Taxes

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Ron Paul supports the elimination of the income tax and the Internal Revenue Service (IRS). He asserts that Congress had no power to impose a direct income tax and has introduced legislation to repeal of the 16th Amendment to the Constitution, which was ratified on February 3, 1913.

An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.

To provide funding for the federal government, Ron Paul supports excise taxes, non-protectionist tariffs, massive cuts in spending.

Ron Paul discusses the income tax and the “FAIR Tax” in May 2007:

On November 20, 2008 Ron Paul said in a New York Times / Freakonomics interview:

“I want to abolish the income tax, but I don’t want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent — over half of all revenue — comes from other sources, like excise taxes, fees, and corporate taxes.

We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to “replace” the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.”

On May 7, 2001, Ron Paul wrote the following column:

The Case Against the Income Tax

Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck. In the late 1800s, when Congress first attempted to impose an income tax, the notion of taxing a citizen’s hard work was considered radical! Public outcry ensued; more importantly, the Supreme Court ruled the income tax unconstitutional. Only with passage of the 16th Amendment did Congress gain the ability to tax the productive endeavors of its citizens.

Yet don’t we need an income tax to fund the important functions of the federal government? You may be surprised to know that the income tax accounts for only approximately one-third of federal revenue. Only 10 years ago, the federal budget was roughly one-third less than it is today. Surely we could find ways to cut spending back to 1990 levels, especially when the Treasury has single year tax surpluses for the past several years. So perhaps the idea of an America without an income tax is not so radical after all.

The harmful effects of the income tax are obvious. First and foremost, it has enabled government to expand far beyond its proper constitutional limits, regulating virtually every aspect of our lives. It has given government a claim on our lives and work, destroying our privacy in the process. It takes billions of dollars out of the legitimate private economy, with most Americans giving more than a third of everything they make to the federal government. This economic drain destroys jobs and penalizes productive behavior. The ridiculous complexity of the tax laws makes compliance a nightmare for both individuals and businesses. All things considered, our Founders would be dismayed by the income tax mess and the tragic loss of liberty which results.

America without an income tax would be far more prosperous and far more free, but we must be prepared to fight to regain the liberty we have lost incrementally over the past century. I recently introduced “The Liberty Amendment,” legislation which would repeal the 16th Amendment and effectively abolish the income tax. I truly believe that real tax reform, reform that so many frustrated Americans desperately want, requires bold legislation that challenges the Washington mind set. Congress talks about reform, but the current tax debate really involves nothing of substance. Both parties are content to continue tinkering with the edges of the tax code to please various special interests. The Liberty Amendment is an attempt to eliminate the system altogether, forcing Congress to find a simple and fair way to collect limited federal revenues. Most of all, the Liberty Amendment is an initiative aimed at reducing the size and scope of the federal government.

Is it impossible to end the income tax? I don’t believe so. In fact, I believe a serious groundswell movement of disaffected taxpayers is growing in this country. Millions of Americans are fed up with the current tax system, and they will bring pressure on Congress. Some sidestep Congress completely, bringing legal challenges questioning the validity of the tax code and the 16th Amendment itself. Ultimately, the Liberty Amendment could serve as a flashpoint for these millions of voices.

Ron Paul introduced the Liberty Amendment in 1998, 1999, 2003, 2005, 2007 and 2009. It is currently know as H. J. RES. 48 and has 2 cosponsors, Roscoe G. Bartlett (MD-6) and Don Young (AK). Here is the text of the proposed amendment:

Liberty Amendment

Section 1. The Government of the United States shall not engage in any business, professional, commercial, financial, or industrial enterprise except as specified in the Constitution.

Section 2. The constitution or laws of any State, or the laws of the United States, shall not be subject to the terms of any foreign or domestic agreement which would abrogate this amendment.

Section 3. The activities of the United States Government which violate the intent and purposes of this amendment shall, within a period of three years from the date of the ratification of this amendment, be liquidated and the properties and facilities affected shall be sold.

Section 4. Three years after the ratification of this amendment the sixteenth article of amendments to the Constitution of the United States shall stand repealed and thereafter Congress shall not levy taxes on personal incomes, estates, and gifts.’.

On April 30, 2009 Ron Paul introduced the Liberty Amendment with the following speech:

Ron Paul: Madam Speaker, I am pleased to introduce the Liberty Amendment, which repeals the 16th Amendment, thus paving the way for real change in the way government collects and spends the people’s hard-earned money. The Liberty Amendment also explicitly forbids the Federal government from performing any action not explicitly authorized by the United States Constitution.

The 16th Amendment gives the Federal government a direct claim on the lives of American citizens by enabling Congress to levy a direct income tax on individuals. Until the passage of the 16th amendment, the Supreme Court had consistently held that Congress had no power to impose an income tax.

