WEBVTT NOTE The Income Tax is Un-American 1 00:00:00.000 --> 00:00:16.240 My talk tonight is The Income Tax is Un-American, and that's kind of a bold statement given that the income tax is in our Constitution, that it is almost 100 years old, 2 00:00:16.240 --> 00:00:23.840 and that Americans have been paying the income tax by the millions for those many years. 3 00:00:23.840 --> 00:00:31.840 Now, I'm an economist, but I'm going to first start out by telling you what libertarians think of the income tax. 4 00:00:31.840 --> 00:00:39.840 Libertarians view the income tax very negatively in an ethical, moral context. 5 00:00:39.840 --> 00:00:51.840 Most importantly, libertarians view the income tax as theft, that income taxation represents the government taking your money from you. 6 00:00:51.840 --> 00:01:04.840 It's not a voluntary mutually beneficial exchange. It's an exchange where one party uses power to dominate the other. 7 00:01:04.840 --> 00:01:18.840 It's an exchange where one party uses the threat of guns, of imprisonment, of confiscation of assets in order to coax you into paying your income taxes. 8 00:01:18.840 --> 00:01:24.840 So, it's not a regular voluntary exchange that you and I do on a regular basis. 9 00:01:24.840 --> 00:01:32.840 It's a coerced exchange where the government takes money from you, an arrangement which none of us have agreed to. 10 00:01:32.840 --> 00:01:40.840 Okay, so that if I were to give you $100, that would be a mutually beneficial exchange. 11 00:01:40.840 --> 00:01:45.840 If you were to give me $100, that would also be a mutually beneficial exchange. 12 00:01:45.840 --> 00:01:52.840 But if I was to say I'm going to take $100 from you or that I have a friend who's right 13 00:01:52.840 --> 00:02:00.580 now in your apartment stealing all your stuff, okay, he's going to take $1,000 out of your 14 00:02:00.580 --> 00:02:04.560 wallet or your checking account or something, that's not a mutually beneficial exchange, 15 00:02:04.560 --> 00:02:07.180 that's theft. 16 00:02:07.180 --> 00:02:14.220 And the idea that we all agree to it, even if that were true, that doesn't make it any 17 00:02:14.220 --> 00:02:18.300 Less or More Ethical or Moral 18 00:02:18.300 --> 00:02:22.100 Just because the people on this side of the room 19 00:02:22.100 --> 00:02:26.260 dominate the people over in this corner 20 00:02:26.260 --> 00:02:30.160 doesn't mean that they can decide, well, yeah, let's take some of their money 21 00:02:30.160 --> 00:02:33.300 and then divide it evenly amongst the group 22 00:02:33.300 --> 00:02:36.340 or divide it evenly amongst themselves. 23 00:02:36.340 --> 00:02:38.480 Just because it's a larger act 24 00:02:38.480 --> 00:02:40.160 of more people 25 00:02:40.160 --> 00:02:42.980 agreeing and then taking money 26 00:02:42.980 --> 00:02:52.580 away from people at large doesn't make it any more moral or ethical. Because your taxes 27 00:02:52.580 --> 00:03:00.140 are withheld from your paycheck, in addition to being theft, it represents confiscation. 28 00:03:00.140 --> 00:03:06.180 The government confiscates your money until April 15th rolls around when you actually 29 00:03:06.180 --> 00:03:31.900 Libertarians also see the income tax as a mechanism of social control, where the government 30 00:03:31.900 --> 00:03:41.200 is controlling your lives very directly and very forcefully in numerous different ways. 31 00:03:41.200 --> 00:03:49.400 And even if that control was beneficial, libertarians wouldn't like it. We believe that people are 32 00:03:49.400 --> 00:03:55.360 free individuals. They should get to do and choose what they themselves want to and take 33 00:03:55.360 --> 00:04:25.360 Let's look at the tax code. Well, in innumerable ways does it distort our decisions in everyday life, although we very often don't see the income taxes doing the distortions, but certainly we all realize that because of the tax benefits of owning a home exists, and were actually increased in the past few years, 34 00:04:25.360 --> 00:04:32.360 The economy is telling us exactly the opposite. In the old days, when people were born and lived and died in the same hometown, buying a home was obviously the logical thing to do. 35 00:04:55.360 --> 00:05:02.120 choice, especially with the tax break in place. But nowadays, people go away to college, they 36 00:05:02.120 --> 00:05:07.960 go get a new job, very often that job may mean transferring from one city to another. 37 00:05:07.960 --> 00:05:14.960 So the idea of home ownership is somehow some kind of predestined ideal is simply wrong 38 00:05:14.960 --> 00:05:18.160 and libertarians say we need to let people choose. 39 00:05:18.160 --> 00:05:33.160 Let's look at health care. Health insurance, when it's paid by your employer, means it comes to you as a tax benefit. 40 00:05:33.160 --> 00:05:44.160 Because the employer is paying for it, you're not getting the money and then buying the insurance with after-tax dollars. 41 00:05:44.160 --> 00:05:50.960 So the tax code has artificially shifted us into employer-provided health care rather 42 00:05:50.960 --> 00:05:53.840 than individual-purchased health care. 43 00:05:53.840 --> 00:05:54.840 Guess what? 44 00:05:54.840 --> 00:05:57.160 That means the individual doesn't get to decide. 45 00:05:57.160 --> 00:06:04.320 Some large firm, some large corporation decides the package that's going to be offered. 46 00:06:04.320 --> 00:06:10.760 In fact, it's such a tax dodge that insurance itself has changed. 47 00:06:10.760 --> 00:06:20.220 When I was born, so many centuries ago, individuals bought catastrophic health insurance, which 48 00:06:20.220 --> 00:06:26.220 meant if you had a baby or you had a heart attack or you had cancer or you had your appendix 49 00:06:26.220 --> 00:06:33.640 out or something and you went to the hospital, the insurance would pay the bills. 50 00:06:33.640 --> 00:06:50.640 Because of the tax benefit, health insurance has evolved into comprehensive health care so that every doctor's visit, every prescription, every little piece of medical equipment goes through the insurance industry. 