So perhaps it is a good time to remember that we are often obliged to be satisfied if we can merely help steer federal policy more or less in the right direction, for a decent approximation of the right reasons, with results that are, for the most part, advantageous. The genial Bush doggedness on taxes seems likely to meet these fairly humble standards, and is accordingly a welcome sign.
It is not, however, a sign that we can expect any progress toward fundamental tax reform. No improvement of the income tax can take the place of the only agenda that will truly restore our freedom. Ultimately, we must abolish the income tax and replace it with the tax system that was intended by our Founders when this nation began – a tax system that leaves our people in control of 100% of their dollars, and that gives to the earner the first use of every dollar that he or she earns. The income tax is a slave tax – inherently incompatible with freedom. Abolishing it is therefore not just economically feasible, it is a moral imperative if we are to meet our obligation to bequeath liberty to future generations.
The income tax should be replaced with the kind of taxes most people are already paying – the taxes on things we buy and that we pay only when we decide to buy them.
This is what the Founders intended to be our economic situation: ordinary citizens in the driver's seat of the economic patterns of their own lives.
Liberty from the income tax would mean, of course, liberty from the Internal Revenue Service (IRS). We would no longer have the IRS, because we would no longer have a tax code excusing the government demand that we report our income to its agents. Nor would federal law continue to permit the seizure of our homes and our goods, and the destruction of our families' livelihoods, in order to improve bureaucratic performance records.
We would no longer have our privacy invaded by a government that was interested – officially and legally – in burrowing about in our business to find out how much we make, where we make it, and when we got it. The income tax is a kind of universal solvent, dissolving the private and personal resolve each of us should have to control responsibly the actions we take in the acquisition and expenditure of wealth. Ultimately, the conservative movement must lead the American people to the abolition of the slave income tax, and for the right reasons. The question of fundamental tax reform is a test of the statesmanship of our politicians and of the quality of citizenship of our people.
But it is just as clearly a test that our national leadership is not going to attempt to pass in the next few months. Rather, we are being asked to support President Bush¹s plan for across the board reductions in marginal income tax rates. If we grant that, for the moment, there is no prospect of eliminating the income tax, substantial reductions in the marginal tax rate are the next best proposal, and deserve our support.
Reductions in the tax rate, ideally including reduction of the capital gains tax rate, are the heart of the Reaganomic, or supply-side, tax policy which the Bush team is unwilling to call by those names. The Reagan tax cuts led directly to the decades of prosperity that the Reagan presidency began. Low tax rates are a fundamental prerequisite to sustaining the natural inclination of free people to invest their time and treasure in risky and time-consuming attempts at the creation of wealth which they eventually offer to their fellow citizens in the market place. Confidence that such wealth creating activity will not be suppressed, and that the flow of new goods and services will continue to increase, is also the real key to avoiding or ending inflation.
It is particularly crucial that the marginal rates on large incomes and capital gains not be excessive. Confiscation of the wealth of the successful wealth creators – entrepreneurs – systematically directs the capital necessary for the next round of wealth creation away from the hands of those who have proven they know how to use it in creating the wealth that provides jobs, goods and services for us all.
Wealth creators are not our most important heroes, but they are, in general, admirable and important people who reap only a small portion of the benefit of their effort. The rest is distributed – in the form of jobs, goods and services – to those who have the good fortune to live and work with the wealth creators of our free society. Liberals ignorantly or demagogically defend high tax rates on the economically successful as an issue of tax fairness. The hidden premise of such a position is that wealth is not created by human beings, but magically appears as a big pile to be distributed. The appropriate response, and the true defense of lower tax rates for everybody, is to point out that wealth is created by real men and women who do so, at least in part, in the expectation that they will not have their just portion of the fruit of their labors stolen from them. And it should be a principal goal of our tax policy to encourage their crucial activity — for the good of all. One of the simplest ways to do this is just to stay out of their way by not taxing them into submission to the liberal vision of sterile but equal inactivity.
For these reasons, principled tax conservatives should help President Bush move the tax system a bit more out of the way of the wealth creators. We should do so despite what might be a reasonable fear that improving the current system will delay its replacement with a tax system truly compatible with liberty. There are, indeed, times in political life when partial victories are the greatest defeats, but we can be reasonably confident that this is not one of them.
Certain kinds of compromise – those, in particular, which are intended to facilitate the ultimate abandonment of principle – are so dangerous as to justify opposition even to proposals that accomplish much of our real agenda. A tax reform proposal, for example, that greatly lowered our national tax burden, but newly established the principle that the government has first claim on our money would be a devil's bargain indeed.
Similarly, we should be wary of the path of partial victory at moments when there is real prospect of accomplishing our most important goals in their entirety. Suppose, for example, that an incident of poignancy on the national stage – a famous pro-abortion crusader undergoing a change of heart in some dramatic circumstance, for example – creates a moment of national attention and openness to the pro-life argument. At such a moment, the pursuit of a ban on partial-birth abortion alone would be surrender. Instead, such moments of possibility must be seized and put to the highest possible purpose.
There are times, then, when we must concentrate all our energy on the ultimate prize. And surely it is always true that our preeminent goal must be the eventual vindication of the original promise of American liberty.
But our national politics – unfortunately – presents us with no such great opportunity on the issue of taxation over the next few months, for the simple reason that there are no champions of fundamental tax reform on the national stage. In such a context, we should lend a hand in accomplishing the very real, if very partial, victory for liberty that the Bush plan represents.
Enactment of a general reduction in marginal rates will be a marginal victory indeed. But it will mean more liberty, more justice, and more prosperity for the American people. It will be, whatever euphemisms are attached to it, a partial reaffirmation of the Reagan economic spirit of encouraging the things that will bring abundance to our neighbors, and of realizing that the abundance of my neighbor does not come at my expense. And it will be a defeat, for now and in some measure, of the servile, jealous, and contemptible ambition of the liberal nanny state.
On the day that he signs the Bush tax plan into law, I would, for the moment, be content if President Bush says that cutting rates is good for all Americans, and it is the people's money anyway. Not perfect, but something.