Income taxes are responsible for the transformation of the Federal government from one of limited powers into a vast leviathan whose tentacles reach into almost every aspect of American life. Thanks to the income tax, today the Federal government routinely invades our privacy, and penalizes our every endeavor.

The Founding Fathers realized that “the power to tax is the power to destroy,” which is why they did not give the Federal government the power to impose an income tax. Needless to say, the Founders would be horrified to know that Americans today give more than a third of their income to the Federal government.

Income taxes not only diminish liberty, they retard economic growth by discouraging work and production. Our current tax system also forces Americans to waste valuable time and money on compliance with an ever-more complex tax code. The increased interest in flat-tax and national sales tax proposals, as well as the increasing number of small businesses that question the Internal Revenue Service’s (IRS) “withholding” system provides further proof that America is tired of the labyrinthine tax code. Americans are also increasingly fed up with an IRS that continues to ride roughshod over their civil liberties, despite recent “pro-taxpayer” reforms.

Madam Speaker, America survived and prospered for 140 years without an income tax, and with a Federal government that generally adhered to strictly constitutional functions, operating with modest excise revenues. The income tax opened the door to the era (and errors) of Big Government. I hope my colleagues will help close that door by cosponsoring the Liberty Amendment.


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775 responses to “Taxes”

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  2. camille rye

    Two issues:
    1. Income taxes - are they valid…questionable?
    2. Income tax complexity - absolutely insane…no question on this one at all!

    I have been looking for a forum that has any power or cohesiveness to make a real impact on the insanely complicated racket of income tax filing and haven't been able to find anything? Why is this?

    I have not marched for anything in my 57 years of life (although have been frustrated, angry, etc)…but I would spend precious retirement savings to march/fight the absolutely absurd, complex, stupid (X&(%$) way our government requires us to not only pay but fill out forms that most PHDs would have (and sure they do) trouble understanding???

    I left a very good paying job because I finally decided that paying high taxes and to add injury to insult either filling out the tax forms every year or hiring someone else (and paying them dearly) to do this was worth my not getting a paycheck any longer.

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  4. Sen. Cruz Calls for Abolishing the IRS | Wichita Observer

    […] “Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck,” writes Ron Paul. […]

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  5. SEN. TED CRUZ CALLS FOR ABOLISHING THE IRS | sreaves32

    […] “Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck,” writes Ron Paul. […]

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  6. United States Senator Ted Cruz Calls For Abolishing The IRS! Well, Its About Time One Of Those Bitches In Washington Grew A Set Of Testicles!! |

    […] “Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck,” writes Ron Paul. […]

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  7. NewsSprocketSen. Cruz Calls for Abolishing the IRS | NewsSprocket

    […] “Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck,” writes Ron Paul. […]

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  8. Pastor Mikes Report | Sen. Cruz Calls for Abolishing the IRS

    […] “Could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of its history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker’s paycheck,” writes Ron Paul. […]

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  9. rand

    Ron Paul - The Best Income Tax Rate is 0% : http://www.youtube.com/watch?v=EwwSaNOWkx0

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  10. ted

    the local gas tax and the local property taxes pay for the roads and the highways not the federal income tax. 100 percent of the money from the income tax goes to the federal reserve to pay intrest on the debt. Foreigners own all the stock in the federal reserve.

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    1. SteveD

      The federal government pays interest on its debt in exactly the same manner that it makes any other type of payment: by sending INSTRUCTIONS to credit bank accounts. It can do this infinitely. No secret cabals, taxpayers, children or grandchildren involved.

      The federal government has no money. Why would it? It creates its sovereign currency, the dollar, ad hoc, when it pays bills. Whenever the federal government sends a check, in payment of a bill, that check is not money. The federal government, not having money, can send no money.

      You never will see a number showing how much money the federal government owns, but you always will see how much the federal government supposedly owes.

      When John Boehner famously lied, “Let’s be honest. We’re broke,” he was referring to the fact that the government supposedly owes trillions, but has no money. In fact, that always is the case for a Monetarily Sovereign nation. It creates its sovereign currency ad hoc, so at any moment in time, its debts far exceed its holdings of money. It has no holdings of money.

      A federal government check merely instructs a creditor’s bank to increase the number in the creditor’s checking account. It does not deliver dollars, since dollars, having no physical existence, cannot be delivered.

      At the same time the bank increases the number in the creditor’s account, corresponding federal accounts are decreased, but none of those accounts are part of the money supply. So when you (or your employer) "send" tax money to the federal government — or more properly, send your instructions in the form of a check or wire — the dollars that existed only as numbers in your checking account are destroyed. They cease to be part of the money supply.

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  12. Karl

    America had its freest and happiest days before the Communist-inspired progressives rammed through the income tax in the earliest 20th century. Hopefully in the 21st century America will wake up from the progressive nightmare and overthrow the Communist program -- hopefully by peaceful means, if that is still possible. I think it is possible, it just takes enough voters who make abolishing the IRS and the income tax their priority.