51 00:06:50.640 --> 00:07:00.640 So all our medical decisions, all of our health decisions have been changed because of that. 52 00:07:00.640 --> 00:07:11.640 And this is a case where the government is supposedly presenting us or providing with us, encouraging us through the tax code that's supposed to benefit us. 53 00:07:11.640 --> 00:07:15.640 But guess what? It's just the opposite. 54 00:07:15.640 --> 00:07:21.640 So now I'm going to put my economist hat on and show you why that's the case. 55 00:07:21.640 --> 00:07:23.640 Let's think about it. 56 00:07:23.640 --> 00:07:24.640 Health insurance. 57 00:07:24.640 --> 00:07:34.640 You've got a little card that you may have purchased from the university, or your parents gave it to you, or your employer gave it to you. 58 00:07:34.640 --> 00:07:43.640 And anything you want in terms of health care, they say you give them the card, right? 59 00:07:43.640 --> 00:07:50.640 And it doesn't really matter after that too much. You may have to pay deductibles, you may have to make some co-payments. 60 00:07:50.640 --> 00:07:59.360 But the co-payment is $20 or $25. If you've got strep throat, you pay $25. If you have 61 00:07:59.360 --> 00:08:07.320 a heart attack, you're basically going to be paying $25. So the economic decision between 62 00:08:07.320 --> 00:08:13.800 you and your doctor and your hospital and your other healthcare professionals has removed 63 00:08:13.800 --> 00:08:22.560 Bargaining has removed the price system from health care. It's taken you completely out 64 00:08:22.560 --> 00:08:29.900 of it. You don't decide what treatments you get anymore. The health insurance company 65 00:08:29.900 --> 00:08:41.460 decides what treatments you get. The doctor may seem like he's offering his own ideas 66 00:08:41.460 --> 00:08:43.820 and his own diagnosis and treatment. 67 00:08:43.820 --> 00:08:48.300 Those are being ruled by the insurance business 68 00:08:48.300 --> 00:08:50.980 and, of course, the government agencies as well. 69 00:08:53.180 --> 00:08:54.020 So guess what? 70 00:08:54.020 --> 00:08:57.580 If you're just paying $25 or you've got this card, 71 00:08:57.580 --> 00:09:02.060 are you more or less likely to seek healthcare assistance? 72 00:09:04.980 --> 00:09:06.260 Yeah, it's gotta be more. 73 00:09:07.300 --> 00:09:10.740 I mean, if it was, you pull a card out 74 00:09:10.740 --> 00:09:15.660 to get something, or you pull your wallet out and take out real money, well then all 75 00:09:15.660 --> 00:09:22.400 of a sudden, the first thing people do is ask, how much is it? How much is this going 76 00:09:22.400 --> 00:09:35.940 to cost me? Is this prescription $4 or is it $256? With insurance, you don't care. 77 00:09:35.940 --> 00:09:41.980 Another thing that this health care, government health care created system of insurance and 78 00:09:41.980 --> 00:09:49.780 Medicaid and Medicare has done is it's created a social safety net for people. 79 00:09:49.780 --> 00:09:51.220 That sounds like a good thing too, right? 80 00:09:51.220 --> 00:09:56.900 I'm trying to pick some of the best good things and then make them sound as they really are, 81 00:09:56.900 --> 00:09:59.860 bad things for people, bad things for America. 82 00:09:59.860 --> 00:10:08.640 Well, when you put a social safety net of health care underneath people, I'm not saying 83 00:10:08.640 --> 00:10:15.840 that you would do this necessarily, but what would a lot of people do if they knew they, 84 00:10:15.840 --> 00:10:21.860 no matter what, you've got Medicaid, Medicare, you've got maybe private insurance, but everybody 85 00:10:21.860 --> 00:10:29.860 Everybody knows basically that you can go to the hospital, to the emergency room and get treated, right? 86 00:10:29.860 --> 00:10:47.860 You're in a car accident, you overdose on alcohol or drugs, you name it, get in a fight, get stabbed. 87 00:10:47.860 --> 00:10:56.860 That social safety net means that we can act irresponsibly and probably get away with it. 88 00:10:56.860 --> 00:11:03.860 We can probably drive drunk, get into a car accident, and get away with it in many cases. 89 00:11:03.860 --> 00:11:07.860 Because you know the government's got that ambulance. 90 00:11:07.860 --> 00:11:13.860 You know that government's going to pay for that emergency room. 91 00:11:13.860 --> 00:11:20.860 So we all act irresponsible towards our health because of that social safety net. 92 00:11:20.860 --> 00:11:24.860 I shouldn't say everybody, but many people do. 93 00:11:24.860 --> 00:11:27.860 And it shows. 94 00:11:27.860 --> 00:11:34.860 The American population is overweight. 95 00:11:34.860 --> 00:11:40.860 Ten percent of the adult population is considered alcoholic. 96 00:11:40.860 --> 00:11:48.860 Another good percentage of them use illegal drugs and drive. 97 00:11:48.860 --> 00:11:57.860 So there's a lot of irresponsibility and a lot of that is because of the tax system and what it does. 98 00:11:57.860 --> 00:12:04.860 Of course, the government also controls us socially through the tax code by the fact that they spend money 99 00:12:04.860 --> 00:12:09.860 in a very large number of different ways. 100 00:12:11.860 --> 00:12:14.860 So libertarians don't like the income tax. 101 00:12:14.860 --> 00:12:18.860 And when we go back to the founding of this country, 102 00:12:18.860 --> 00:12:21.860 we see that the founders of the United States 103 00:12:21.860 --> 00:12:23.860 also did not like the income tax, 104 00:12:23.860 --> 00:12:28.860 that it was morally unacceptable. 105 00:12:28.860 --> 00:12:32.860 Okay, this was certainly true in the American Revolution. 106 00:12:32.860 --> 00:12:44.820 fought the world's most powerful empire without an army really, without a navy, because of 107 00:12:44.820 --> 00:12:55.060 their power to tax. And the taxes themselves were really, really small. It was just that 108 00:12:55.060 --> 00:13:01.540 they had taken the initiative, the British had taken the initiative to establish their 109 00:13:01.540 --> 00:13:11.020 The American people understood this because the people who moved to America and formed 110 00:13:11.020 --> 00:13:20.100 the colonies were leaving European nations that were oppressive. 111 00:13:20.100 --> 00:13:21.500 They wanted to get away from that. 112 00:13:21.500 --> 00:13:26.620 That's why they took the chance of coming here, is to get away from exactly that type 113 00:13:26.620 --> 00:13:31.320 of oppressive, intrusive government. 