Commentary 13- Taxes Destroy

From NJVoices

"The power to tax involves the power to destroy"
Posted by Joseph Racioppi January 17, 2008 9:22PM
Categories: Hot Topics, Policy Watch, Taxes
Note: This piece is best read while listening to the Beatles' "Tax Man", written and sung by the late George Harrison. See the lyrics here.

The quote in the title is from the great Chief Justice John Marshall in the landmark case of McCulloch v. Maryland (1819). Though that case involved a bank (not tolls), the phrase is obviously still relevant today. For a discussion of the case, see this article.

Call it what you want, but Governor Corzine's plan to increase tolls is a tax increase, and an unfair one at that. He is going on a twenty one county tour selling his plan. A couple of my friends asked me to go to the Governor's stop in Morris County on Wednesday night. I declined because I don't want to be sold something I don't want. His plan does not involve spending cuts or layoffs because they are not popular. Therefore, he is not leading or making the hard decisions that need to be made. A spending freeze in not a cut.

Here is the schedule for upcoming sales pitches if you want to attend and say yes or no to the plan.

"What's your plan then?" I was asked. I would favor a TEMPORARY hike in the gas tax to pay off the massive debt given to us by our representatives the past 20 years. Someday, the tax would be repealed but I don't know if that's possible given human nature. Wasn't the sales tax supposed to be temporary? Or was it the income tax, I forget. Taxes, like death, are permanent it seems.

Property taxes alone are destroying many people, or at least forcing them to move. A sales tax increase in 2006, now a massive toll increase, talk about leasing the turnpike; No, this excessive taxation must stop, along with "robbing from Peter to pay Paul" schemes. Now that the economy is tanking, the last thing the average Joe needs is more taxes in the shape of a toll increase.

Yes, the power to tax involves the power to destroy, something the politicians in the State of denial called New Jersey fail to grasp.

I'm getting tired of having to e-mail, write and speak to get our government to NOT do something. Last summer it was the immigration/amnesty bill the people stopped. Now this. Wouldn't it be great if we could just sit back and do nothing while our reps actually worked for us? In the meantime, we must keep e-mailing, writing and speaking out against bad medicine (see Bon Jovi lyrics here).

Maybe I will go to see the Governor after all.

Original Referenced Link


My Commentary:

Posted by Zemack on 01/20/08 at 2:41PM

"I'm getting tired of having to e-mail, write and speak to get our government to NOT do something."

Mr. Racioppi is on to something here. It is hard to fight for a negative. It's not that opposing bad policy is not a worthwhile fight. It's that one must be fighting for something in order to inspire people. So here's my suggestion. Bundle opposition to the Corzine scheme with a call for the abolition of the state income tax.

As the attached essay on taxes correctly points out, inflation and the income tax are the two most destructive taxes. They are, I would add, immoral as well. Inflation is immoral because it is a hidden tax. The value of money is in the goods and services that back it up. Every honestly earned dollar represents the production by the earner of some value traded on the open market. When the government inflates (i.e., prints money beyond the requirements of the productive efforts of its citizens), it is engaging in legalized theft. The dollars it creates do not represent actual products or services. They do not represent anything. When these worthless dollars are used to purchase actual goods and services, what the government is actually doing is taxing (stealing) the purchasing power of the people.

The income tax is immoral for a different reason. Since man can only survive and thrive by creating the things he needs, productive work is his means of survival. As the article points out, the income tax is a tax on current income, i.e., productive work. In other words, it is a tax on the individual's means of survival. It is inherently wrong.

Inflation is a Federal issue. The income tax, however, is also a state issue, which is relevant here.

Demonstrating the immorality of the income tax is important because people need to believe that what they are fighting for is not only practical but right as well. Ayn Rand believed that one could not separate economics from morality. I agree. The destructive and impractical nature of the income tax has been well documented by economists. Yet it survives and thrives. This is because most people have been convinced that it serves some worthy notion of government services or "societal needs", etc. So the first task is to make the case that it is wrong to fund "services" or "needs" through a tax on the means of survival, the incomes, of others.

The practical case should be easier to make. I am old enough to report that for the first ten years of my working life, there was no state income tax! When it was enacted, it was billed as the answer to our educational "needs". Yet here we are. The schools in "poor" districts that were supposed to benefit are, by most accounts, worse than ever. Worse still, the income tax has been primarily responsible for the explosion of special interest pressure groups battling in Trenton to grab a branch off of the income tax Christmas tree. On top of that, and despite more or less steadily rising tax rates, NJ is in its worst fiscal hole ever. To paraphrase Ronald Reagan, the state income tax is not the answer to our state's problems, it is the problem.

The NJ GOP should counter Gov. Corzine's government growth plan with a real counter attack. It should lay out a plan to shrink government by attacking its main nourishment, the income tax. The plan would include the elimination or privatization of all programs currently funded by the income tax. As part of the phase-out, the existing tax can be temporarily replaced by a flat-rate wealth tax to pay off the current state debt that would automatically expire when that debt is retired. Imagine the incalculable benefits for the state's economy!

The "it can't be done" crowd will be out in loud force. Horrified opposition will come from both sides of the political isle. But this line rings hollow when one remembers that there was no state income tax as recently as 31 years ago! A bold and principled movement to abolish the income tax on the grounds that it is both practical and right to do so is a mantle maverick GOPers should pick up. Electoral gains might not come immediately, but the NJ GOP is irrelevant anyway. But it would sure change the dynamics of the debate and put the Trenton establishment on the defensive. It would also ignite demoralized Republicans, as well as many independents and likely draw in many new voters willing to fight for a big cause.

Only challenging the status quo, the accepted, and the hitherto not-to-be-questioned can reverse the fiscal and economic death spiral taking hold on our state.


Other Commentary:

Posted by cubcadet on 01/20/08 at 5:01PM

Hey zemack,
Very well put. I can remember when I was a little boy, going to the dime store and soda shop and buying a pop or a grilled cheese sandwich and not paying state sales tax. As a matter of fact, when one purchased something, at least in a small retail establishment, the prices were so low that they did not have to price things in a deceptive manner, ie., $4.99 instead of just plain $5.00.