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  14. James Hogan

    Let me dissect his argument.

    Firstly, in the second paragraph, income tax is described as implying that the government somehow owns the labor of its citizens. This is fundamentally untrue. An income tax is not a matter of owning people or their labor, it is intended to compensate for the services that the government provides. Roads are a good example. If you own a trucking business and you ship goods across the US, then you use roads and other government built infrastructure. This means that your income is dependent on the government. If there were no roads, you would have no way of shipping your goods. Income tax is designed to pay for the government's expenses such as building roads.

    Secondly, in that same paragraph, it is said that income tax is mentioned "tellingly" in the communist manifesto. This is a cheap trick to get people who read this to have a negative reaction to income tax as an idea. The communist manifesto mentions many other things that even Ron Paul admits are good. Peace, for instance. The communists also state that they "wish to attain their ends by peaceful means". If you wish to argue against something, argue against the thing itself, not the groups who support it.

    Finally, the article gets into details. Ron Paul supports excise taxes, or in other words taxes on commerce. While this sounds nice, there are some fundamental problems with this idea. Firstly, poor people spend a greater percentage of their income as they have to use every penny of it on necessities. The rich, on the other hand, spend a smaller percentage, meaning that the tax will affect them more. This is one of the most unfair tax systems as the poor, who can't afford to pay as much, are forced to lose more of their income than the super-wealthy who have little use for the majority of their income. Even an equal income tax for all people would be better than this.

    The next fallacy in his argument is that the government has gone "beyond its constitutional limit". This is a problem. If you base your argument around the opinions of important people as opposed to facts, then you will run into many problems. The founding fathers had slaves and the constitution allows slavery. There are times when people must make decisions for themselves and not always follow others.

    Big government is not a problem. It is not anti-american. It merely is the government stepping in to fix things when the government is the only thing that can step in. When gas companies used lead in their gas, the government stepped in and stopped this. The companies objected because they would lose profits, but it saved the public's heath.

    I hope that anyone who reads this will reread Ron Paul's argument so that they can decide for themselves whether or not income tax is right. In a true democracy, debate is essential and that is what I am trying to provide. I have friends who are libertarian. We argue. In the end we make up our own minds on subjects instead of being influences by politicians.

    I hope this has been useful.

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    1. John

      Income tax is not used to build the roads. It is tax on gasoline and vehicle registration that pays for that

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  19. vernon corey vouga

    http://whatreallyhappened.com/WRHARTICLES/fedponzi.php

    If im supposed to live to be 80, and my entire intellectual (as in research, chats with freinds, even religious preferance) life has been on the internet... then in the next 53 three years of the life i have left, i will fight for the rights origionally intended by the framers of the constitution. And i wont settle for anything less. I have no choice but to be honest and transparent because there is no privacy on the internet, no matter how hard you try. Thats why im posting with my full name.

    Im steaming mad at being born into a debt i can never repay, because of people interested only in self preservation, and not the preservation of our nation and her diverse and wonderfull people (or having a vested interest into the future i was born into).

    From what i can tell, the income tax was enacted to pay intrest on the fed banknote... if this system is the only generator of the money your using to pay them back, they need to print more of it so you can. Inflation explodes untill the system collapses... its proven historic fact. I hate being lied to and i hate having information hidden from me (when i cant lie or hide information myself)... im being taxed without the proper representation to know why im being taxed.

    Why was the actual reason for the american revolution hidden from me? (King george forcing us to use only his banknotes)
    Why do we have to "pass them so we know whats in them" (laws and bills), when my taxdollar is what pays for these?
    Why are we paying taxes on oil, when according to what ive read, there was a deal struck to make the u.s. dollar the only currency allowed in its trade? If thats true, where did the revenue from that go?

    Im investing in precious metals and/or bitcoin, and ill be fighting to get rid of centralised banking in favor of what is supposed to be in place, conceived by people who foresaw this exact thing happening in 1776.

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  20. mcap

    Ron should know this... the 16th Amendment was never ratified. It was done under the usual cloak of darkness that is being used today.

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  21. jreyn leed

    IF any of Ron Pauls staff read this. Please do some research into the enactment of the 16th ammendment. Judges ruled that the 16th gave no additional taxing powers to congress. Maybe as former House member, he can pull some strings to have the Supreme Court finally hear the arguments concerning the constitutionality of the income tax as well as test the legislation against the the constitutionally mandated purpose of government. He called also push that it be found void for vaugeness due to the fact that many important terms commonly used today have never been definitively defined by any legislation within the ammendment nor later legislation. He could also tackle the question of what legislation actually grants the IRS inc authority of enforcement.