114 00:13:31.320 --> 00:13:36.320 The Articles of Confederation, the first form of government in the United States, did not 115 00:13:36.320 --> 00:13:41.600 allow the federal government to have any power to tax. 116 00:13:41.600 --> 00:13:45.040 It had no power to tax. 117 00:13:45.040 --> 00:13:55.320 It simply said that the federal government, the national government can request contributions 118 00:13:55.320 --> 00:13:57.520 from the state governments. 119 00:13:57.520 --> 00:14:01.960 and so they would say small states we need this amount, large states we need this amount, 120 00:14:01.960 --> 00:14:07.640 and then the states themselves would comply voluntarily to those demands. 121 00:14:07.640 --> 00:14:15.000 The U.S. Constitution provides no authority for the federal government to tax our incomes 122 00:14:15.000 --> 00:14:19.080 initially. 123 00:14:19.080 --> 00:14:24.760 There was no authority in the U.S. Constitution as written by the founding fathers to provide 124 00:14:24.760 --> 00:14:26.400 for an income tax. 125 00:14:26.400 --> 00:14:30.600 It was written specifically against the idea of an income tax. 126 00:14:30.600 --> 00:14:38.320 The federal government could tax imports, it could raise fees on federal roads, and 127 00:14:38.320 --> 00:14:45.280 it could charge people for postage, and it could impose certain excise taxes, like on 128 00:14:45.280 --> 00:14:46.280 alcohol. 129 00:14:46.280 --> 00:14:52.560 And as a matter of fact, the Supreme Court regularly backed that up for more than a hundred 130 00:14:52.560 --> 00:14:59.160 of Years of denying the federal government the right to impose a federal income tax so 131 00:14:59.160 --> 00:15:04.520 that even if the House and even if the Senate concurred and even if the President signed 132 00:15:04.520 --> 00:15:15.520 a bill that imposed an income tax, the Supreme Court always called it null and void as unconstitutional. 133 00:15:15.520 --> 00:15:21.340 President Lincoln got away with it during the American Civil War as an emergency war 134 00:15:21.340 --> 00:15:43.340 Now, across the political spectrum to the other side, that's the American side, now we're going to go back a little bit more towards Europe, and the Communist Manifesto, written by Karl Marx and Friedrich Engels, 135 00:15:43.340 --> 00:15:54.340 Now we're going to go back a little bit more towards Europe and the Communist Manifesto, written by Karl Marx and Frederic Engels. 136 00:15:54.340 --> 00:16:03.340 And if you look at the Communist Manifesto written in 1848 by those two gentlemen, the forefathers of communism, 137 00:16:03.340 --> 00:16:15.340 In their 10-point program to bring about the socialist revolution, they call for a progressive income tax. 138 00:16:15.340 --> 00:16:23.340 A progressive income tax in the sense that the more money you make, the higher the rate, which is basically the type of system we have today. 139 00:16:23.340 --> 00:16:29.340 It's not a flat tax. It's a progressively higher rates for higher incomes. 140 00:16:29.340 --> 00:16:52.340 And I encourage each and every one of you, it's got to be on the web some place, to look for the Communist Manifesto, it's very short, and then to look at the ten-point program of the Communist Manifesto and see what you see in there, in your country, the United States. 141 00:16:52.340 --> 00:17:01.940 They called for all sorts of things that we did not have at the time, but that we do now. 142 00:17:01.940 --> 00:17:09.780 Things like a central bank we did not have, we do now. Things like public education. There 143 00:17:09.780 --> 00:17:17.740 was no public education in 1848 to speak of. Of course there is today. The communists were 144 00:17:17.740 --> 00:17:24.820 are joined by the socialist, the fascist, and socialist of every sort, basically, in calling 145 00:17:24.820 --> 00:17:29.940 for a progressive income tax. 146 00:17:29.940 --> 00:17:36.040 Here in the United States, a group known as the progressives, which came to be fairly 147 00:17:36.040 --> 00:17:43.840 prominent in the first part of the 20th century, also supported a progressive income tax. 148 00:17:43.840 --> 00:17:51.840 The Progressive Era lasts from the first through the second decade in the United States, where 149 00:17:51.840 --> 00:18:00.280 the Constitution was changed in a variety of ways, including the 16th Amendment. 150 00:18:00.280 --> 00:18:06.600 The 16th Amendment to the United States Constitution authorized an income tax in the United States 151 00:18:06.600 --> 00:18:13.440 for the first time, and it certainly was progressive. 152 00:18:13.440 --> 00:18:21.800 The more you make, the higher the tax, the higher the tax rate, it actually applied initially 153 00:18:21.800 --> 00:18:29.160 to very few people, only the super wealthy actually came under the umbrella of the progressive 154 00:18:29.160 --> 00:18:36.120 income tax as it was intended. 155 00:18:36.120 --> 00:18:43.760 There is some question as to whether or not the 16th Amendment was actually officially 156 00:18:43.760 --> 00:18:50.160 correctly passed, but I will pass on that issue here tonight. 157 00:18:50.160 --> 00:18:57.160 One interesting part of the whole debate, however, was that opponents of the income 158 00:18:57.160 --> 00:19:05.920 Income Tax wanted there to be included in the amendment a statement to the effect that 159 00:19:05.920 --> 00:19:13.680 the income tax rate could never rise above 10%. So the income tax could never rise above 160 00:19:13.680 --> 00:19:19.200 that level. And the proponents of the legislation said, oh, don't be ridiculous. It would never, 161 00:19:19.200 --> 00:19:26.120 ever get that high. We would never allow the income tax rate to ever approach 10%. And 162 00:19:26.120 --> 00:19:32.400 started out as only a couple of percent and only on those who would be making today several 163 00:19:32.400 --> 00:19:40.520 hundreds of thousands of dollars. So that 10% limit was never included. And it's too 164 00:19:40.520 --> 00:19:46.600 bad for taxpayers because within a couple of years, the income tax rates had passed 165 00:19:46.600 --> 00:19:55.220 10% and of course would go far beyond that level. Today, the upper brackets are in the 166 00:19:55.220 --> 00:20:06.380 and Low 40%, but we've seen marginal tax rates higher than 70%. 