We talk secession here at DumpDC.com. And as such, we think about what a newly seceded state, now standing on its own as a new nation, would do to raise money from the citizens to pay for the functions of the new nation.
Washington’s methods of taxation are insane. There are so many methods of taxation…so many assessments, fees, tariffs and penalties…that we cannot keep up with them. Then consider the voluminous IRS tax code. It has been said that there are so many laws in the IRS tax code that every taxpayer is likely violating some tax law at any given moment in their lives. And all of this tax insanity at every level of government robs Joe Taxpayer of about half his income.
The doublethink and mendacity coming out of Washington about taxes is enough to make even a liberty-minded free-market person confused. So today, I’m going to address some fundamental issues about taxation…kind of like “Tax 101.”
First lesson is about money. There is only ONE form of legitimate money, and that is precious metals such as gold and silver. But money is not currency and currency is not money. Currency…paper and coins not made of gold and silver, can easily be counterfeited and passed off as money. Most people think that the greenback paper bills in their wallets or purses are money. But that is just currency.
The word “Federal” would be dropped from the lexicon in a new nation, since the new nation is a single entity, not a confederation of states. The proper term going forward would be “National” to describe the government of the new nation.
A new nation needs to go on the gold and silver money system. For more about this, read Sound Money and Limited Government.
Once the money issue is settled, then the government can begin planning for how to generate revenue of money for its purposes.
“Taxation” is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state (or the functional equivalent of a state) such that failure to pay is punishable by law. That is one method whereby governments collect money to pay for the costs of the government.
All taxation is the ethical equivalent of theft. But taxation has been found, over centuries, as the most workable way for government to collect revenue from its citizens to fund government activities. Most taxation is inequitable, meaning that some pay more, some pay less. Much of taxation is an attempt by government to either reward certain activity or penalize other activity. The disparity of taxation between income earners in America is so great that a large percentage of citizens effectively pay no tax, while other groups of citizens pay the most. So the best that any government could do would be to make the taxation as close to voluntary as possible. The sales tax is the method of taxation closest to voluntary contribution. Think about it. The only time you pay tax is when you spend money.
And what about so-called “fairness?” I’ve said for a long time that “fair” is a place you take your pig to win a blue ribbon. The fairness in taxation ends up being whatever those in power say it is, and that’s certainly not fair. But should not every person pay taxes? Every person enjoys some benefit from the functions of government. Why should the poor be exempt from taxes? More to the point, why should ANYONE be tax exempt? I hold the position that all tax exemptions be ended, no matter if you are a poor individual, a charity or a church. And with a national sales tax as the only method of taxation, all of the other tax exemptions would end as a byproduct of reinventing the tax system. They simply wouldn’t be needed anymore.
Another even more insidious method of taxation is inflation. There is only one source for inflation, and that is a government that devalues its own currency. Inflation lowers the currency’s value. When currency is devalued, it takes more currency to pay for a product or service than before inflation. So it’s easy to look at price increases and think the increase is inflation. It is not. For some excellent information about inflation, go to www.Inflation.us.
I’m going to offer my proposals for generating revenue for the new nation. And when you read these, remember that I am throwing out everything that Washington has done over the last 200 years and starting with a clean sheet of paper.
National Sales Tax
A national sales tax only collects from taxpayers at the point of a retail sale. Every state already has a mechanism in place for the collection of retail sales tax. So any seceding state would have to revise the percentage of sales tax collected but that’s about it.
To fund all operations of the new National government, a sales tax of 15% will be assessed at the point of purchase. This turns national taxation upside down. No longer would the government be able to spend over its income. The new government would be forced to operate within its income, and that income would come from one source…the sales tax. Consequently, the new nation would have to prioritize the services it rendered based upon income, not providing services and then squeezing the citizens for money, borrowing or inflating to pay for it.
If this proposal seems unworkable to you, remember that a new nation, formed from a seceded state, would not have to start with the burdens presently laid upon all of us by Washington. No Social Security, Medicare, big military, and long list of three-letter bureaucracies like HHS, FBI, DOA, FTC, etc. The new nation would start with a very small government, and would be prevented from adding new government burdens unless it could pay for them.
• One tax, no other taxes. No property tax, personal property tax, estate tax, income tax, gift tax, capital gains, tariffs, duties, alternative minimum, Social Security, Medicare, and self-employment taxes.
• The gold standard money could be paid to the new national Treasury through coin, currency or electronic money.
• All government functions, from national down to county, city, village and townships, would be paid from the sales tax.
• All employees earning paychecks would have no government deductions of any kind.
• There would be no exemptions for any individual, business, charity or religious organization.
• No goods or services would be exempt, like food and medicine.
• There would be no tax forms whatsoever for citizens to fill out.
• It would eliminate the need for an IRS-type tax collector. Tax revenues would be forwarded to the Treasury by retailers. Retailers would be paid a service fee for collecting and forwarding taxes to the Treasury.
• No tax breaks, tax deductions, tax credits, tax amnesties, tax returns.
• The sales tax would collect revenue from citizens, aliens, illegals and tourists equally. If you spend money in the new nation, you pay sales tax.
• The national sales tax encourages savings and investment.
The Single Disadvantage:
Those who wanted to avoid the sales tax would sell stuff as a non-retailer, just like people do today when they do personal sales transactions like at yard sales.
There is no way to estimate the revenue that would flow from a national sales tax for any new nation. First, we’d have to know which state it was that seceded. Then, possibly some estimates could be made based upon the economic output of that state at the time of the secession. But a new national sales tax would be a game-changer for this new nation. What individuals or businesses would not LOVE the abolition of all other taxes and the establishment of the sales tax?
I predict that the economy of the new nation would explode with growth and prosperity. Capital from all over the planet would flow into the new nation as individuals and businesses sought the stability of this government and its monetary system.
The national sales tax as the sole method of taxation radically simplifies the taxation process while bringing taxation out into the light of day. It promotes transparency in the new government. Between the sales tax and the gold standard, it affords the new nation the freest economy in North America…arguably the freest economy in the world.
Secession is the hope for mankind. Who will be first?
DumpDC. Six Letters That Can Change History.
© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.