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  22. 8 Ways Rand Paul is Different from Ron Paul – IVN

    […] at least his 2008 run for president, Ron Paul famously said that the national income tax should be “repealed and replaced with nothing.” Rand Paul […]

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  23. vernon corey vouga

    Mr paul,
    I am 27 years old and a vet. This website gives me hope for the future... alot of the things i stand for and firmly beleive in make me a terrorist in the eyes of our current governing body. That couldnt be further from the truth. Im just as concerned for the country i live in than anyone else. I think the current dissasociation the people have with the government in this day and age has alot to do with the nature of our tax system, and i beleive the stance you have taken isthe correct one. I wanted to submit another idea for your contemplation, andany other person with enough weight in money to try and defend thier positions. I think the president, whomever he may be, should abolish the obsolete electoral colledge, set up a comittee of advizers from colledges across america (yes colledge students), and create a program for computers or cellphones (or both) that give the american people the chance to vote on issues in real time.
    Thank you for your consideration.

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    1. vernon corey vouga

      Id like to amend this. The program should be for each elected representative and should include all of the registered and legal constituancy hehh represents. HWe shouldnt have to read or hear about senators playing video poker during hearings or sessions if we live in the age of instant communication. I must admit, im putting my last hopes into this. Because youve sparked them mr senator.

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  24. jhon

    From the us goverments comprehensive annual financial report called Cafr which should be audited you find that the goverment gets twice the reveneue it gets in taxes from its investment held income which means that it does not need the taxes and you could get rid of all taxes not just the income tax and still have a big goverment because according to the us goverments Cafr they get twice the revenue they get from taxes from their investment held income. According to the us goverments Cafr they use all the money from your taxes to and invest in and buy and then own through outright majority stock ownership companies. According to the Us goverments Cafr The Us goverment owns all the fortune 500 compnies by having majority stock onwership in all of them. According to the Us goverments Cafr The Us goverment has 51 percent stock ownership in 7o percent of the blue chip companies foreign and domestic. The CAFR Swindle - The Biggest Game In Town. Taxes are no longer necessary. This video exposes a deliberate and massive swindle that is perpetrated by every government agency from your local school district all the way up to the Federal government.This is the second Version of this expose' on public finance: http://www.youtube.com/watch?v=1pRPBKJQnyU All income tax money goes to pay interest and none of it goes for the operation of the government according to the Grace Commission Report of 1984. ""100% of what is collected is absorbed solely by interest on the Federal Debt ... all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government.": http://www.scribd.com/doc/32595026/Grace-Commission-Report-full

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  25. T.E. Sumner

    The problem cannot be solved mathematically, because it's not a formula that needs solving.
    You can propose 10% or 17% in steps, and have a rebate or not, and decide which group of payers will pay what proportion and so on and so forth, but no matter what you propose it will never be enough. The solution will last less than 10 microseconds.
    As a normal person's reaction to having to pay for something is to avoid that something, people's behavior will change - that the x part of the equation. But worse y, the thing you're trying to solve for, will change (always increasing).
    So, let's say you think y = 20% x + 10%(x - poor) - rebate
    x will become 70% of x as people reclassify whatever you're taxing to something untaxable, and "poor" will increase as politicians buy votes just as they increase "rebate" part of equation. But,
    worse y will become 120%y as new benefits are bestowed and new re-building 'must' be funded and so on.
    You can never solve this problem with arithmetic.

    You want proof? Study the sales tax rates levied by states all over the country. In fifty years they have more than tripled - the rates have tripled.
    Why? Because governments become more inefficient over time, because they take on more projects to command more power, because unchecked, government always grows and becomes inefficient.
    They will defend themselves by saying that prices have risen over the last 5 decades, necessitating the rise in sales tax rates. But if prices have risen, then so have sales tax revenues (since they're tied to prices). It is a shell game.
    Businesses either become more efficient or die to the competition. Government does the exact opposite. Bigger compensation packages for its "workers" more bonuses for its leaders and when you object the answer is always [remember the picture of Obama standing in front of policemen?] if we don't raise taxes, we have to fire policemen and firemen. That's Chicago politics.

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    1. T.E. Sumner

      So, what is the answer if we can't propose a mathematically balanced equation?
      The underlying axioms are wrong.
      Taxes are the negative feedback that the government sends towards activities that it should be trying to eliminate or reduce.
      The size of taxes should be enough to offset the deleterious effects of the activities so taxed. No deleterious effects = no tax.
      That doesn't mean we need zero government, but baseline government should be cheap enough for every man, woman and child to pay for it. If that's $25 a person a year, so be it.

      And who will build the roads?
      The same people who do now.
      And who will pay for all the section 8 housing?
      Nobody, except private charities.
      And who will pay for free medical care for the indigent?
      Nobody, except those who want to pay for somebody else.

