Are Tariffs going to replace the Income Tax?
It's an interesting idea, and it sure would be a great way to increase everyone’s net income. Could it work? Has it ever been done before?
Jeffrey Tucker, a renowned author, founder of the Brownstone Institute recently wrote an article on this very subject. Allow me to summarize his opinion as it put light on what the current administration is doing toward that end.
First, let’s go back to 1913, the year Congress passed legislation to establish the current income tax. Prior to that year, all revenue came from Estate Tax and Tariffs. “You had the right to earn, own, and keep property, and it was sacrosanct, guaranteed by U.S. law and tradition. There were no audits, investigations, account freezes, withholdings, or any other forms of payment. “
In those days, though, the government was tiny. “The federal government in 1885 spent in inflation-adjusted dollars about 0.05 percent of what it spends today. Pre-1913 period of U.S. history saw the greatest amount of economic growth we’ve ever seen. The dollar was governed by the gold standard, and there was no central bank (Federal Reserve).”
In 1913, Congress passed an amendment for the income tax, mainly to support monies needed for World War I. In that same year, the Federal Reserve was established. Both the tax and the Federal Reserve financed that war. This was also the year that senators were directly elected. What all three did was put the big cities in charge of the U.S. like the House of Lords in England.
Trump has floated the idea of ending the income tax. “No matter how you do the math, there is simply no way that the tariff can make up the difference. The only solution, then, is massive cuts in government spending, which people such as Elon Musk have promised.”
Understand that nothing like the cuts they are talking about has ever been done in history. “Usually what Washington calls cuts are really just cuts in the rate of increase in spending. Without real cuts and with a curbing or elimination of the income tax, the United States merely ends up with more debt that will be financed by the Federal Reserve, and that result in more inflation. Inflation is nothing but a different and more surreptitious form of taxation. Instead of taking money out of your bank account directly, government simply reduces the purchasing power of the dollar itself.”
Frank Chodorov in his book, “The Income Tax: Root of Evil” wrote about the establishment of an income tax in the 16thamendment.
“It puts no limit on government confiscation. The government can, under the law, take everything the citizen earns, even to the extent of depriving him of all above mere subsistence, which it must allow him in order that he may produce something to be confiscated.
“Whichever way you turn this amendment, you come up with the fact that it gives the government a prior lien on all the property produced by its subjects. In short, when this amendment became part of the Constitution in 1913, the absolute right of property in the United States was violated.
“In name, it was a tax reform. In point of fact, it was a revolution. For the Sixteenth Amendment corroded the American concept of natural rights; ultimately reduced the American citizen to a status of subject, so much so that he is not aware of it; enhanced Executive power to the point of reducing Congress to innocuity; and enabled the central government to bribe states, once independent units, into subservience.
“No kingship in history of the world ever exercised more power than our Presidency or had more of the people’s wealth at its disposal. We have retained the forms and phrase of a republic, but in reality, we are living under an oligarchy, not of courtesans, but of bureaucrats.”
So tell me, who wouldn’t be in favor of eliminating the income tax for all the reasons I have just given? Since tariffs could not replace income tax based on the current expenditures, the only choice we have is massive cuts in spending. The budget freeze, the freeze on new hires, the freeze on outgoing grants—all of this points in the right direction. We, as a country, desperately need to solve the problem of our ongoing debt and overspending, or we can count on higher taxes and much higher inflation in the coming years.
Grit your teeth for the cure for it will probably have some negative consequences for some, but it is a necessary move forward for all of us.
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