Every year around this time, millions of Americans fill out a form 1040 – hoping they don’t have to write a check to Uncle Sam. Millions more know they will be getting a “refund”; which is normally a return of some portion of “their money” that was withheld in excess of what the IRS thinks they were “owed;” while a smaller number will receive a “refund” in excess of the amount withheld by the IRS. The Tax Policy Center reports that nearly 50% of “households” filing with the IRS will “pay no income tax.” While this enrages many people who will claim that the 50% that do pay are “supporting” the 50% that don’t, I see things a little differently.
The 50% that do pay income tax are not “supporting” anyone. The Grace Commission in 1984 issued a report that stated in part, “100 percent of what is collected (by the IRS) is absorbed solely by interest on the Federal debt…all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from their Government.” Certainly some of the revenue from the IRS is redistributed to those that receive a more from the IRS than they had forcibly withheld from them, though that could hardly be interpreted as “supporting” the ones that don’t “pay.” Every time I hear a report like this, I’m reminded of the “Whitey” Harrell trial. Mr. Harrell was charged with not filing an Illinois State tax return and was acquitted by the jury. Marcella Brooks, the juror that was vocal in getting the acquittal, recounts in “America: Freedom to Fascism” that the other members of the jury said “but he’ll get away with it.” Mr. Harrell was acquitted because “the IRS couldn’t show us the law.” Millions of Americans are like the members of that jury – they’re not really upset that others aren’t paying; they’re upset that they are!
The TPC report doesn’t explain all of the ways people avoid federal income tax and that is a very important part of the equation. “Half of them earn too little, while the other half — mostly middle- and lower-income households — will take advantage of tax credits such as the earned income credit, the child and child-care credits, the American Opportunity and Lifetime Learning credits, which help pay for college, and the saver’s credit, which subsidizes retirement saving.”[TPC] There are also tax credits for buying a “green” automobile, making “green” improvements to your house, mortgage deduction, not to mention all of the various credits and deductions for owning certain types of businesses and investment strategies that yield “tax-exempt income.” Congress uses these tax deductions and credits as a way to pander to certain groups in exchange for votes and/or campaign contributions, though simply eliminating these deductions and credits will not solve anything. The only solution is to eliminate the IRS, abolish the Federal Reserve and abolish all unconstitutional spending. Then, and only then, 100% of American households will pay no federal income tax!