit the following proposition.

Let us together repeal the sixteenth amendment to the Constitution by the year 2013. This infamous income tax amendment was passed in 1909 by “progressive” Republicans as the best method to collect government revenue, ensure “fairness” and get around the pesky Supreme Court. The latter had the gall to rule in the late 19th century that such levies on income were unconstitutional. Undaunted, the politicians of the era decided that an income tax amendment was necessary. It required four years for the states to ratify the amendment, which became part of the Constitution in 1913.

Hence 2013 presents a nice target date for the amendment’s repeal (rather then a year of mournful reminders, 2013 could become a jubilee year that strikes a majestic blow in favor of individual rights). Further, we all can participate in the nine year debate to determine if our country is to be truly free. Repeal of the 16th amendment would be a real and symbolic reaffirmation that our government is truly limited; no other single act we could possibly perform would so effectively reinforce the idea that America is a country dedicated to individual happiness.

Consider some of the travesties the 16th amendment has spawned in the last one hundred years. The power to tax has become the ultimate politician plaything. The so-called “progressive” nature of the tax code allows permutations uncountable as politicos raise, then lower, individual tax rates. The tax code can tailored to benefit specific special interest groups to garner bloc votes. As seventy five percent of government revenue is made possible by this insidious amendment, great sums become available to wage war, pay premium prices for toilet seats and allow certain folks to sit and do nothing for a living.

Upon approval of the 16th amendment, a new agency was sired to “help” reticent citizens “volunteer” personal, private income data, the Internal Revenue Service. And such a “service” it provides! If the IRS suspects tax cheating it can: garnish wages, freeze bank accounts, seize assets and in general make life hell for its “customers”. Over the amendment’s existence, citizens of the United States have been harassed, hounded, and in some cases, driven to suicide for failing to pay their “fair” share to the government. Never mind due process, innocent until proven guilty or other such tripe. The 16th amendment horribly contradicts other parts of the Constitution, such as depriving citizens of property without a trial. These things make one yearn for the good old days of taxation without representation under Great Britain.

The diminution of individual rights is sordid enough but by no means the only effect of the 16th amendment. The income tax has served to raise costs on the very people made poorer by paying the taxes in the first place. The government is able to finance great agencies that cause prices to increase artificially: milk subsidies raise the price of dairy products as do a whole host of similar subsidies in other industries; medical care costs have spiraled since the inception of Medicare and Medicaid; housing costs have ballooned astronomically, in part due to government support of unions, underwriting of loans and special tax write-offs for mortgage interest. I could mention OSHA, EPA, minimum wage and a thousand other regulations but you get the point. The tax system often makes us pay twice.

Lest we overlook another point regarding taxpayers: they pay taxes so that others can have material things that the taxpayer himself may not be able to afford. Housing instantly springs to mind. Poor folks (i.e., unproductive folks) move into government subsidized housing while the hapless taxpayer struggles to save for a down payment, a process made more difficult by the act of paying taxes. Many persons work but have no health care coverage. Not so with those refusing to work at all. Still other taxpayers struggle to capitalize a business while their fellow citizens stop at the Small Business Administration for government financing of their start-up costs. Poor mom and pop farmers feed at the government trough to save their acres of land while a struggling taxpayer in the big city lives on a sliver of land called an apartment.

At the philosophic level there is something morally repugnant in forcing people who get off their butt and work for a living to pay for that privilege. Life can be trying to say the least but when one works, prospers and finally succeeds it is a travesty to levy a tax on that person’s “good fortune”. No working person should have to look over their shoulder to see where the taxman is hiding. The income tax system makes citizens angry at their government, and distrustful to boot. It makes enemies of people who vie to place tax burdens on their fellow countrymen. It divides the nation into permanent classes of the “haves” versus the “have-nots”, divisions that accentuate envy and ill will among the populace.

Finally I note that taxing income is hardly fair as it fails miserably as a barometer of who should pay what. With great envy (see above paragraph) I calculate that for the year 2003 I paid a higher income tax rate than ketchup nabob Theresa “Heinz Inheritance” Kerry (me, 20% average rate on income of 200k, Ms. Kerry, 11.5%, on income of 5.1M). Her fabulous wealth immune from government pillage, she smugly endorses taxation on others so that all below her can be equally poor. I marvel continuously that such a system would ever employ the term “fair” as an adjective.

Of course the income tax system is not fair, has never been fair, and indeed can never be fair. As the Ms. Kerry example demonstrates, our tax system is based on the faulty premise that a person’s income can be arbitrarily classified to produce a tax that affects all taxpayers equitably. A person making $200,000 in San Francisco may be worse off financially than a rustic living in Idaho on an income of $30,000. Net worth is the true measure of wealth, not income.

The solution to these systemic injustices is not to tweak the tax code so that Ms. Kerry pays more. The solution is to scrap the entire system. Anything that has had one hundred years to prove itself and fails to do so is, well, a failure. Dismally so. The efforts of our great people must be directed toward invention, business and improving life rather than filling tax forms, hiring accountants and fighting the government. Work must always be rewarded. So let us begin the fight against freedom’s enemies by finally making gross -minus net-pay equal to zero.

Michael Marriott is a information technology entreprenuer, having founded several companies in the areas of computer software and consulting in the 1980s and 90s.  His current interest is in the area of Objectivist philosophy, where he is writing a book about fallacies and logical thinking entitled, Follow the Logic. Mr. Marriott has degrees in Computer Technology and Economics. 

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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