167 00:20:06.380 --> 00:20:14.440 And then during World War II, the withholding aspect of the income tax was put into place. 168 00:20:14.440 --> 00:20:20.420 This meant that as you got a paycheck that your employer would remove part of your pay 169 00:20:20.420 --> 00:20:21.780 and give it to the government. 170 00:20:21.780 --> 00:20:30.180 This is where the confiscation of income enters into the system. 171 00:20:30.180 --> 00:20:35.340 And of course, you think about today, prior to World War II, the income tax was pretty 172 00:20:35.340 --> 00:20:40.260 small still, and applied to a small number of people. 173 00:20:40.260 --> 00:20:45.900 Then they put this withholding aspect into the income tax, and during World War II, the 174 00:20:45.900 --> 00:20:50.160 marginal tax rates increased significantly, and the number of people who were actually 175 00:20:50.160 --> 00:21:06.740 The average family of a couple making the average median income in the United States, 176 00:21:06.740 --> 00:21:15.900 if there was no withholding tax on that average family, they would be writing a check tomorrow 177 00:21:15.900 --> 00:21:21.100 for more than $6,000. 178 00:21:21.100 --> 00:21:25.700 Now when you think about it, that would make a lot of people mad. 179 00:21:25.700 --> 00:21:34.500 A lot of people that I know who are normal, level-headed people, when they all of a sudden 180 00:21:34.500 --> 00:21:42.100 realize, like tonight, how much they've actually paid in total taxes, they're up in arms about 181 00:21:42.100 --> 00:21:43.100 it. 182 00:21:43.100 --> 00:21:49.100 They want to talk to me about it, and what can I do to not pay $6,000? 183 00:21:49.100 --> 00:21:57.100 Unfortunately, they've been kind of lulled into submission because of this withholding tax. 184 00:21:57.100 --> 00:22:05.100 One thing I think is very important to understand is tax reform. 185 00:22:05.100 --> 00:22:17.100 It's a big issue in the presidential campaign. Mike Huckabee wanted to impose the fair tax, 186 00:22:17.100 --> 00:22:23.900 which is a flat tax, on consumption. And then the battle between the current Democrats and 187 00:22:23.900 --> 00:22:32.880 Republican is that the current Democrats want to raise the marginal tax rates by withdrawing 188 00:22:32.880 --> 00:22:41.880 The Bush Tax Cuts, John McCain was against the Bush Tax Cuts but now supports them. 189 00:22:41.880 --> 00:22:47.320 Well basically what I want to tell you here tonight is that tax reform is a scam. 190 00:22:47.320 --> 00:22:57.360 You can't improve the system with marginal tax reform measures. 191 00:22:57.360 --> 00:23:04.360 When people in Washington DC talk about tax reform, it's a scam. They're scamming the 192 00:23:04.360 --> 00:23:11.720 voters into thinking they're going to get something out of this. But what it's really 193 00:23:11.720 --> 00:23:18.240 a scam about is the people in Congress who are talking about these measures. You know 194 00:23:18.240 --> 00:23:24.840 what happens when they start talking about the tax code? Just try to think. What would 195 00:23:24.840 --> 00:23:29.340 What would happen if senators and congressmen were gathering together to rewrite the tax 196 00:23:29.340 --> 00:23:32.340 code? 197 00:23:32.340 --> 00:23:38.360 Yeah, and their friends. 198 00:23:38.360 --> 00:23:45.440 And so money starts to flow into Washington D.C. at warp speed. 199 00:23:45.440 --> 00:23:52.380 People who would benefit from the changes are given money, and people who are being 200 00:23:52.380 --> 00:24:20.380 The people who are on the tax writing committees, the money starts flowing in like crazy. It's a giant campaign contribution mechanism and they've basically been, quote-unquote, reforming the tax code about every three or four years, ever since it went into being. 201 00:24:20.380 --> 00:24:28.380 They've come along and they've adjusted the marginal rates and they have adjusted the deductions in a significant way. 202 00:24:28.380 --> 00:24:37.380 They actually play around with a lot more, but the reforms are about every three to four years, just enough to refill those campaign coffers. 203 00:24:37.380 --> 00:24:46.380 But the system never gets any better. The rates and the amount of money that it's taken out of our pockets almost never goes down. 204 00:24:46.380 --> 00:24:58.380 Collectively, it's never gone down. And it only gets more and more complicated as they write in special provisions for this group or that group. 205 00:25:03.380 --> 00:25:13.380 I've got a PhD in economics. I was a business major as an undergraduate. I've taken intermediate accounting courses, level accounting courses. 206 00:25:13.380 --> 00:25:43.380 I can no longer do my taxes. I mean, I could go into TurboTax and fill in some numbers. But I've already tested myself out. And I didn't pass. And I've asked people who've worked for the IRS questions. I've called the IRS with questions. In about a third of the cases, I never got an answer. 207 00:25:43.380 --> 00:25:52.460 And about another third, they gave me the wrong answer. 208 00:25:52.460 --> 00:26:01.460 And the final third, they were able to either answer simple questions or they gave ambiguous 209 00:26:01.460 --> 00:26:02.460 answers. 210 00:26:02.460 --> 00:26:07.980 And of course, if you ask a question and they give you an answer and you get it wrong on 211 00:26:07.980 --> 00:26:16.180 in your taxes because they gave you the wrong information, you're still liable. So it's 212 00:26:16.180 --> 00:26:28.000 getting worse. It's not getting better. And that has been the trend trajectory from the 213 00:26:28.000 --> 00:26:33.820 beginning of the income tax to the present. If you wanted to go back and study the history 214 00:26:33.820 --> 00:26:39.940 Give the tax code, which I really don't suggest you do, but if you did, or just go back to 215 00:26:39.940 --> 00:26:47.340 the very beginning and look at it, amazingly simple, we would all kill to have that kind 216 00:26:47.340 --> 00:26:50.620 of an income tax. 217 00:26:50.620 --> 00:26:52.980 It's so different. 