Trivia Question: Whose idea was it to tax people at different rates based upon their income? Answer: Karl Marx, as in the father of Marxism, the ideology adopted worldwide by totalitarian communist regimes and responsible for the murder of more than 100 million people in the 20th century alone. In his 1848 “Communist Manifesto,” Marx outlined the basic tenets of communism. Tenet One: abolish private property. Tenet Two: Establish a progressive income tax. Why? Because whatever you cannot confiscate in land, you can confiscate in income.
Thus, the graduated income tax finds its roots in the Marxist/Leninist/Communist concept of wealth redistribution. In Marxist theory, the land and money seized by the government would be given back to “the people.” In reality, the Soviet government seized the land and money and kept it for elitist government bureaucrats.
The U.S. adopted the graduated income tax as the 16th Amendment to the Constitution in 1913 (though some scholars claim it was never officially ratified). The same Soviet dynamic actually happens in our country today. Unaware of who is really getting the money, people think that high taxes are good for the poor and needy. In reality, the elitist government bureaucrats benefit the most. Hopefully that can change.
Last week, a joint statement by House and Senate leaders, the Treasury secretary and the National Economic Council director declared their commitment to tax reform. They stated that the mission of the forthcoming legislation is to “protect American jobs and make taxes simpler, fairer and lower for hard-working American families.”
When the tax system burdens its citizens and business owners while disincentivizing basic things like hard work and saving, this lowers risk-taking entrepreneurship and discourages investing. All in all, a country that doesn’t work hard, doesn’t save, doesn’t create businesses and doesn’t invest in businesses doesn’t have much of an economy, does it? Tax reform measures could restore economic strength to American families and businesses.
The joint statement continues: “There should be a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones.” Furthermore, the objective is to create “a system that encourages companies to bring back jobs and profits trapped overseas.”
The U.S. has the highest corporate tax rate of any Organization for Economic Co-operation (OECD) industrialized country. When combining the federal and state corporate income tax rate, the average is over 39%. The average of other OECD developed nations is 25%. The high corporate tax rates force companies to move abroad in order to make their business profitable. A lower rate would encourage them to stay here, which would improve our economy and create American jobs, not overseas jobs.
The joint statement also prudently rejects two tax options: a domestic consumption-based tax and a Border Adjustment Tax. A consumption-based tax comes in various forms but essentially is a higher sales tax (like the Value Added Tax or VAT tax prevalent in the European Union). Ideally, a consumption-based tax would shrink the Internal Revenue Service (IRS) and appears to be more fair, because all people have to pay taxes. The problem faced by other countries who have adopted this system, however, is that they create or raise a sales tax, but never really get rid of the income tax — which means citizens get doubly taxed.
The statement also rejected the Border Adjustment Tax (BAT) that taxes imports, but not exports. In theory, this would incentivize American people to buy American-made products. In reality, everything imported would cost 20% more, and would ultimately cost our economy jobs and businesses, according to the National Retail Federation.
Critics of tax cuts claim that our country would not receive sufficient tax dollars to then contribute to the debt. However, these critics fail to see that the deficit is directly related to spending. According to the Congressional Budget Office, tax revenues (i.e. money collected) are above their historical averages. The Heritage Foundation puts it succinctly: “Washington has a deficit and debt problem because it spends too much, not because it collects too little in taxes.”
Despite the failures of ObamaCare repeal, Republican tax reform has a high likelihood of happening in some form. While most bills require 60 votes, and can be filibustered, there is an exception for budgetary bills called “reconciliation procedures.” This only requires a simple majority in both the House and Senate with a signature from the president, which means that passing tax reform under reconciliation could actually happen.
The origins of the Marxist graduated income tax intended to destroy property, money and private businesses. Unless we realize that our burdensome tax system still intends to do the same thing, we will be at a loss. The good news is that our Republican Congress appears committed to reform. If they would lower tax rates for families and job-creating American businesses under reconciliation, that would be a win for the American people and for the economy.
Also published on Patriot Post, August 3, 2017.
Image credit: artitcom/BigStock
Russia. Twitter. Impeachment. These are the words that USA Today, CNN and The New York Times want you to believe describes the first six months of Donald Trump’s presidency. While they choose to dwell on dead-end stories from eight months ago, President Trump has been putting the American people, jobs and safety first. And in spite of Democrat obstructions to his political appointments, he has still accomplished good things for America.
