Is Our Tax System Up Side Down?

Posted by Jason | Posted in Government | Posted on 20-04-2010

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Yesterday on Facebook, I asked why we let politicians steal our money to then turn around and attempt to bribe us with it with tax credits, cuts and incentives. One of my newer Facebook friends then mentioned how the federal government bribes the states as well. I responded that maybe we should only be taxed by our states. Then if the feds wanted taxes, they would have to tax the states. This would cause friction between the feds and the states again, and I may just be dreaming, but I think it would cause states to tell the feds to go pound salt when they wanted to create new federal programs.

If you are a governor or state legislator, would you not want to keep your state’s tax money in your state? You are accountable to your people, and the better your state is ran, the better your chances of getting re-elected. If the feds decide to create a new entitlement program, would it improve your state? Would your people say, “Yeah, send our hard earned money to Washington. They will handle it properly.”, or would they say, “What the hell are you sending our hard earned money into that cesspool for? You know they are going to waste it. Guess I’ll be voting for your opponent next election.”

Also, wouldn’t this give “The People” more power? Wouldn’t the people basically be able to overturn federal laws by changing their state legislators? If a bunch of candidates who say, “We are not going to send your tax money to Washington for tracking down pot heads. It’s a complete waste of money.” gets elected by the people, wouldn’t the people be better represented? The states could then basically nullifying the laws each election.

OK, I can hear some of the concerns now. “Yes, but wouldn’t you just then have state legislators doing the same things as federal legislators, stealing your tax money and then bribing you with it?” The answer is yes. Here’s the catch though. With states, they have to be competitive. If one state taxes too much and promises too many programs, they’d become uncompetitive. Businesses and people would move to a more competitive state. This would force states into restraining themselves. Competition is the key, and there is no competition with the federal government.

“Yeah, yeah, but what about those states who don’t have a lot of tax payers?” Well, then they’d have to be really restrained. They’d probably be a great draw to people who want less government all around. While not completely government free, they’d be about as close as you could get, and that would entice many people. Also, if there aren’t a lot of tax payers there, then why should other tax payers have to subsidize them? If they want to live there, then let them pay to live there. Other citizens should not have a gun stuck to their head and robbed to pay for some other states government when they chose to live in a more populated state.

“What about federal laws? They would become meaningless, because states could nullify them so easily.” OK, I’m waiting for the negative consequence. This sounds great to me. This would keep the federal government down to the size it should be. It would only have the power that is specifically granted and approved by the states. For example, most states want military defense, so I’m sure they would all be willing to contribute. On the other hand though, would states have paid for our empire around the world? Would they have funded the war in Iraq? Chances are they would have not. The people would not want to waste their money, which they would have much more control over under a tax system like this. They also would not allow the federal government to steal their money to hand it off to other countries as bribes…I mean AID. I’m not saying AID would be non-existent. Maybe you have a state with a large Latino population, and they would like some of their money contributed to AID in Latin America. The beauty is the entire country is not compelled to do it. The entire country is not compelled into sending money to countries where their interests are not being represented.

Lastly, this would help both conservatives and liberals get what they want. Conservatives can migrate easily to small government, low tax states, while liberals can move to high tax, socialized states. The great thing about it is socialism could collapse on it’s own. A state that became heavily socialized would have to bear it’s own burden, and if it’s as great as the liberals tell us, then people will voluntarily move there. They would choose to live under socialism, but it could not force the productive parts of the country to subsidize it’s ideology.

I’m sure other people have contemplated this idea and have had much better dialog on it than I. It would be great to hear other people’s opinions, both pro and con. Let me know your thoughts in the comment section.

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Comments (4)

This was the method that the original United States Constitution (the Articles of Confederation) used. It lasted less than a decade before the Constitutional Convention. There’s a reason why it didn’t work – the states refused to give money to the federal government.

Additionally, this may have been one of the reasons why the CSA lost the War of 1861 – the states were too independent from the central authority, thus Lee didn’t have enough troops to beat Grant. (I’m not saying the CSA should have won nor do I support slavery or any form of racism; I’m just saying that this might have been a reason they lost.)

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This was not the sole reason the Articles of Confederation didn’t work. States printed their own money, could have trade wars between each other, etc. I think you could still have our current constitution with a change in the way taxes are collected. Again, it’s a good thing when states tell the feds they aren’t sending money. States were supposed to protect their people from the feds. As we have it right now, the feds bleed us dry, steal our liberty and are in the process of selling our kids into bondage. They do this because they have too much power, and much of that power comes from taxing us directly. On top of that, they bribe the states with block grants, special projects and the like to force them into submission as well. Even after the Constitution, the states were to remain powerful.

Lee had enough troops. He was winning almost every battle. What turned the tide of the war was Grants total war. Lee fought the war as wars had been fought up till then with certain rules. When Grant took over, they waged total war against their own people and basically obliterated the south. You don’t have to tell me you are against slavery. The civil war wasn’t just about slavery. Every other nation got rid of slavery without a war, except us. It was more about the expansion of the federal government over the states, and the south was sticking to the principles of the revolution. Read The Politically Incorrect Guide to the Civil War for a view of the war that hasn’t been constructed by the feds.

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I think most of the states would buy into this. The issue is how much funding does each state contribute, and how is that amount determined?

I think most states would see the benefit to essentially having the fed gov act as a referee in making sure the states played honest, aka regulating interstate commerce (the 1800′s definition, not 2010′s). Essentially that means keeping the judicial branch, but the executive and legislative branches would almost become unnecessary. Would the states really be willing to fund a standing army? Probably not, not that that is a bad thing. We’d probably move back to a more state militia type system, with maybe an FBI or some federal police force to deal with interstate crime.

There are certainly more scenarios that would come up that none of us could know the answer to, but I certainly like the idea of this system. My favorite idea is that the states that wish to be socialist can collapse under their own weight and not screw the rest of us. Maybe then people would understand that capitalism is their friend, not their enemy.

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John, maybe funding is determined by population. Maybe it’s still taxed on an individual basis, so the bigger the population the more money they contribute. I’m sure there would be problems there I’m not thinking of. The great thing about a very limited federal government like the one that was supposed to be created by the Constitution is it doesn’t need a lot of tax money. It only needs that when it wants to become oppressive.

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