With the remarkably quick emergence of Steve Forbes onto the national political scene, the issue of tax reform recently has received a great deal of consideration. Forbes has sparked much of this debate with his proposal for a flat-rate income tax. Though this plan marks a step toward both tax relief and a more just tax structure, the implementation of a national sales tax, coupled with the abolition of the federal income tax, would constitute a more ideal initiative.
Much of the debate that surrounds the issue of taxation concerns what level and type of taxation is "fair." The left tends to argue that progressive taxation is "fair," because this system ensures that those in high-income brackets will pay their "fair share"; many on the right, by contrast, insist that a flat-rate system is "fair," because it fails to base one's rate of taxation on one's income. What both sides overlook in this conflict is the inherent unfairness of taxation, for its existence rests upon coercion, rather than free choice. Thus, it is futile to argue that one system is fair while another is not; one may only submit that a given system is fairer than a second. It is for this reason that the sales tax is superior to the flat tax.
In a free society, individual choice and voluntary agreement are essential values, for they limit the power of the state and secure the autonomy of the individual. While no system of taxation coincides precisely with voluntarism, it is necessary, within the confines of a governmental society, to enact a tax structure that approaches these values. Only in this manner will liberty thrive within society.
Though it institutes a dramatic reformation of the current system, the flat tax affirms the existence of the federal income tax. This, in short, is its fundamental flaw. As a direct tax, an income tax infringes upon one's autonomy by directly confiscating one's property. That is, there exits no degree of individual choice concerning the level of taxation that one will face. Thus, the income tax fails to accommodate the free choice necessary for liberty to exist.
While the sales tax also functions under coercion, this indirect tax leaves some space for choice concerning one's level of taxation. This is due to the fact that one faces taxation only as a result of making a voluntary transaction, such as the purchase of a product. Though it is unreasonable to assume that one will forego economic consumption altogether, the sales tax grants one some ability to influence one's tax bill.
Perhaps a more important reason why the income tax is inconsistent with liberty concerns the manner in which the government collects it. To lawfully pay this tax, all taxpayers must file a series of forms with the Internal Revenue Service. Such a mandate constitutes a violation of one's privacy and autonomy, because it requires one not only to forfeit part of one's property, but to reveal personal informationto the government as well. This system has granted a tremendous amount of power to the national government, enabling it to expand beyond its legitimate, constitutional scope.
Indeed, the very existence of the IRS poses a threat to liberty. As James Bovard writes in Lost Rights: The Destruction of American Liberty, the IRS "is the authoritarian means to paternalist ends." Bovard cites a plethora of instances in which the IRS, in an overzealous attempt to acquire revenues, unfairly has invoked tax penalties on citizens, while denying them their rights to due process and a presumption of innocence. In short, the tax-collecting efforts of the IRS have culminated in a virtual tyranny over the private lives of Americans Ñ hardly a circumstance conducive to the existence of liberty.
One of the most beneficial features of the sales tax is that such a system would no longer require one to file tax forms. Thus, the sales tax effectively abolishes the IRS, restoring the privacy and due process that is necessary for a free society to exist.
While the flat tax does bring reformation to the current tax structure, it fails to adopt that reform which is needed most: the introduction of a tax system that holds some respect for individual privacy and autonomy. It is the national sales tax that achieves this, by abolishing the IRS and granting individuals some degree of choice concerning their taxes. Only under this system will America move closer to the ideal of freedom.