218 00:26:52.980 --> 00:26:59.660 Now speaking of apples and oranges, one of the things I wanted to talk about tonight, 219 00:26:59.660 --> 00:27:05.740 Because I think it is important is the fair tax. 220 00:27:05.740 --> 00:27:13.020 You could substitute in the flat tax, but any tax reform that's basically designed 221 00:27:13.020 --> 00:27:20.220 to simplify the system, to make everybody pay roughly the same amount or in percentage 222 00:27:20.220 --> 00:27:27.780 terms, but to not change the amount of revenue essentially coming into the government. 223 00:27:27.780 --> 00:27:39.980 This is more of an apples to apples type analysis. First of all, I have a hard time imagining 224 00:27:39.980 --> 00:27:48.980 a simple tax reform ever passing. The current people who write our tax legislation simply 225 00:27:48.980 --> 00:27:54.780 have too many friends, have too many favors. It's the idea where they would take away deductions 226 00:27:54.780 --> 00:28:03.740 from some group and give the money away to other groups. I just don't see that happening. 227 00:28:03.740 --> 00:28:11.980 Second of all, I don't really see even the theoretical possibility of a simple tax reform. 228 00:28:11.980 --> 00:28:21.820 If you had a sales tax instead of an income tax, and that sales tax was 23% and you add 229 00:28:21.820 --> 00:28:29.340 Add that on to the local tax, a sales tax of 8%, and so you're talking about a sales 230 00:28:29.340 --> 00:28:34.380 tax of 31%. 231 00:28:34.380 --> 00:28:38.380 And the proponents of this are saying, we can get rid of the IRS. 232 00:28:38.380 --> 00:28:44.820 Well, you may be able to get rid of some of the IRS, but the guys with the guns are still 233 00:28:44.820 --> 00:28:54.820 We're also going to have to be there, because believe me, people will be cheating on that system in a major league way. 234 00:28:54.820 --> 00:29:04.820 I mean, if you can cut the price of something by 30% just by paying cash, people are going to do that. 235 00:29:04.820 --> 00:29:22.820 I mean, right now as it is, 40% of Americans admit in opinion polls that they either have cheated or regularly cheat on their income taxes. 236 00:29:22.820 --> 00:29:26.820 It just goes to show you how stupid we are. 237 00:29:26.820 --> 00:29:33.820 Why would you admit to a perfect stranger that you regularly break the law? 238 00:29:33.820 --> 00:29:39.420 I mean, I would personally feel like I might be talking to an IRS agent. 239 00:29:39.420 --> 00:29:47.820 That's why I always pay my fair share of taxes. 240 00:29:47.820 --> 00:29:54.140 I have an analogy here about the fair tax and the flat tax. 241 00:29:54.140 --> 00:30:03.820 And basically, imagine a world where we grow apples. 242 00:30:03.820 --> 00:30:09.820 And one group of people argue that the way 243 00:30:09.820 --> 00:30:16.260 to properly pick an apple is to start at the bottom of the tree 244 00:30:16.260 --> 00:30:19.940 and then work your way up. 245 00:30:19.940 --> 00:30:21.940 And then get back down off the ladder, 246 00:30:21.940 --> 00:30:26.180 Move it over, start at the bottom, and work your way up. 247 00:30:26.180 --> 00:30:31.300 And then get down, move the ladder, start at the bottom and work your way up. 248 00:30:31.300 --> 00:30:40.420 But the other group says, no, what you should do is start at the bottom and work your way 249 00:30:40.420 --> 00:30:43.700 around the whole tree. 250 00:30:43.700 --> 00:30:47.040 And then once you get all the way around, then go up to a higher level and come back 251 00:30:47.040 --> 00:30:49.500 and get all of these apples. 252 00:30:49.500 --> 00:30:55.500 and then aggressively move yourself around an up tree going sideways rather than up and down. 253 00:30:58.500 --> 00:31:07.500 And that's basically the same type of debate between the current system of the income tax or the fair tax or the flat tax. 254 00:31:12.500 --> 00:31:17.500 We do know something that one of those methods has to be more efficient. 255 00:31:17.500 --> 00:31:30.940 We might not be sure about which one is more efficient, but we probably can presume that 256 00:31:30.940 --> 00:31:39.700 one's going to be better than the other. But the problem with the income tax is not how 257 00:31:39.700 --> 00:31:46.760 How to Most Efficiently Collect the Tax 258 00:31:46.760 --> 00:31:55.060 The problem with this world of apple growers is that the income tax means that we collect 259 00:31:55.060 --> 00:32:03.940 and go out and pick 100% of the apples and then we destroy 50% of them. 260 00:32:03.940 --> 00:32:10.980 And as a matter of fact, we have to pay about five to ten percent of our remaining apples 261 00:32:10.980 --> 00:32:15.180 to the people who destroy our apples for us. 262 00:32:15.180 --> 00:32:20.980 That's what the income tax does, or that's what the fair tax and the flat tax does. 263 00:32:20.980 --> 00:32:25.300 It says we're going to take half of all of our production and we're just going to bury 264 00:32:25.300 --> 00:32:26.300 it. 265 00:32:26.300 --> 00:32:27.880 We're going to burn it. 266 00:32:27.880 --> 00:32:36.320 We're going to roll it over instead of eating it. 267 00:32:36.320 --> 00:32:42.640 I would rather have even used a less efficient method of doing something as long as we get 268 00:32:42.640 --> 00:32:49.200 the whole 100% of the apples. 269 00:32:49.200 --> 00:32:54.760 So what libertarians argue is that we're not going to argue over what's the best way to 270 00:32:54.760 --> 00:33:07.760 What libertarians argue is that this theft process is immoral from the get-go, and that 271 00:33:07.760 --> 00:33:16.120 it has terrible consequences in our economy and in our lives. 272 00:33:16.120 --> 00:33:19.080 It makes us less free. 273 00:33:19.080 --> 00:33:23.720 It takes away our labor from us. 274 00:33:23.720 --> 00:33:29.200 It then tells us what to do, how to spend our lives, how to live, how to take care of 275 00:33:29.200 --> 00:33:36.680 our health, and thousands of other things that you can't imagine until you actually 276 00:33:36.680 --> 00:33:47.000 are faced with the income tax in your lives, in your businesses. 