Trump’s pro-growth policies have strengthened the economy and created jobs. The Dow Jones Industrial Average has increased 17% since Election Day last year. In this year alone, it has already hit new highs 25 times. In addition, since January, the American economy added 863,000 new jobs, 821,000 of which are non-government jobs, including 79,000 construction jobs, 42,000 mining and logging jobs, and 41,000 manufacturing jobs.
Trump takes regulation as a barrier to growth seriously. He has signed 14 Congressional Review Act resolutions to end Barack Obama’s growth-choking regulations. He signed an executive order that requires two old regulations to be eliminated for every new regulation implemented. According to the American Action Forum, these regulation reductions have cut costs by $70 billion.
Trump withdrew from the Paris Climate Accord, participation in which could have cost the American economy $3 trillion dollars, 6.5 million industrial sector jobs and 3.1 million manufacturing jobs, according to NERA Consulting.
On trade, Trump withdrew from the Trans-Pacific Partnership (TPP) and is renegotiating the North American Free Trade Agreement (NAFTA). He has sped-up the permitting and approval process of Liquefied Natural Gas (LNG) export terminals, including the Lake Charles LNG terminal in Louisiana. He has also increased U.S. oil exploration by approving the Keystone XL and Dakota Access pipelines, which has created 42,000 jobs and $2 billion in earnings.
Trump is restoring the Rule of Law to immigration. He ordered the hiring of 10,000 new Immigration and Customs Enforcement (ICE) officers, including 5,000 border patrol agents. Compared to this time last year, illegal border crossings have been reduced by 53%, Enforcement and Removal Operations conducted by ICE increased by nearly 40%, and arrests of criminal aliens have increased by 20%.
Under Trump’s leadership, the Department of Veterans Affairs has restored integrity by firing more than 500 employees, suspending 200, and demoting 33. Trump also signed legislation that allows our veterans to seek medical care outside of the VA system.
Rather than leading an apology tour, President Trump supported the opening of the Global Center for Combating Extremist Ideology in Saudi Arabia, which helps Muslim-majority countries counter radicalized minorities. He understands that extremist ideology, not lack of “understanding,” is the root cause of radical Islamic terrorism.
President Trump has worked with our partners and allies in the Middle East to combat the Islamic State and Iraqi forces have recaptured Mosul, a huge victory. In addition, the U.S. recently sanctioned 16 entities and individuals who have supported Iran’s military in the development of military equipment.
The president has supported the dignity of human life. On the third day of his presidency, Trump reinstated the Mexico City policy, which prohibits non-governmental organizations (NGOs) that receive federal funds from advocating or providing abortions.
Meanwhile, he’s draining the swamp of government lobbyists through an executive order that bans executive branch political appointees from becoming lobbyists for at least five years after they leave their post.
Finally, the biggest win of all: President Trump fulfilled his promise to the American people by nominating Neil Gorsuch to the Supreme Court.
Despite — or, rather, because of — these great accomplishments, President Trump has faced needless obstructions to his appointments and nominations. Consider this: The Senate has confirmed just four of 135 judicial vacancies, seven of 24 nominations for the Department of Defense, three of 29 nominations for the Department of Justice, three of 13 for Health and Human Services and less than half of his nominations for the Department of Homeland Security. In total, the Senate has confirmed 23% of Trump’s nominations. At about the same time in Obama’s first term, the Senate had confirmed 69% of his nominations.
This not only highlights the aggressive obstructionism of the Democrats but also gives context for why the Trump administration appears to be running with less fuel. It has less fuel — by Democrat design. Democrats have purposefully attempted to slow the confirmation process so that the Trump presidency will be understaffed and thus unable to achieve his policy goals.
And yet… Despite these obstructions and the resulting understaffed administration, President Trump has been able to strengthen the economy, increase jobs, reduce crime and illegal immigration, protect human life abroad and achieve a victory over the Islamic State in the recapturing of Mosul. All of this without taking a salary, but rather donating his first six months’ salary to the National Park Service and the Department of Education. These accomplishments, in spite of the purposeful obstructions by Senate Democrats, reveal a president who has done more to achieve safety, prosperity and human flourishing than anything we saw in the previous eight years. For this, he deserves our gratitude and support.
Image Credit: Senate Republican Policy Committee