The Progressive 9

One hundred years ago in this country, and for the hundred years before that in Europe, the income tax was considered progressive.  It was new and evolving; it was tried and dropped and tried again until it became a permanent fixture in most of the “modern” countries.  The goal was to make the working and poorer classes feel like the well-to-do were paying their “fair share.”  And to this day we still hold on to that dream, even though after a hundred years in this country it still has yet to come true.  You know what they say when you keep trying the same thing and expect different results.  This country must move forward where tax reform is concerned.  If anything, it will be therapeutic – it will loosen insanity’s grip.

Have you ever gone through the process of training your hair to go in a direction it isn’t used to?  Takes a while, doesn’t it?  You brush your hair in the new direction, but the cells and molecules are used to being bent or stretched in the old direction and are set, so the hair gradually moves back.  Through repetition, the cells are eventually set in the new direction.  Our minds can be the same way, and I’ll prove it to you.  I’m going to tell you something about the income tax tonight that is true.  It is something that many of you will have difficulty believing because you most likely think the exact opposite is true.  My hope is that a lot of you reading this are relatively new to giving this topic much thought – I actually hope that many of your minds are made up in the opposite direction of the truth, because it is your minds that need to learn to switch directions.  And if your interest in this topic grows and you want to forward any of my posts to others to bring them along, I hope this is the first post you share.  Here goes:

Whether at the state or federal level, the income tax is not necessary.

Now, that is the truth, and if you believe the opposite, I'm sure you still believe the opposite.  But as I show you the truth from a couple of different angles, even as you start to believe the truth, your mind will still try to go back to what it’s used to.  Speaking from my own experience, even after you have become fully convinced of the truth, you will still catch your mind drifting back in that direction, and you have to remind yourself of what you know to be true.

Thoughts of roads and schools are filling your head.  You still don’t believe me.

So, you remember I mentioned the conversation I was having with one of my friends this past Sunday night?  I want to share now what she said really struck her as I was venting over my International House of Pancakes Belgian waffle.  It is something I mentioned several posts ago, but I will give it a little more attention now.

There are currently nine states in the Union that do not levy an income tax on their citizens.  In 2010, I sent letters to the governors of those nine states and enquired as to why that is.  Is there a specific principle that keeps them from doing so?  Is it not allowed, or is it just a matter of its being unpopular?  I received five very cordial responses – some of the governors responded in person, and some referred the matter to other departments.  Here are some highlights.

A letter from Governor Perry’s Constituent Communication Division in Texas said: “Governor Perry does not support a state income tax…The state’s revenue comes largely from sales and property taxes.”

A special assistant for Alaska’s Department of Revenue wrote: “Alaska did impose an individual income tax for many years…By 1979, however, revenue from oil and gas production, property, and corporate income tax was nearly five times greater than revenues from the individual income tax.”  The state repealed the individual income tax effective January 1, 1980.  “Its repeal was simply a case of economics.”

Governor M. Michael Rounds of South Dakota said: “I do not support a state income tax because we already have a balanced and fair system of taxation in South Dakota…Most state government activities are funded primarily by the state sales and use tax.  Most local government activities are funded primarily by local property taxes.  Also, because the federal government already taxes income, I do not believe we should tax incomes a second time in South Dakota...

“States with state income taxes also have much more difficult times during recessions.  For example, in the current recession, the two revenue sources we have that are based on income generation – investment returns and the bank franchise tax – have plummeted.  If our entire state tax system were based primarily on an income tax, many harmful cuts would have to have been made in services that help people in need.  Therefore, reliance on a state income tax would not be good for South Dakotans.”

And Wyoming’s director of the Department of Revenue shared this: “The Legislature simply never saw fit to impose a personal or corporate income tax.

“In 1974, by a vote of the people the Constitution was amended by Article 15, Sec. 18, and it read as follows:

‘No tax shall be imposed upon income without allowing full credit against such tax liability for all sales, use, and ad valorem taxes paid in the taxable year by the same taxpayer to any taxing authority in Wyoming.’

“The message sent by the electorate was pretty obvious.  We don’t want income taxes imposed in Wyoming!...So the answer to your question is simply that there has never been any popular support for an income tax.  Because Wyoming is a mineral rich state, the tax revenue lost by not having an income tax is made up for by imposing severance and ad valorem taxes on minerals, primarily coal and oil & gas.”

Now, the point is not that states without the income tax are Utopias.  None of the letters suggested such a thing, nor have I ever believed that abolishing the income tax will lead to that.  But also note that none of the letters said, “Our wood plank schoolhouses are crumbling.  Raw sewage runs down our unpaved streets.  We can’t afford police.  A library?  Never heard of that.  Our naked, homeless citizens sit in a vast field, waiting to die.  If only we had an income tax.”  None of the “Progressive 9” (as I’m calling them) lack the bells and whistles of civilization enjoyed by their neighbors.

Nine of our states are proving every day that taxing the income of their citizens is unnecessary.  And what I truly admire about the people of Wyoming is that they fully recognize the fact that, though they don’t pay an income tax, they are still taxpayers!

I hope it’s beginning to sink in.

I need to sink into my bed, so tomorrow I will address this same topic at the federal level, and I think you will be very intrigued.