Follow Your Money

Financial Report of the U.S. Government, FY 2021

p. 55 includes “There are, however, other significant resources available to the government that extend beyond the assets presented in these Balance Sheets. Those resources include stewardship PP&E in addition to the government’s sovereign powers to tax and set monetary policy.”

How many ‘taxes’ are in the US government’s annual financial report?

The Treasury Department issues an annual Financial Report of the United States Government. The latest report, covering the fiscal year ended September 30, 2021, ran 265 pages long. The word “tax” appeared 551 times, or more than two times per page. Since 2000, the number of pages for the report has risen 87%, while the number of “taxes” has doubled.

Libertarian Party Platform, Section 2.0 “Economic Liberty”

Section 2.4, “Government Finance and Spending,” includes “All persons are entitled to keep the fruits of their labor. We call for the repeal of the income tax, the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution. We oppose any legal requirements forcing employers to serve as tax collectors. We support any initiative to reduce or abolish any tax, and oppose any increase on any tax for any reason. To the extent possible, we advocate that all public services be funded in a voluntary manner.”

Libertarian Party Platform, Section 2.0 “Economic Liberty”

Section 2.5, “Government Debt,” includes “Government should not incur debt, which burdens future generations without their consent. We support the passage of a “Balanced Budget Amendment” to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.”

Libertarian Party Platform, Section 2.0 “Economic Liberty”

Section 2.14, “Retirement and Income Security,” includes “Retirement planning is the responsibility of the individual, not the government. Libertarians would phase out the current government-sponsored Social Security system and transition to a private voluntary system. The proper and most effective source of help for the poor is the voluntary efforts of private groups and individuals. We believe members of society will become even more charitable and civil society will be strengthened as government reduces its activity in this realm.”

Adrien Hill, “How tax withholding became the norm for American workers”

From 2017, includes “Rewind to early 1943 and World War II. That was before federal income tax withholding as we know it today. … During the war, tax rates went up, and a broader number of people were expected to pay them. Professor Anuj Desai from the University of Wisconsin Law School said there was a saying that income tax went from “a class tax to a mass tax.” … “You could never have the taxes that were levied during World War II without withholding. It was absolutely essential for that purpose,” economist Milton Friedman said … Friedman worked with the Treasury Department at the time withholding was introduced. Withholding stuck around after the war, much to Friedman’s chagrin.”

Robert Higgs, “Wartime origins of modern income tax withholding”

From 2007, includes “Wars have always been the most important occasions for the introduction of new forms of taxation. … One way to capture more revenue is to reduce tax evasion by seizing the people’s earnings before the earners ever lay hands on them. … Precedents for withholding U.S. taxes go back as far as the War Between the States, when the Treasury withheld taxes owed by federal employees under the income-tax law adopted in 1862 until an 1864 amendment exempted federal salaries from taxation. … Before World War II individuals who owed federal tax on their income earned in a particular year paid the tax during the following year in quarterly installments. … After more than a year of wrangling in the bureaucracy and in Congress, the Current Tax Payment Act was signed into law on June 9, 1943. … After the system became fully operational, employers withheld almost $8 billion for income taxes in 1944 and more than $10 billion in 1945. … The withholding system has remained in effect continuously ever since 1943, even though the war that prompted its creation ended 62 years ago … The Treasury itself publicly acknowledges, in a fact sheet on the history of the U.S. tax system posted at its website, that wartime withholding not only “greatly eased the collection of the tax,” but “also greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e.[,] it reduced the transparency of the tax, which made it easier to raise taxes in the future.” …”

Anuj Desai, “What a history of tax withholding tells us about the relationship between statutes and constitutional law”

From 2014, includes “… Although tax withholding was a feature of both the short-lived Civil War income tax and the first post-Sixteenth Amendment income tax in 1913, it was World War II, the Current Tax Payment Act, and a legislative compromise that put the country on the path to a system that now shapes the relationship between the federal government and the vast majority of the American population. … If we look at our current federal tax system, recent reformers have proposed numerous different types of changes—from a blanket reduction in rates combined with elimination of deductions and exemptions, to a flat tax, to a consumption tax, to filing on postcard-sized forms—but virtually no prominent reformer has proposed repealing income tax withholding. The fact that almost no one wants to change this fundamental feature of the tax system suggests that it is entrenched in a de facto sense. …

Jeffrey Tucker, "Withheld taxation is theft, even if it doesn't feel like it"

From 2016, includes “Of course all taxation is about forcing resources away from the way we want to use them and coercing us against our will to fund government instead. But in today’s world, this brutal reality is shrouded within an accounting smokescreen that uses the employer as subterfuge. … As comedian Chris Rock said on stage, “You don't even pay taxes. They take taxes. You get your check, money gone. That ain't a payment, that's a jack.” … A young and smart Milton Friedman was the driver of an idea that he later came to regret. Taxes would be collected from the employer, that is, withheld from the paycheck. “It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too intrusive, too destructive of freedom. Yet, that was precisely what I was doing.” … If we really wanted to make a wonderful change in favor of transparency and decency, one that would mark a shift in people’s perceptions of the costs of government, the withholding tax could just be repealed completely. In principle this should change little about the revenue expectations of the federal government. The difference is that every taxpayer would pay the full amount owed to the government every April 15 and otherwise receive full compensation the rest of the year.”

Neera Badwhar, “Cronyism: A Toxic Friendship Between Business and Government”

From 2020, includes “Some libertarians reject the idea that seeking tax credits is cronyism because, they claim, the state never had a right to impose taxes on us in the first place. Whatever the merits of this claim about taxes, the argument proves too much. If it’s ok to seek tax credits, it’s also ok to seek subsidies, because, after all, subsidies are taken from the same taxes that the state supposedly never had a right to impose on us. Similarly, if it’s ok to seek tax credits, it’s ok to seek low‐​interest or guaranteed loans from the government, because they also draw on the taxes that the state supposedly never had a right to impose on us. So if seeking tax credits is not cronyism, neither is seeking subsidies or guaranteed loans, a view that libertarians, of course, reject.”