277 00:33:47.000 --> 00:33:57.560 It does all of that, so libertarians want to scrap the income tax entirely because it's 278 00:33:57.560 --> 00:34:03.120 not American, it doesn't represent the American way of life. 279 00:34:03.120 --> 00:34:09.440 Now of course the question is, can it be done? 280 00:34:09.440 --> 00:34:14.200 Well constitutional amendments are hard things to overturn, but the 18th amendment to the 281 00:34:14.200 --> 00:34:24.160 Constitution was overturned, alcohol prohibition was seen by the majority of people as being 282 00:34:24.160 --> 00:34:30.640 wrong and wrong-headed. And it wasn't the drinkers. The drinkers were against it from 283 00:34:30.640 --> 00:34:38.320 the get-go. It was business people who saw what it was doing to their business, what 284 00:34:38.320 --> 00:34:57.800 It was mothers. Mothers united into an organization. I can't remember what the name of it is. Mothers 285 00:34:57.800 --> 00:35:03.560 against alcohol prohibition or something like that. Because they saw what it was doing to 286 00:35:33.560 --> 00:35:46.560 and so prohibition was passed and then repealed once people figured out that it was wrong and wrong headed. 287 00:35:46.560 --> 00:35:55.560 And I think that there are a lot of people, in fact the majority of people now see that income tax is at least wrong headed. 288 00:35:55.560 --> 00:36:25.560 I think that is perfectly clear. What a lot of people don't understand is just, it's wrong. And that it's not American. And it can be done. If we got rid of the income tax today, we would have to cut the federal budget back to the year 2000. Eight years ago, if we had those spending levels, we could take every dollar of the income tax that is collected and not collected. 289 00:36:25.560 --> 00:36:41.560 That's how much spending has increased from 1.9 trillion dollars in the year 2000 to 3.1 trillion dollars in the current budget year. 290 00:36:41.560 --> 00:36:54.560 That difference between 1.9 and 3.1 is actually slightly larger than the amount of revenues currently collected by the income tax. 291 00:36:54.560 --> 00:37:02.560 So the income tax makes up a little bit between about 35% of federal expenditures. 292 00:37:02.560 --> 00:37:07.560 So it's not eliminating federal government, but it's a good start. 293 00:37:07.560 --> 00:37:11.560 And that's what libertarians hope to achieve in the future. 294 00:37:11.560 --> 00:37:20.560 And to that end, we hold an annual April 15th tax day protest 295 00:37:20.560 --> 00:37:25.560 in front of the post office on the Olopoleika Highway. 296 00:37:25.560 --> 00:37:32.560 And initially I was kind of timid about going to these tax protests. 297 00:37:32.560 --> 00:37:39.560 I mean, the students, okay, yeah, but faculty shouldn't really be out there, right? 298 00:37:39.560 --> 00:37:47.560 But over the last several years I've just had a great time going to these tax day protests. 299 00:37:47.560 --> 00:37:59.560 We've been on TV, we've been in the newspaper, and we hold signs that say a number of different things, but the most popular one is, honk if you hate taxes. 300 00:37:59.560 --> 00:38:14.560 And the noise level out there can get pretty high, especially at the lunch hour, and then between five and six o'clock when everybody's going home, almost everybody honks in favor of us. 301 00:39:14.560 --> 00:39:21.240 in the Income Tax because they don't pay taxes themselves and their job is paid for by the 302 00:39:21.240 --> 00:39:22.240 income tax. 303 00:39:22.240 --> 00:39:29.320 So obviously there is a lot of opposition within government employees especially and 304 00:39:29.320 --> 00:39:33.360 people who have more or less a direct benefit from the income tax. 305 00:39:33.360 --> 00:39:43.520 But I want you to know today that the founding of this country and the founders of this country 306 00:39:43.520 --> 00:39:49.720 dramatically opposed any idea about the income tax and that's why I think it's 307 00:39:49.720 --> 00:39:54.320 un-American and I think you should and one day I think we can do something 308 00:39:54.320 --> 00:39:57.360 about it. Thank you very much. 309 00:40:00.440 --> 00:40:06.640 Sure, I'd be happy to. I'd be happy to if you have any. I can't offer any tax advice, 310 00:40:06.640 --> 00:40:13.640 11 a.m. 311 00:41:06.640 --> 00:41:34.640 No, that's a very valid point. We do implicitly accept it. You know, I pay my taxes even though I think it's an immoral, unethical system, and we don't see the real true nature of it unless you have run afoul of the system. 312 00:41:34.640 --> 00:41:47.640 Unless you have tried to oppose this system, unless you have said, you know, I didn't agree to this, nobody here agreed to it, and yet we still have it. 313 00:41:47.640 --> 00:41:52.640 And then you see the guns come out, and you see your assets confiscated. 314 00:41:52.640 --> 00:42:00.640 Without trial, even, I mean, all this stuff takes place prior to any type of normal adjudication system. 315 00:42:00.640 --> 00:42:07.640 You know, if they think you have run against their rules and regulations, 316 00:42:07.640 --> 00:42:12.640 they not only use force, but they use punitive force. 317 00:42:12.640 --> 00:42:19.640 I mean, they take you down in terms of your assets and your access to your debit card, 318 00:42:19.640 --> 00:42:27.200 just like that without a trial and so that's where the that's why we see it as 319 00:42:27.200 --> 00:42:30.360 sort of implicit agreement because normally well we just go along with it 320 00:42:30.360 --> 00:42:36.840 but if we didn't then we would see the the type of force that's involved that it 321 00:42:36.840 --> 00:42:42.400 is force it is coercive and it is a vindictive type of force it's not you 322 00:42:42.400 --> 00:42:47.680 know gee can't we all get along here it's we're coming down on you and we're 323 00:42:47.680 --> 00:42:54.440 putting you out before anything has actually been adjudicated. So it has a 324 00:42:54.440 --> 00:43:02.680 kinder face but it also has one that's very menacing. 325 00:43:17.680 --> 00:43:47.600 Well, you know, in surveys of Americans, where they're asked to list the programs, the government, 326 00:43:47.600 --> 00:43:52.600 and the environmental services that they deem most necessary, most essential. 327 00:43:52.600 --> 00:43:58.600 Ninety percent of those respondents indicated that most, in fact all, 328 00:43:58.600 --> 00:44:03.600 almost all of the ones that they listed were local government services. 