in free-market system, xix–xx
in nineteenth-century America, ix–x
Free market
freedom of choice in, 21
functioning without income tax, 52–53
income and wealth in, xix
individual in, xix
nineteenth-century America, 7–8, 91
opposition in nineteenth century to, xx–xxi
as replacement for feudal system, xix
self-interest and productive potential, xix–xx
Friedman, Milton, 82
G
Garrison, William Lloyd, 97–98
Godkin, Edwin L., 78
Government
in Adam Smith’s system of natural liberty, xviii
Framers’ conception of limited, xiii–xiv
growth in late nineteenth century, 22–23
idea of direct taxation of income, xxi–xxii
income tax receipts and growth of, 8–9
inconsistent demands for tax on income, 15
intimidation of citizens by, 18
limits on power of, 45
Mencken’s position on, 22
people’s war with, 7–9
power derived from income tax, 69
in Progressive view, 91–92
relation to citizens, 87
role in twentieth century in America, x
status with advent of income tax, 87
transfer of wealth by, 53–54
Government, federal
activities not specified in Constitution, xiv–xv
functions in libertarian view of America, 91
growth related to income-tax revenues, 64–65
spending (1997), 2–3
spending, meaning of, 101
Gross, Martin, 39–40
H
Hamowy, Ronald, 42–43, 45–47, 76
Hand, Learned, 12–13
Herbert, Auberon, 12
Hill, David, 75
Hines, James, 62
Hoover, Herbert, 81
Hughes, Charles Evans, 78
I
Immorality
of income tax, 17–18
of taxation, 12
Income
flat tax on, 19–20
in free-market system, xix–xx
Income distribution
in market economy, 25–26
by progressive tax, 24–25
Income, personal
belonging to the nation, x
differences in, 52–53
government seizing of earned, 16–17, 52
nationalization of, x, 15, 62
Income tax
abuses of, 6
with adoption of Sixteenth Amendment, 34
based on notion of state’s prior claim, 15, 62, 87
cannot be reformed, 97–98, 99–102
criticism of, 5–7
during and after Civil War, 70–74
effect of, 27, 51–59, 87–88
endorsement by T. Roosevelt, 76–77
federal government receipts from, 8
flat-rate, 19–20, 56
flat tax (1894) overturned, 75–76
historical development of idea for, 69–70
increasing rates of, 80–82
interpreted both as direct and indirect, 76
as largest source of federal revenue, 88
of Marx and Engels, xxi
penalties and disincentives of, 58
proposed campaign against, 97–98
recommended abolition of, 47, 62, 97–98
as theft, 6, 12–13
as tool for redistribution of income (Meade), xxi–xxii
See also Flat-rate tax; Internal Revenue Service (IRS); Payroll tax; Withholding tax
Information
from IRS, 36
IRS using personal, 46–47
obtained by IRS, 6, 11, 17–18, 37, 42–47, 87–88
in price system, 52
Inheritance tax, 76–77
Interest groups, 14, 61
Interest income, 57
Internal Revenue Service (IRS)
attitude toward self-employed and small business, 63–64
audit by, 37
authority to examine records, 44
circumvention of statute of limitations, 45–46
conditions for setting aside restrictions, 46
criticism of, 5–7
enforcement of laws and regulations, 36
GAO estimates of erroneous levies by, 39
illegal seizure of records, 46–47
information gathering by, 37, 42–43
pays informers, 34
power of, 36, 38–47
proposed campaign against, 97–98
reign of terror, 2
used for political gain, 38
used to harass, 38
J
Jefferson, Thomas, 7, 94, 95
Judicial system
interpretation of IRS authority and actions, 44–46
limited oversight of IRS, 39–40
Supreme Court ruling in Pollock, 75
See also Supreme Court
K
Keating, David, 40
King, Rufus, 76
L
Laffer effect, 89
LeFevre, Robert, 93
Legislation
Civil War income tax, 70–73
giving power to IRS, 3
income tax (1908–9, 1913), 69, 77, 79
requiring overhaul of IRS (1997), 41
See also Congress
Levine, Andrew, 18
Libertarian spirit, 33, 96
Liberty
Adam Smith’s system of natural liberty, xviii
importance of, 96
political, 96
principle of individual, x
understanding meaning of, 95–96
Lincoln, Abraham, 20
Lobbying, 14, 61
Lugar, Richard, 5
Luxury tax, 53
M
Mahan, Alfred, 80
Market economy
functioning without income tax, 52–53
with income tax, 53–59, 88
income tax diversion of, 54
See also Free market
Marx, Karl, xxi, 19–20
McKinley Tariff, 74
