February 8, 2005
In my last post, I suggested we roll back the 16th Amendment. For those of you who don’t know the 16th is the amendment that made the income tax constitutional. And for many who didn’t know that fact, they’re probably surprised that in our original Constitution, the income tax wasn’t constitutional. Either way, perhaps I was a bit too harsh. As a libertarian, usually I can argue that certain things are unconstitutional, but obviously I need to argue that we need to change the constitution if I want to repeal the income tax.
So, I’ve decided to soften my position. Let’s end withholding. Many people have made the argument that tax withholding is unconstitutional, and we can use that argument. A woman named Vivien Kellems, shortly after the Current Tax Payment Act of 1943, decided to offer withholding as a test case for the Supreme Court. She simply stopped withholding for her employees. Of course, rather than allow withholding to be judged against its constitutionality, the IRS decided to come after her:
As a businesswoman, Miss Kellems was required by law to withhold income tax from her employees. But if she agreed to be an unpaid tax collector for the government, she knew that she would be submitting to involuntary servitude, which is forbidden by the Constitution. Knowing that the Withholding Tax directly opposed the Constitution, violated the right to privacy, and, in effect, stole freedom from her people, she refused to participate in this atrocious act.
Miss Kellems paid her employees in full — withholding nothing — and, unlike the government, trusted the employees to — on their own — pay the amount that was required. This course of action was unacceptable to the Internal Revenue Service and they promptly sent out their thugs to collect money from Miss Kellems — money that had already been paid in full by her employees.
Some have cautioned against repealing the process of withholding. Often, they caution that this will cause citizens to stop paying their taxes. And they’re right! I personally believe that if people saw their tax liability at the end of the year as a payment rather than a “refund”, they would take a much different view of tax rates.
By design, the government tried to withhold more tax than they will need. They do this for two reasons. First, it will grant them an interest-free loan from the American people, for the time in between the excess tax is withheld and the tax return is filed. Second, if people at the end of the year become used to the pleasant surprise of a “refund” rather than the pain of paying their tax bill, it makes them much less critical of the tax system in general.
I’m relatively certain we will never see withholding end, for as long as we have an income tax. In my mind, it’s a pipe dream to think that government will bring on a revolt of the magnitude that would inevitably follow. But it is important to remember, liberal or conservative, that if people actually understood the level of taxation they were forced to endure, that perhaps they might not like it very much.
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