Larry Greenfield: Taxed enough already

Tea Party activists gather on Capitol Hill for a "Hold the Line" rally on June 27, 2011, in Washington, D.C. GETTY IMAGES FILE PHOTO

As the American Colonial economy grew, the British Crown imposed duties on molasses, rum, sugar, wine, newspapers, legal documents, licenses and playing cards. Even more taxes were then imposed on glass, lead, paper, paint and tea, leading to the Boston Tea Party, resulting in the closing of the port and imposed British military command. The American Revolutionary War cry went out: "Taxation without representation is slavery!"

The founders of the new United States limited federal taxing power. Early 19th-century revenue was derived from import tariffs, plus internal taxes on distilled spirits, tobacco, refined sugar, auctioned property, corporate bonds, carriages and slaves.

The War of 1812 brought the first sales taxes, on gold, watches, jewelry and silverware.

In 1817, Congress revoked most taxes, with tariffs on imported goods seen as sufficient to run the government. In 1862, the Civil War effort led to sales and excise taxes and the nation's first income tax – with a progressive rate of 3 percent for most earners.

The "inheritance" tax also made its debut, and the Commissioner of Internal Revenue was given the power to assess, levy and collect taxes through seizure of property and income and prosecution.

Congress eliminated the income tax in 1872. Revived in 1894, the Supreme Court decided the next year that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.

A hundred years ago, in 1913, the 16th Amendment to the Constitution gave Congress legal authority to tax income of both individuals and corporations. The top marginal tax rate was 7 percent and the entire tax collected was $28 million.

By fiscal year 1918, collections hit the $1 billion mark, rising to $5.4 billion by 1920.

The withholding tax on wages was introduced in 1943, and the wartime economy increased the number of taxpayers to 60 million and tax revenue to $43 billion by 1945.

President John F. Kennedy cut tax rates and, in 1962, delivered his famous speech promoting low taxes. In 1981, President Ronald Reagan signed the largest tax cut in U.S. history, and in 1986 he brought the top tax rate on individual income down from 50 percent to 28 percent, the lowest since 1916, sparking decades of economic productivity.

President George H. W. Bush, who had famously pledged, "Read my lips, no new taxes," came to regret his 1990 budget deal with Democrats that included "tax revenue increases."

President Clinton cut capital-gains taxes for individuals, and provided child tax credits and incentives for education.

In 2001, President Bush saved taxpayers $1.3 trillion over 10 years, cutting the top four tax rates (28 to 25 percent; 31 to 28 percent; 36 to 33 percent; and 39.6 to 35 percent) and creating a new low rate of 10 percent.

Then came the Affordable Care Act, in 2010. Though a tax on individuals based solely on their decision not to buy health insurance is a direct tax on individuals, disallowed by the U.S. Constitution, Chief Justice Roberts controversially ruled that the new health care tax is indirect because not everyone will have to pay it.

Obamacare imposes taxes on investment income, Medicare payroll taxes, individuals, employers, health insurers, medical device makers, drug companies, medical bills, special-needs parents, health savings accounts withdrawals, indoor tanning services, charitable hospitals and more.

The recent 2013 fiscal cliff deal resulted in a rise in payroll taxes to 6.2 percent, (from 4.2 percent last year), hurting all working Americans. The top income tax rates also rose back to 39 percent.

And now the new Senate Democratic budget proposes just under $1 trillion in new taxes over 10 years.

Bloated federal spending, a massive national debt and unfunded liabilities for entitlement programs that President Barack Obama resists reforming promise to keep taxes high on current and future workers.

Washington resists a flat tax that would simplify the tax code.

Taxes have never been popular. Famously, baseball executive Bill Veeck once said: "Look, we play the 'Star Spangled Banner' before every game. You want us to pay income taxes, too?"

We are taxed on accounts receivable, alcohol, art, books, buildings, cars, clothes, computers, death, dining, education, energy, entertainment, food, fuel, health care, hotel stays, active and passive income, luxuries, marriages, Medicare, real property, recreation, Social Security, sales, transportation, watercraft, wells and workers' compensation. Add in local, city, county, state and federal taxes, and a range of assessments, enhancements, fees, fines, licenses and permits. The massive estate tax crushes family farms and small businesses; that's taxation even without respiration. Compliance costs for all taxpayers result in significant lost national productivity. The U.S. corporate tax rate is the highest among Western economies, stunting economic growth and job creation.

Proposals abound for additional, new taxes on carbon emissions, Internet sales, vehicle miles driven, and on land, wealth, savings, financial transactions and exit taxes for those departing high tax states and the U.S. for lower tax havens. Even the U.N. wants to impose a global poverty tax on citizens. Cyprus has now grabbed money from the bank accounts of savers. France has raised the top tax rate to 75 percent, causing an exodus of earners. Government avarice has no limits.

Former Chief Justice John Marshall expressed the fundamental axiom that the power to tax involves the power to destroy.

Milton Friedman, our greatest economist, taught that what we tax, we get less of. He noted that we now have a system that increasingly taxes work and subsidizes nonwork. Sen. Rubio, R- Fla., repeats a truism: "We need not more taxes, but more taxpayers."

The Tea Party will be back.

Larry Greenfield is a fellow in American studies at the Claremont Institute.


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