329 00:44:03.600 --> 00:44:10.600 Police, fire, trash collection, you know, things, you know, courts, jails. 330 00:44:10.600 --> 00:44:12.600 None of that is paid for with the income tax. 331 00:44:12.600 --> 00:44:23.400 is paid for by local taxes and while all taxes are coercive libertarians are 332 00:44:23.400 --> 00:44:28.680 reasonable in the sense that well the more local they are the better the lower 333 00:44:28.680 --> 00:44:34.000 the rates the better the more chance that citizens have to actually impact 334 00:44:34.000 --> 00:44:39.800 the determination of taxes the better you know I get to I've gotten to vote on 335 00:44:39.800 --> 00:44:50.800 A lot of property taxes here in Auburn, sales tax increases, property taxes, they have to send me a notice that they're raising my property values. 336 00:44:50.800 --> 00:44:54.800 I get to go to court and present evidence that they're wrong and I'm right. 337 00:44:54.800 --> 00:45:03.800 And so people think of, you know, the income tax is government, and if it went away, government will go away. 338 00:45:03.800 --> 00:45:14.800 but none of the government that they really like and see as important would go away to any great extent. 339 00:45:14.800 --> 00:45:25.800 Everything that the government does has been done by the private sector for a long time and in a variety of different ways. 340 00:45:25.800 --> 00:45:32.800 In the United States in the colonial period and beyond, most roads were done by private companies 341 00:45:32.800 --> 00:45:38.000 and not just easy roads but really hard roads were done by private companies. 342 00:45:38.000 --> 00:45:47.240 Until the 1930s, almost all of welfare or assistance for the poor was done by the 343 00:45:47.240 --> 00:45:53.560 private sector and that has gotten increasingly sort of pushed out of the 344 00:45:53.560 --> 00:45:59.080 way. So everything that the government does now do, the private sector has 345 00:45:59.080 --> 00:46:10.080 It's already done prior to this and could easily come back in and fill in any gaps that were missing once the federal income tax was removed. 346 00:46:10.080 --> 00:46:21.080 Obviously, a lot of policy decisions would have to be different. Stationing 150,000 American soldiers in South Korea would have to be rethought. 347 00:46:21.080 --> 00:46:36.080 for 50 years, basing 150,000 American soldiers in South Korea, which could wipe out North Korea with both hands tied behind its back. 348 00:46:36.080 --> 00:46:45.080 A lot of those more sensible decisions would have to be met, would have to be made if you took the income tax away. 349 00:46:45.080 --> 00:46:49.080 Things would have to go, and things would have to be prioritized. 350 00:46:49.080 --> 00:47:01.080 In today's world, we increase taxes, we increase the national debt, we print up money to pay for whatever is left over, and we never make any hard decisions. 351 00:47:01.080 --> 00:47:11.080 We never make any decisions saying, what's more important? It's just more, more, more, and things tend to get worse, worse, and worse from my perspective. 352 00:47:19.080 --> 00:47:36.900 The federal government is funded a lot by the federal government itself. 353 00:47:36.900 --> 00:47:42.860 The state governments are like franchise restaurants for the federal government. 354 00:47:42.860 --> 00:47:48.360 They're just the local operator. 355 00:47:48.360 --> 00:47:59.200 I think a lot of decisions would have to be looked at and agencies, departments would 356 00:47:59.200 --> 00:48:06.520 have to be considered for termination and the Department of Education is one where I 357 00:48:06.520 --> 00:48:13.500 think what it does is does not only not help private schools, it actually makes it more 358 00:48:13.500 --> 00:48:19.100 more difficult for them to achieve their goals. 359 00:48:19.100 --> 00:48:25.500 People have suggested, and I think rightly so, eliminating the Department of Energy and 360 00:48:25.500 --> 00:48:28.380 the Department of Homeland Security. 361 00:48:28.380 --> 00:48:34.780 People have suggested that bringing troops home, we have American troops stationed abroad 362 00:48:34.780 --> 00:48:37.940 in 151 countries around the world. 363 00:48:37.940 --> 00:48:44.500 I didn't even know there were 151 countries around the world until I read that article. 364 00:48:44.500 --> 00:48:50.660 And you know, I think that's probably the most stupid form of spending, is to take American 365 00:48:50.660 --> 00:48:59.660 money and spend it on soldiers in a different country, because that makes the local leaders 366 00:48:59.660 --> 00:49:07.220 look kind of like puppets to their population, plus we're spending our dollars in their country. 367 00:49:07.220 --> 00:49:12.740 It seems like if you're going to spend it on soldiers, spend it here. 368 00:49:12.740 --> 00:49:19.020 And then if you did need to send them someplace, well, you can just pick your choice. 369 00:49:19.020 --> 00:49:25.580 But keeping soldiers in every country permanently doesn't make a lot of sense to me, so I think 370 00:49:25.580 --> 00:49:36.140 a lot of that would have to come undone as well. 371 00:49:36.140 --> 00:49:49.100 Well, Congress would have to make those determinations, but I think the candidates for cutting are 372 00:49:49.100 --> 00:49:54.100 extremely large, both in terms of whole programs, whole agencies, but also in terms of just 373 00:49:54.100 --> 00:50:01.660 cutting back on certain things and making other things run on their own, like the post 374 00:50:01.660 --> 00:50:02.660 office. 375 00:50:02.660 --> 00:50:07.660 You know, they made the post office run on its own. There was no more federal subsidies for that. 376 00:50:07.660 --> 00:50:15.660 They could certainly do that for Amtrak and they can do it for a hundred other agencies that could live off of their own revenues. 377 00:50:15.660 --> 00:50:24.660 So they could be completely cut off. I worked in the governor's office in Alabama for the state banking agency. 