      The fundamental axiom that has gotten us all into trouble is emotion. We allow anger to permeate our laws. We allow guilt and compassion to run so many government programs.
      Anger is exemplified by the 1965 Voting Rights act which is a Bill of Attainder against certain states and jurisdictions, finding them guilty of acts without proof and having those guilty parties prove their innocence not in court but to a political machine. Either the same standards apply to all states, all jurisdictions or the law is an attainder for previous crimes.
      The fact that many television shows advertise "men finding themselves the wives of other prisoners" is a testament to the cruel and unusual punishment that script writers wish on convicts. Imprisonment is not a method to detain criminals, help them see the error of their ways, teach them to become good citizens and release them with assistance into the population when they can contribute and make up for their past transgressions. Instead it is a place of horror where they suffer in silence everyday and are assaulted by other prisoners, sometimes dying, and are considered incapable of rehabilitation to be shunned once released. Drug users, drug dealers, conscience-less murderers, rapists, tax dodgers and any other criminal are expected to endure the same madness and later rejection from society. Such anger!
      Compassion is the most costly aspect of emotion in law. If you don't want to increase the nutrition of a child in school or pre-school, you are a bad, heartless person: therefore, a new Federal program will send money to local schools but in exchange the Feds will be able to fine the school if they turn on the soda machine during lunch hour. We got suckered. We were guilted or shamed into acquiescence on the largesse bestowed upon local political machines with national strings attached.
      The Feds have successfully warped our Reefer Madness just as they did with the Volstead Act into a Federal money-making enterprise for those willing to break the law, and those willing to enforce the law, while those willing to acquiesce will pay for it.
      Free birth control pills, free abortions, free cellphones ... lots of free stuff from the Feds - just vote for the man who brought you these things. Never mind who really pays for them.
      Lastly, jealousy in the law. We can call it envy, if you like. But it is the resentment of success that powers the "99%" to pay back the "1%" by making them pay for anything they can force them to. The Senate was supposed to have protected the least populated and presumably less rich states from the more populated ones. But the Senate has become an emotion-ridden bunch of social justice advocates bent on destroying success and making us all equally impoverished.
      To the extent possible we need to make it an "axiom" that the law be constructed without emotion.

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      1. T.E. Sumner

        If the first axiom is to remove emotion from the construction of laws and regulations, are there other principles that we can follow in making laws, especially concerning taxation.
        Imagine that we go back to our first equation:
        no deleterious effect = no tax.
        Setting a rate of taxation first has to be grounded on an activity that we want to reduce. If there is some ill effect, we have to measure the ill effect and find it attributable to the activity and then we can proceed to construct the taxing rate and mechanism.
        Keep in mind the axiom is that taxes reduce an activity by imposing the tax. A perfect tax will reduce bad effects to zero by first reducing the activity itself and then by using the collected tax to repair the deleterious effect.
        So, a principle we will follow is that the tax collected is purposed for repairing the damage caused by the thing or activity taxed.
        This is in contradistinction to measuring benefit and collecting a tax on businesses, for example, that is higher than on consumers because the benefit to the business is higher. Taxes are a punishment for doing something that should not be done, because it causes damage. The tax reduces the activity and pays to repair the damage.

        Looking at income tax through this prism: what damage does earning profit cause? What ill effect does investing and producing things at lower cost have? In and of itself capitalism does not cause harm. This fact is disputed by many, who believe that people shouldn't earn any profit on anything and that they can somehow force others to do things, like buy a product. How do I force a person to read this article? I can't, but I can make it interesting enough to pique their desire to read on. It can be something satisfying to them, and in so satisfying their desires I get them to use my product.
        It is falsity to believe people will do things they don't want to do. They don't want to pay taxes, but they will because the alternative is worse (or can be). In Taiwan every cash register receipt has a national lottery number on it. Locals scour the paper every week looking for their receipt number to see if they won. And it didn't cost them very much to get that lottery ticket - they just had to pay the sales tax. So, even paying taxes doesn't have to be a completely negative experience.
        (A lot of people think it's rubbish that a capitalist would ever contribute or have a charitable heart - but we liberty-loving capitalists are generous and kind and give what we can to causes that touch us.) What we object to is being forced to give to someone or something without choice - someone else makes the choice and we pay for it? No effing way.
        Let's lift the prism of our second axiom that taxes reduce activities and apply it to real property taxation. Some people believe that taxing wealth (property is a public display of one's wealth) is wrong. Does having wealth in and of itself cause damage to someone else? Really? Financial accumulations are in fact IOUs for the value of labor and goods. Using those IOUs changes allocations of spending on some items versus others. Money spent on consumption from accumulated savings raises the bid price for the goods consumed. Taxing the accumulation forces the holder to decide between consuming something he would prefer not to (and raises prices for others) or leaving the savings available for others to borrow.
        Maybe borrowing is bad. When an entrepreneur has an idea that people would love, but he doesn't have the funds to implement it, should he simply wait until he accumulates the required capital before beginning his manufacturing or servicing? Demand delayed is demand denied. So, the entrepreneur makes a deal to borrow the necessary funds to launch his venture and pay it back with interest, or maybe by allowing the person who saved to share in profit from the venture.
        The saver should have the choice - it's his money at risk either way. Instead we repeatedly tax the real property forcing the owner to liquidate or otherwise find a source of income. But it is important to note that no one can accumulate savings as easily when the income to save from is taxed.
        Worse, we then tax the outcome of the venture with a stepped income tax on the profits. What's the point of investing when the government reaches into your pocket after you took the risk and sweated all those hours to make it successful and extract their vigorish.
        So, when comparing income taxes to taxes on accumulation of income, like property, the more insidious is the income tax. But wealth and inheritance taxes aren't far behind.