Meade, James E., xxi
Medical savings accounts, 60
Mencken, H. L., 22, 91
Morality
effect of income tax on personal, 27
of government funding, 13
See also Immorality
Morrill, Justin, 71, 73
N
O
Office of the Taxpayer Advocate, 40–41
P
Paine, Thomas, 88
Payne, James, 34, 40, 41, 51, 62–63
Payne-Aldrich Tariff, 77
Payroll tax
increases in, 5
revenues from, 65, 88
Pilla, Daniel, 36, 99–100
Pollock v. Farmers Loan and Trust Co. (1895), 75, 76
Preferences for deductions and credits, 59–62
Privacy, financial, 17–18
Progressive Policy Institute (PPI), 24–25
Progressives, 22, 69–70, 79, 91–92
Property, private
government’s prior lien on, 15, 62, 87
as individual right, 15–17
principle of, x
R
Rangel, Charles, 12
Reagan, Ronald, 5
Reagan administration, 81
Revenue neutrality, 89–90
Rights, individual
in Constitution, 15
under federal tax law, 43–44
protection of, 38–39
Rights of man, xviii–xix, 7, 12, 15–17, 33
Roosevelt, Franklin D., 8
Roosevelt, Theodore, 76–77, 79
Root, Elihu, 36, 78
Rothbard, Murray, 6, 13, 20, 54–55
&n
bsp; Rousseau, Jean Jacques, 21
Rule of law, 37, 44
S
Savings, 57–58
Say, Jean-Baptiste, 14, 54–55
Schumpeter, Joseph, xxii
Seligman, Edwin R. A., 19–20, 22–23, 79
Simons, Henry C., 25
Sin tax, 85 n. 44, 91
Sixteenth Amendment
campaign to ratify, 76–79
effect of, x
evil in power of, 12
proposed campaign against, 97–98
ratification of, 34, 78
recommended elimination of, 47
Skinner, Jonathan, 63
Smith, Adam
invisible-hand concept, 53
on self-interest, 26
system of natural liberty, xviii
on treatment by tax gathers, 11
Smith, Harry Edwin, 72
Sobran, Joseph, 95
Socialism, xx–xxii
Spencer, Herbert, 14
Spending, government
burden of increased, 88–90
federal (1997), 2–3
recommendation to slash, 90
Spooner, Lysander, 5–6
Springer v. United States (1881), 75
State, the
access to wealth, 88
corporativist view of, 22
idea of, 21–24
Statute of limitations
IRS circumvention of, 45–46
as limit on government power, 45
Stevens, Thaddeus, 70
Strassels, Paul, 18
Subsidies, 59
Sumner, William Graham, 79
Supreme Court
decision in Pollock, 75–76
decision in U.S. v. Butler, xv–xvi
interpretations related to income tax, 75–76
role in weakening Article I, Section 8, xv–xvi
T
Taft, William Howard, 77–78
Taxation
of capital gains, 57
coercive and unjust nature of, 13
defined, 12
direct and indirect, 75–76
double taxation on savings, 57–58
effect in free market, 53–59
of interest income, 57
as theft, 5–6, 12–15
U.S. plan in event of nuclear war, 3–5
See also Flat-rate tax
Taxation, progressive
disincentives in, 56–57, 59
income redistribution with, 24–25
proponents of, 24–25
Tax code
burden (in days worked) on average taxpayer, 97
burden on small business and self-employed, 63–64
changes in U.S. (1980s), 36–37, 62
government manipulation through, 59–62
lobbying for changes in, 61
nature of current, xvi
uncertainty created by, 62–63
Tax credits and deductions, 59–62
Tax Foundation, 30 n. 42, 31 n. 43, 57, 96
Taxpayers
costs imposed by tax system on, 51, 62–63
create wealth, 54
effect of withholding on, 17–18
fear of IRS, 7, 37
IRS abuse of, 47, 102
IRS weapons used against, 38–40
lack of accountant-client privilege, 46
number of days worked by to pay taxes, 97
vs. tax consumers, 54
Taxpayers’ Bill of Rights (1988, 1996), 40, 47
Taxpayers’ Bill of Rights (1998), 99–101
Tax shelters, 60
Tax system
burden of tax and, 63–64
exemptions, credits, and deductions, 59–62
influence on decisions, 51–62
lacking public consent, 34–36
nineteenth-century in United States, 69–70
post–Civil War, 73–75
U
Uncertainty, burden of, 62–63
United States
before income tax, 7–8
post–Civil War growth, 74
United States v. LaSalle National Bank (1978), 45
U.S. v. Butler (1936), xv
W
Wealth
access of state to, 88
accumulation in America, ix–x
effect of income tax on, 51–65
in free market, xix
government redistribution of, 53–55, 92–94
Webber, Carolyn, 79–80
Welfare state
activists’ ideas, 23
interventionist, xx–xxii
present-day American, x–xi
Wells, David A., 23, 73
Wiebe, Robert, 79
Wildavsky, Aaron, 79–80
Wilson, Woodrow, 79
Withholding tax, 17–18, 82