378 00:50:24.660 --> 00:50:36.380 Agency. And I was the assistant superintendent of banking. And we ran off the charges that 379 00:50:36.380 --> 00:50:41.860 we made to the banks. We didn't, we never had one penny of tax dollars, which makes 380 00:50:41.860 --> 00:50:47.940 me feel, you know, me sort of a hardcore libertarian and working for the state government was, 381 00:50:47.940 --> 00:50:54.620 I was little upset about, not upset, after all I was just getting some of my money back 382 00:50:54.620 --> 00:51:01.520 but we never took a penny from the taxpayers we charged the banks to 383 00:51:01.520 --> 00:51:07.700 inspect them so we set regulations they they had a chance to comment on the 384 00:51:07.700 --> 00:51:16.940 regulations and then that would be put forth to for approval and in order to be 385 00:51:16.940 --> 00:51:20.660 chartered at the state level instead of the federal level they would have to be 386 00:51:20.660 --> 00:51:27.460 We regulated, someone would have to go into the bank and count the money and oversee their 387 00:51:27.460 --> 00:51:35.980 loan portfolio and all that kind of stuff and we would get paid a fee as a result of 388 00:51:35.980 --> 00:51:37.220 that. 389 00:51:37.220 --> 00:51:42.820 So we ran completely independently, we had a very good working relationship with our 390 00:51:42.820 --> 00:51:49.140 banks because our banks could come to us or they could come to the federal regulators 391 00:51:49.140 --> 00:51:54.860 were their charter. And so if we were good to them and we had a good working relationship 392 00:51:54.860 --> 00:52:01.060 with them, they would come to us. If we tried to impose some stupid regulation, they would 393 00:52:01.060 --> 00:52:05.980 switch over to the feds. And that's how libertarians would like, if we're going to have any kind 394 00:52:05.980 --> 00:52:12.700 of government intrusion, those are kind of some of the ways in which we can make life 395 00:52:12.700 --> 00:52:23.540 more cooperative and more harmonious rather than having one of coercion and monopoly dictating 396 00:52:23.540 --> 00:52:24.540 to everybody. 397 00:52:24.540 --> 00:52:32.540 That's what we want to see, at a minimum, achieved here in the United States. 398 00:52:32.540 --> 00:53:02.540 Yes. Let's see. Okay, in the year, in the year 2000, 1.8 trillion 399 00:53:02.540 --> 00:53:30.340 dollars of spending, well I do know that they took in 1.2 trillion in 2008 and I 400 00:53:30.340 --> 00:53:37.340 I think, what was the year you were asking for? 401 00:54:00.340 --> 00:54:25.340 I would just be guessing. I would just be guessing. You can go to the United States Federal Budget on Wikipedia or the Treasury Department, though, and get all those numbers. 402 00:54:25.340 --> 00:54:52.700 Numbers. Although you have to be careful. There's a lot of numbers and there's a lot of different ways in which they present them. So you have to be very, very careful about what numbers you're talking about. I did spend a little bit of time today making sure I had a few correct numbers. And it's pretty amazing. Pretty amazing amounts of money involved in all that. 403 00:54:55.340 --> 00:55:03.340 Are there ways to eliminate the national debt and keep up with the state's aeronautics and that factor? 404 00:55:25.340 --> 00:55:32.140 The last one I heard but did not read, so I can't tell you what the source was or if 405 00:55:32.140 --> 00:55:35.660 it's valid, was 60 trillion dollars. 406 00:55:35.660 --> 00:55:41.100 And that's really a hole that we probably aren't going to get out of. 407 00:55:41.100 --> 00:55:46.860 I would like to think that if we started today, you know, and cut all sorts of government 408 00:55:46.860 --> 00:55:52.980 spending and cut taxes and made everything more efficient that somehow we could grow 409 00:55:52.980 --> 00:55:58.980 I don't know our way out of it, but I'm pretty skeptical about that. 410 00:55:58.980 --> 00:56:10.980 The estimates from economists at MIT, as well as the general accounting office of the federal government, 411 00:56:10.980 --> 00:56:31.980 Come up with numbers like we would have to cut spending in half and increase tax rates by 50% starting today in order to somehow erase out $60 trillion in these future liabilities. 412 00:56:31.980 --> 00:56:34.980 Of course, we could also just renege on them. 413 00:56:34.980 --> 00:56:41.980 We can just say, you know, all you old people, we just can't take care of you anymore. You're on your own. 414 00:56:41.980 --> 00:56:50.980 And we're probably going to do a lot of that. We're probably going to do a lot of inflation at the Fed, because you can inflate away debt. 415 00:56:50.980 --> 00:56:55.980 You can inflate away liabilities just by making the dollars less valuable. 416 00:56:55.980 --> 00:57:24.980 Yeah, yeah, there's no easy way out of this, there's no good way out of it, and I don't really see, you know, logically I could sit down and draw out a plan that might work, but they don't listen to me. 417 00:57:24.980 --> 00:57:35.580 to me. They don't listen to us over there. We started calling the housing bubble in 2003, 418 00:57:35.580 --> 00:57:42.780 you know, when long before anybody else had noticed it, we actually said that the housing 419 00:57:42.780 --> 00:57:50.300 bubble in the home building stocks was over in 2000, mid 2005, and anybody who talked 420 00:57:50.300 --> 00:57:54.860 about the housing bubble on TV or whatever would be shouted down as saying, oh, that's 421 00:57:54.860 --> 00:57:58.280 of Business, that there would be a housing bubble and home prices. Home prices never 422 00:57:58.280 --> 00:58:05.400 go down. Real estate is a great investment. We were calling the end of that bubble aspect 423 00:58:05.400 --> 00:58:17.440 in the stock market at that point. So no one listens to, to a great extent, to economists 424 00:58:17.440 --> 00:58:26.760 of the Austrian School. They prefer mainstream, main street marketing type economists to tell 425 00:58:26.760 --> 00:58:34.880 a story. And so this message about the income tax or that message about the housing bubble 426 00:58:34.880 --> 00:58:41.220 doesn't really get out that effectively. The main street media doesn't ever put it out 427 00:58:41.220 --> 00:58:54.220 I've been out there until very recently and people just haven't been listening to us, which is why I'm so appreciative that you came here to listen to me tonight. Thank you very much.