Richard Wagner, “Taxation”

From 2008, includes “Taxation represents the replacement of the handshakes of commerce with the threat of force as an instrument for human governance. Although some libertarians think this threat is unnecessary to human governance, others think some modest use, although unfortunate, is unavoidable. This second position makes taxation a form of Faustian bargain: Some modest use of force is thought necessary to promote peaceful social order, but mere possession of the power to employ force will almost inevitably expand its use beyond its necessary limits. … Some taxation is almost surely necessary to secure an economic order grounded in private property, and such taxation would be likely to command close to universal support. Actual levels of taxation, however, are surely significantly higher than whatever this minimal level might be.”

David Boaz, Libertarianism: A Primer

p. 29, “Shortly after Cicero’s time, in a famous encounter, Jesus was asked whether his followers should pay taxes. “Render unto Caesar the things that are Caesar’s and unto God the things that are God’s,” he replied. In so doing he divided the world into two realms, making it clear that not all of life is under the control of the state.”

Miron, Libertarianism, from A to Z

pp. 170-176, “Even small governments require some expenditure, so taxes are necessary in every society. At the same time, taxes impose costs, so it is important to keep taxes low and to design tax systems that do minimal damage. … In the presence of taxes on income, however, the incentive to work is reduced because the earner does not keep all the fruits of his labor; taxes introduce a wedge between the effort and reward obtained, thus discouraging effort. Similar considerations apply to taxes on interest or dividend income, which discourage saving …”

P.J. O’Rourke, On the Wealth of Nations

pp. 144-149 “Adam Smith did a lot of thinking about taxes, eighty-odd pages worth. He began with four sensible maxims of taxation: taxes aught to be inexpensive to collect, be levied when taxpayers are best able to pay them, be proportionate to the revenue that taxpayers “enjoy under the protection of the state,’ and be ‘certain and not arbitrary.’ The last maxim is the most sensible and therefore the least observed. The boggling complexity of tax law and the ceaseless fiddling with taxes, even by legislators who would lower them … Smith did not see a consumption tax as a panacea … He wouldn’t have favored introducing a VAAT in the United States. Just the fact that it is in use elsewhere is an argument against it. ‘There is no art which one government sooner learns of another, than that of draining money from the pockets of the people.”

Henry Hazlitt, Economics in One Lesson

pp 19-20, “… They tell us that government can spend and spend without taxing at all; that it can continue to pile up debt without ever paying it off because ‘we owe it to ourselves.’ … Here I am afraid that we shall have to be dogmatic, and point out that such pleasant dreams in the past have always been shattered by national insolvency or a runaway inflation. Here we shall have to say simply that all government expenditures must eventually be paid out of the proceeds of taxation; that inflation itself is merely a form, and a particularly vicious form, of taxation.”

Miron, Libertarianism, from A to Z

pp. 170-171, “Taxes are costly for society because they distort economic decisions. … Taxes also generate compliance costs. Individuals spend time filling out forms. … Business expend resources collecting and processing sales and employment taxes. Corporations must compute and comply with the corporate income tax. All these entities expend further effort avoiding or evading taxation. The implication of these costs is that government expenditure of a dollar costs the economy more than a dollar … Thus while reform of the tax code is a worthy goal, reduced expenditure is more important yet since this is a precondition of significant reform.”

P.J. O’Rourke, On the Wealth of Nations

pp. 144-149, “He cleared the fog about the national debt, which isn’t a Keynesian stimulus to the economy or a Milton Friedmanish drag upon same, but a moral outrage. It allows government to indulge in sneaking: ‘Every new tax is immediately felt more or less by the people. It occasions always some murmur, and meets with some opposition. … Debt is not immediately felt by the people, and occasions neither murmur nor complaint.’ … And counterfeiting. Because the devaluation of currency that results from such defaults should properly be called ‘… an injustice of treacherous fraud.’ …"

Adam Smith, The Wealth of Nations

“… Nations have sometimes, for the same purpose, adulterated the standard of their coin; that is, have mixed a greater quantity of alloy in it. … An augmentation, or a direct raising of the denomination of the coin, always is, and from its nature must be, an open and avowed operation. By means of it, pieces of a smaller weight and bulk are called by the same name, which had before been given to pieces of a greater weight and bulk. The adulteration of the standard, on the contrary, has generally been a concealed operation. … When king John of France, in order to pay his debts, adulterated his coin, all the officers of his mint were sworn to secrecy. Both operations are unjust. But a simple augmentation is an injustice of open violence; whereas an adulteration is an injustice of treacherous fraud.”

David Boaz, Libertarianism: A Primer

pp 217-218, “Flat tax, graduated tax, sales tax, luxury tax — there are certainly differences among these, but the basic libertarian tax policy is to reduce taxes, on everyone. How far could taxes be reduced? The libertarian goal is a society free of coercion. … Since taxation is coercive, the ultimate libertarian goal is to eliminate it. How, then, would we pay for the legitimate functions of government — police, courts, and national defense. … The best we can offer here is that we have a great deal of government spending and taxation to roll back before we get to the point where the only remaining taxation goes to support the legitimate functions of government. At that point, maybe we will be able to see how even the remaining coercive taxation can be eliminated. … a government tat taxes 5% of our incomes in order to protect us from aggression by fellow citizens or foreign powers would be far closer to the libertarian vision than today’s expansive state.”