GORDON HOLMES
April 9, 2006
Special to the Star-Banner Newspaper - Ocala, FL

Years come and years go, but income taxes remain a constant -- either too high or insufficient to fund the politicians' grandiose dreams.

This wasn't always the case. But the 16th Amendment was ratified in 1913, and Congress made the income tax a reality in October of that year.

The original law authorized the extraction of taxes directly from the worker's pay envelope before the worker ever received it. After much public outcry, that provision was removed in 1917 and not heard from again until the 1940s.

In 1943, the "Current Tax Payment Act" was much cussed and discussed, but finally passed and became law. This again allowed for taking taxes from a worker's pay before he ever received it.

The collection methodology was taken from Social Security's payroll deduction system. People behind this played on the patriotic theme that money was needed to support the war effort -- a real motivator to people. Thus, politicians succeeded in getting the law passed without ever publicly revealing their ulterior motives.

However, if you look at discussions in Congress at that time, the real reason was clearly voiced.

These harsher objectives included increasing government revenue, enforcing payment of taxes and muting taxpayer resistance. Department of Treasury officials viewed pay-as- you-go withholding as a way to collect money from people who would not otherwise report any income. We need to be ever vigilant to prevent taxes that are so easily collected from being extended and expanded with great ease by legislators, and from being used as a lever to lower personal income tax exemptions or otherwise impose new burdens on low-income groups.

Attempts were made to ameliorate the impact of the income tax by establishing a system of deductions and credits whereby people who owned property or who accumulated business losses could reduce the amount of tax they paid. However, the very mechanism of withholding deflects blame from the government by requiring employers to initiate and bear the cost of forcible extraction of people's income.

Piecemeal collection each payday obscures the magnitude of the annual tax. And, because it is forced, it raises the cost to the public of expressing political resistance to taxes by the obvious route of not paying them.

This system has continued and been expanded by Congress through all types of legislative schemes. For example, one ruse that extends the government's hand farther into our pockets is to tack a revenue-producing bill onto legislation bound to pass.

This needs to end. We need some way to rein in the runaway tax system that encompasses more than 55,000 pages and takes more than 98,000 employees, who work in 33 administrative offices, 10 computer centers, 404 walk-in centers and other areas scattered around the country.

One recent effort to end this was the Flat Tax introduced by Rep. Dick Armey of Texas. This patch job would apply a fixed tax rate to your income, but leave the tax structure there for future use. It would not have just rid us of the onerous withholding system, but created a way for us to have both the flat tax and the current income tax.

• The current rage is the so-called Fair Tax, a sales tax of around 23 percent imposed on all "new" items purchased. It would replace all forms of withheld taxes: personal income, corporate income, Social Security, Medicare, estate, gift, capital gains and self- employment.

• Everyone would be able to take home all the money they earn -- no more making criminals of honest taxpayers by causing them to decipher an undecipherable mess.

• The 23 percent rate is revenue neutral, meaning the government will receive the same amount of money as under the current system, and would pay for all government operations, including Social Security and Medicare.

• It also takes care of our low-income population through monthly rebates up to the federal poverty level for all taxpayers, ensuring nobody will be required to pay taxes on necessities.

• The Fair Tax will also make it possible for people to quickly determine when taxes have been increased. Revenue-increasing bills can no longer be hidden; if the tax goes up, you will see it plainly on your receipt.

• Sales taxes as the primary source of revenue is not new. Several states do not now have an income tax. The majority have both a sales tax and an income tax. Since states already levy sales taxes, they can collect the tax and remit it to the federal government.

• I urge all Americans to get behind the Fair Tax, promoted through HR 25, a bill sponsored by Rep. John Linder of Georgia.

Let's do away with the IRS as it currently exists and all, or at least most, of the expense of running it. Let's get rid of all the abuse and mistreatment that occurs because of IRS enforcement actions. Let's have a tax system that allows workers to keep every penny they earn. Let's stop Americans from having to file a tax return ever again. Let's stop all audits and searches for loopholes to reduce taxes. Let's make it possible for every American to buy basic necessities tax free. Let's get the Fair Tax enacted.

We are all willing to pay our share of government's cost. But we want a fair and reasonable manner, which the Fair Tax provides. Get behind the Fair Tax. It may not be perfect, but it's something we've got to have.

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Gordon Holmes resides in Ocala, FL.