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  26. Jim

    Mr. Paul's assessment that Income Tax is the most degrading and totalitarian of all possible taxes is erroneous.
    While the current income tax and the Federal Reserve are both illegal scams that need to be eliminated, the most totalitarian tax by all measurable means is property taxes.
    I say this because property ownership is the primary right by which all of our other rights are derived.
    Property taxes change the basic title of property from allodial or absolute ownership to feudal or property owned by the King.
    In our case the State and Federal governments are now our Kings and the true owners of all our personal property, thus changing our legal status from sovereign citizen to subjects.
    In so doing, all of our rights are now granted by government who owns the land upon which we live. The entire concept of inalienable rights which are God given no longer apply.
    While we may have fought a revolution to win independence from the King of England, we soon just replaced one King with another.

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  27. jam

    The second plank of the communist manifesto is A heavy progressive or graduated income tax. The 16th Amendment of the U.S. Constitution, 1913 (which some scholars maintain was never properly ratified), and various State income taxes, established this major Marxist coup in the United States many decades ago. These taxes continue to drain the lifeblood out of the American economy and greatly reduce the accumulation of desperately needed capital for future growth, business starts, job creation, and salary increases: http://laissez-fairerepublic.com/tenplanks.html
    This amazing interview was done back in 1985 with a former KGB agent who was trained in subversion techniques. He explains the 4 basic steps Marxists use to socially engineer entire generations into thinking and behaving the way those in power want them to. To date, we’re currently at step #3: http://www.youtube.com/watch?v=zeMZGGQ0ERk&feature=player_embedded#at=29
    Yuri Bezmenov: Deception Was My Job (Complete) full interview: This is G. Edward Griffin's shocking video interview, Soviet Subversion of the Free-World Press (1984), where he interviews ex-KGB officer and Soviet defector Yuri Bezmenov who decided to openly reveal KGB's subversive tactics against western society as a whole. Bezmenov explains how Marxist ideology is destabilizing the economy and purposefully pushing the U.S. into numerous crises so that a "Big Brother" tyranny can be put into place in Washington, how most Americans don't even realize that they are under attack, and that normal parliamentary procedures will not alter the federal government's direction: http://www.youtube.com/watch?v=y3qkf3bajd4

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  28. kacklatern

    https://www.facebook.com/ronpaul ron pauls latest podcast, where he talk s about political tax enforcement and the justice department’s sneaky methods: http://www.podcastone.com/program?action=viewProgram&programID=401
    Considering the type of power the IRS excises over the American people, and the propensity of those who hold power to violate liberty, it is surprising we do not hear about more cases of politically-motivated IRS harassment. As the first US Supreme Court Chief Justice John Marshall said, “The power to tax is the power to destroy” — and who better to destroy than one’s political enemies?

    The US flourished for over 120 years without an income tax, and our liberty and prosperity will only benefit from getting rid of the current tax system. The federal government will get along just fine without its immoral claim on the fruits of our labor, particularly if the elimination of federal income taxes are accompanied by serious reduction in all areas of spending, starting with the military spending beloved by so many who claim to be opponents of high taxes and big government.

    While it is important for Congress to investigate the most recent scandal and ensure all involved are held accountable, we cannot pretend that the problem is a few bad actors. The very purpose of the IRS is to transfer wealth from one group to another while violating our liberties in the process, thus the only way Congress can protect our freedoms is to repeal the income tax and shutter the doors of the IRS once and for all.: http://www.the-free-foundation.org/tst5-20-2013.html

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  29. Nomad

    Where is Ron Paul now that the IRS has stepped in their own poop? This should be the time to jump and push to get rid of the tyrannical organization!!! Where are you Mr. Paul???

