So I am reading "The Liberty Amendments" by radio talk show host Mark Levin. My conclusion is that his "solutions" won't work, and that the solutions from Localism, A Philosophy of Government for the same issues are far superior. This article is a comparison of his answers on the issue of federal taxation. I have done the same comparison with the "Liberty Amendments" vs. Localist solutions for judicial over-reach and federal spending. Basically I am going down the list because I think such a comparison will demonstrate just how much better localist answers are to what others are offering. But my opinion doesn't matter, its yours that counts, so read on...
Levin's solution is to limit by amendment taxes on American citizens (corporate and real) to 15% of their annual income, and a limitation on other taxes with these words "Congress shall not institute a value-added tax or a national sales tax or any other tax in kind or form."
Your loop-hole seeking eye might notice that numerous taxes of almost every kind have already been "instituted" and that the wording does not seem to address the issue of what to do with other taxes that Congress has already instituted. And of course, there are other labels Congress can put on their extraction of revenue, such as "fee".
If you think that they won't resort to such stratagems, here is a bit of history for you: Here in my home state of Arkansas, we have a state constitution which says a 3/4ths majority vote of the legislature is required to raise taxes. The courts ruled that applied only to taxes which were in place at the time the amendment was written, so that any new tax needs only a majority vote! Since sales taxes were not in existence at that time, the legislature has raised our sales taxes so that they are above 9% in most of the state! The ruling class always finds a way to end-run the restrictions constitutions place on them when they are the only enforcement mechanism against themselves.
My point is one that I made at length in the previous two articles on this subject, that you can't make enough rules to force bad men to be good ones. Bad men will abuse whatever jurisdiction they oversee, and in order to stop them you must take away all jurisdiction in a given area away from them, not lay enough rules on them so that they are forced to be good. We must also make it much easier to replace them altogether.
But let's be absurdly generous and pretend Washington will stick by the 15% of annual income cap. Levin's own statistics show why this would be a disaster. As of 2009 he says the bottom quintile (20%) of the population had a negative income tax rate of -9.3%. That is to say almost one dollar of every ten they get comes from welfare via the tax code. The next quintile of Americans, who are in the 20-40% range of income earners, have a negative 1.3% tax rate. Only when you get to the 40-60% range of income earners do you find a group which pays more in taxes than it gets from various welfare programs hidden in the tax code, and they only have a tax rate of 1.3%.
The slice of the population in the 60% to 80% range of income earners has an average tax rate of 4.6%. The top 20% of wage earners pay 13.4% of income in taxes. Only when you get to the top two or three percent of wage earners do you find tax payments significantly above 15% of income. For example the average for the top 1% is 21% of income.
So taxes for the top 1% would get a huge tax reduction under Levin's amendment, which would have to paid for by increasing taxes on the other groups. The primary beneficiaries of Levin's amendment would be giant corporations. The biggest losers would be the middle class and upper middle class- the people who tend to buy Levin's book! He is setting up his audience to be taxed far worse than they are in the name of "fixing" the income tax problem.
His amendment would not fix our tax problem. Since only the top few percent pay total taxes above 15% of annual income, our tax system could stay just like it is after his amendment passed. The one exception being that the taxes paid by the very richest in the nation (including global corporations) would be shifted unto the backs of the only ones left who would be able to pay them - the middle class and upper middle class.
He also claims that this would somehow simplify the tax code and reign in the IRS. None of this is true. As I just showed you by the numbers, even if his amendment passed the tax code could stay exactly like it is except for the fact that those at the very top of the heap (mostly giant corporations) would get a significant tax cut which would have to be paid by the rest of us.
The Localist solution goes back to the vision of the Founders. The central government would be prohibited from laying any direct tax on individual citizens. The states would be interposed between citizens and the central government. It would no longer be their business as to how much income each citizen earned and from where. If the feds could not meet their budgetary needs through modest tariffs and taxes on interstate corporations then they would have to approach the states for the difference. Each state would then decide how to raise the money needed to pay its share of the federal bill.
This is a solution which would really simplify the tax code, or if not, at least it would not apply to individual persons, but only to large corporations with the resources to sift through it. Individual citizens would also be shielded from the IRS in such a system, much more so than under Levin's proposals which as I say leave the current system pretty much in place despite the posturing that they would do otherwise.
Of course, Localism is an integrated philosophy. It would be hard to fund our current fedgov off of reasonable tariffs and moderate taxes on interstate corporations. Most things that fedgov is trying to handle now must be either pushed down to the states, or eliminated. For states where people want big government, they can still have it, but they should not expect people from states who want less government to pay for it. In addition, Localism's policies on limiting foreign corporations must be adhered to in order to, among other benefits, make these tax policies work long-term.
If you haven't read "Localism, A Philosophy of Government" yet but are interested in government policy, you should. The way it approaches the problem is far more satisfactory than anything else I have heard out there, "The Liberty Amendments" being a case in point.