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  30. Lucky

    The property tax discriminates against a class of people, property owners, and fails to tax many of those who use our roads, bridges, water, hospitals, schools, parks, and services. This includes people from outside of Cobb County who work and shop here, and illegal aliens,” . The property tax is also subjective, complex and costly to administer, with, for example, two identical houses next to each other potentially being assessed at different values due to foreclosures, short sales, or auctions. The property tax should be replaced with nothing. A sales tax is bad to. The first of the 10 planks of “The Communist Manifesto” is the abolition of private property and the application of all rents of land to public purposes. this is done at the federal level through eminent domain and such agencies as the Bureau of Land Management, the Forest Service, the Fish and Wildlife Service, the National Park Service, the Bureau of Indian Affairs, the Department of Defense, the Army Corps of Engineers, the Bureau of Reclamation, the Tennessee Valley Authority, and the Environmental Protection Agency, among others. At the local level, there are school and property taxes as well as eminent domain. www.oneofbook.com “Who owns your land if government can control what you can and cannot do on your land? And who owns your land if it can be taxed away from you?” “Who would want to buy your land once the government has decreed that it cannot be used for commercial or recreational purposes?” The federal government owns 30 percent of the land in the 50 states, or about 650 million acres. “I would personally like to eliminate the entire property tax for both individuals and businesses, because it would better protect our private property rights, broaden our tax base, lower our total taxes, and bring more businesses and jobs to Cobb County,”

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  31. jhon

    The property tax discriminates against a class of people, property owners, and fails to tax many of those who use our roads, bridges, water, hospitals, schools, parks, and services. This includes people from outside of Cobb County who work and shop here, and illegal aliens,” . The property tax is also subjective, complex and costly to administer, with, for example, two identical houses next to each other potentially being assessed at different values due to foreclosures, short sales, or auctions. The property tax should be replaced with nothing. A sales tax is bad to. The first of the 10 planks of “The Communist Manifesto” is the abolition of private property and the application of all rents of land to public purposes. this is done at the federal level through eminent domain and such agencies as the Bureau of Land Management, the Forest Service, the Fish and Wildlife Service, the National Park Service, the Bureau of Indian Affairs, the Department of Defense, the Army Corps of Engineers, the Bureau of Reclamation, the Tennessee Valley Authority, and the Environmental Protection Agency, among others. At the local level, there are school and property taxes as well as eminent domain. “Who owns your land if government can control what you can and cannot do on your land? And who owns your land if it can be taxed away from you?” “Who would want to buy your land once the government has decreed that it cannot be used for commercial or recreational purposes?” The federal government owns 30 percent of the land in the 50 states, or about 650 million acres. “I would personally like to eliminate the entire property tax for both individuals and businesses, because it would better protect our private property rights, broaden our tax base, lower our total taxes, and bring more businesses and jobs to Cobb County,”

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  32. Tools tax rebate

    Dr Paul I also thinks that the income tax should be removed not only from America but from entire world. There are so many disadvantages of income tax. First of all as you said our privacy is destroyed, as the tax increases people decreases investing their money ultimately economy gets affected. There are many countries in this world which are free from income tax then why can’t the remaining countries can be?

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  33. Victor

    Dr. Paul what do you think about abolishing the property tax and replacing it with a consumption tax here in the state of Texas?

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    1. jhon

      taxes are systematic of the spending and how much the role of government ought to be. So we have to deal with do you want a welfare state do you want to police the world, do you want to place us as individuals then you need a lot of money so thats the problem. But if you get rid of all those conditions no matter which way you collect the taxes it would be so minimal. You could do it probably with a import tax or a minor sales tax but if you put a sales tax on and dont replace the income tax they would give us both. Ron Paul opposes the fair tax and a national sales tax. The big thing is that you got to cut spending. That is the issue. Spending by itself is a tax. First you tax you do not collect enough income on the income tax to pay the bills. Then we borrow a lot, and we are dependent on china. Isint it amazing that we depend on china to fight our wars. We couldnt even fight them without approval from China. But then we still dont have enough and then we print the money. And that is a tax becuase falls back down on the inflation factor. The higher prices affect the average people a lot more than it affects the wall streeters. A matter of fact where the money goes first into wall street or the goverment there only the money has more value when it goes down it has less value. So wall street does quite well and they have so much cash out there on wall street it is going crazy of course there well be a correction on that but goldman sacks paid out 16 billion dollars last year in bonuses and that is why that is a tax it is a transfer of wealth from the poor. We lived a great many years without an income tax.

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  34. jhonflinstone

    Q: [to Paul]: you’re from Texas. Does Gov. Perry deserve credit for Texas’ job creation?
    PAUL: Not quite. I’m a taxpayer there. My taxes have gone up. Our taxes have doubled since he’s been in office. Our spending has gone up double. Our debt has gone up nearly triple. So, no. And 170,000 of the jobs were government jobs. [Perry claimed job growth due to tax cuts] but how do you pay for a tax cut? I think that’s the wrong principle, because when you give people their money back, it’s their money. You don’t have to pay for it. That means that the government owns all of our money if you look that way. So we have to cut the spending, and a good way to start, there’s a little embassy we built over in Baghdad that cost us a billion dollars. It’s bigger than the Vatican. That’s what’s bankrupting this country, and that’s the easy place to cut. That’s where we should be cutting. PAUL: Well, we should have the lowest tax that we’ve ever had, and up until 1913 it was 0%. What’s so bad about that? I think the question is generally misleading, because anytime you spend money, it’s a tax. You might tax, you might borrow, you might inflate. The vicious tax, that’s attacking the American people, the retired people today, is the inflation tax, the devaluation of the currency, the standard of living is going down, and you need to address that. And that’s why I want to make the inflation tax zero, as well: http://www.ontheissues.org/2012/Ron_Paul_Tax_Reform.htm

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  35. jhonflinstone

    “I lean toward a flat tax. But I want to make it real flat, like zero.”
    --Ron Paul, Jay Leno show, Oct. 31, 2007. Paul told Leno that the abolition of the income tax would leave the federal government with roughly the revenues it was able to gather in 2000, before the overseas adventures of the Bush years.
    This seemed too good to be true, and it was. Without the revenues from individual income tax, the federal budget would shrink to the size it was in the early 1990s, not the year 2000. The discretionary share of the federal budget would dwindle to zero. All remaining federal revenues would be earmarked for mandatory entitlement spending such as social security--which Paul has said he would not touch--and interest on debt. The Paul campaign responds, “Policy wonks can go back and forth arguing over budget specifics. Dr. Paul’s point is that we can eliminate the income tax & fund a level of government from the recent past. Whether that year is 1995, 1997 or 2000 is irrelevant.” A: Well, a government program is too vague. What kind of a government program? If it’s appropriating money and trying to stimulate that way and spend more money, no, that would be the wrong thing to do. But a government program of a reduced tax burden, yes, that would be. I believe we’re in a recession. Over-stimulation in an economy by artificially low interest rates by the Federal Reserve is the source of the recession. It shouldn’t be that difficult to figure out what we should be doing, because we have a lot of problems: we have fiscal and monetary policy problems, foreign policy problems, and deficit problems. Where do they come from? It’s because we don’t follow the rule of law; we don’t follow the Constitution. If we knew and understood and read Article 1, Section 8, believe me this government would be much smaller, we would have a lot less taxes, and we could repeal the 16th amendment and get rid of the income tax. A: We have to cut spending. You can’t get rid of the income tax if you don’t get rid of some spending. But, you know, if you got rid of the income tax today you’d have about as much revenue as we had 10 years ago, and the size of government wasn’t all that bad 10 years ago. There’re sources of revenues other than the income tax. You have tariff, excise taxes, user fees, highway fees. So, so there’s still a lot of money. But the real problem is spending. But, you know, we lived a long time in this country without an income tax. Up until 1913 we didn’t have it. Q: But if you eliminate the income tax, do you know how much lost revenue that would be? A: A lot. Q: Over a trillion dollars. A: That’s good. If you think that government has to take care of us, from cradle to grave, & if you think our government should police the world and spend hundreds of billions of dollars on a foreign policy that we cannot manage, you can’t get rid of the IRS. But if you want to lower taxes and stop causing all the inflation, you have to change policy. I would get rid of the inflation tax. It’s a tax that nobody talks about. We live way beyond our means. We print money for it. The value of the money goes down, and poor people pay higher prices. That is a tax. That’s a transfer of wealth from the poor and the middle class to Wall Street. Wall Street’s doing quite well, but the inflation tax is eating away at the middle class of this country. We need to get rid of the inflation tax with sound money. Not only is inflation the result of the political demands of special interest groups, the career desires of politicians, and the ill-conceived motives of economists, it was also clearly unconstitutional. Money of real value, gold or silver, was clearly intended by the Founding Fathers. If for no other reason, inflation should be rejected on the basis of morality. Inflation is taxation by deceit. Government deceives the people as to the tax burden, and who is bearing it. The working and middle classes are gradually impoverished, while the poor are ground further down. Wealth is transferred to the rich, from the hardworking and thrifty to the conniving & foxy. Monetary and economic decisions are increasingly taken from individuals and transferred to politicians, bureaucrats, and central bankers. To enforce the transfer, government officials accumulate power through legislation and regulation. A: Eventually they go into the private sector. Then don't all leave immediately when the plan goes into effect. But what my plan does is it addresses taxes in a little different way. We are talking about the tax code. But that's the consequence, that's the symptom. The disease is spending. Every time you spend, spending is a tax. We tax the people, we borrow, and then we print the money and the prices go up, and that is a tax. So you have to address the subject of spending. That is the tax. That is the reason I go after the spending. I propose in the first year cut $1 trillion out of the budget in 5 departments. Now the other thing is that you must do if you want to get the economy going and going again is you have to get rid of price-fixing. And the most significant price-fixing that goes on, that gave us the bubble and destroyed the economy, is the price-fixing of the Federal Reserve. The most sinister of all taxes is the inflation tax and it is the most regressive. It hits the poor and the middle class. When you destroy a currency by creating money out of thin air to pay the bills, the value of the dollar goes down, and people get hit with a higher cost of living. It’s the middle class that’s being wiped out. It is most evil of all taxes.

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