Teensy-Weensy Legal Reforms
American visitor to this Web site probably has a cabinet-level agency
that he thinks should be abolished first. I dream such dreams, too.
But as I grow older, I become less utopian. So, Iím going to recommend
two minor technical revisions of the tax code.
withholding on all federal income taxes.
the date that federal taxes are due to the first Monday of November.
elections are held on the first Tuesday after the first Monday of
are just a couple of minor technical revisions, right? Nothing too
revolutionary here! I find it difficult to believe that a critic
could go on national television and say, "This strikes at the
very heart of the American experiment in liberty!" Would anyone
believe him? Would voters rise up in wrath against a President who
proposed these reforms?
in 1942, Beardsley
Ruml came up with a plan to sell Congress on the idea of federal
income tax withholding, he understood exactly what it would to for
revenues actually collected: multiply them.
was the governmentís problem in 1942: only about five million out
of the 34 million Americans subject to the income tax were saving
to pay it on March 15, 1943. This presented a big problem for tax
collectors, now that wartime taxes had been hiked dramatically.
formerly the director of the Laura Spelman Rockefeller Foundation,
in 1942 was chairman of the New York Federal Reserve Bank. He was
also the treasurer of R. H. Macy & Co., the department store.
As Macyís treasurer, he well understood that most people resist
saving for known expenditures. He asked: Why not get employers to
deduct their employeesí income tax liabilities? He recommended this
to Congress in 1942, and Congress in 1943 passed a tax collection
bill that included Rumlís withholding provision: the Current
Tax Payment Act.
it work? Beyond their wildest expectations. In 1942, the U.S. government
collected $3.2 billion from income taxes. It 1943, before the law
was fully operational, it collected $6.5 billion. In 1944, it collected
$20 billion. (Historical
Statistics of the United States, Pt. 2 (Government Printing
Office, , p. 1105.)
tax was passed as a wartime measure. Naturally, it was not repealed
in 1945. This is why the courageous Vivian Kellums quit sending
in withholding taxes for her 100 employees in 1948. The IRS never
beat her in court. (Someone should put her 1952 book on the Web:
Toil, Taxes, and Trouble. Some enterprising grad student
should write his Ph.D. dissertation on her. Her papers are in the
University of Connecticut library.)
withholding tax system is popular with the federal government for
four reasons. First, the government deliberately over-withholds.
This forces taxpayers to file their forms to get their refunds.
Second, it creates a "free money from the government"
emotional response when the refund check arrives. Third, the government
gets to use this money, interest-free, during the taxable year.
Fourth, it makes income taxes and Social Security taxes less painful
and therefore more acceptable.
all federal income taxes were due on the same day, this day would
become the most feared and hated day of the year, assuming that
it isnít already. I ask: Why not have this day fall on the day before
income tax forms must be mailed by April 15. Think about this date.
Before they vote in November, taxpayers have almost seven months
to forget about tax misery day the previous April, and their next
form-filing day will not come for almost six months. Out of sight,
out of mind.
say, let every citizen recall his previous dayís tax filing and
check-writing experience when he steps into the polling booth to
cast his vote. Let democracy speak!
W. Bush could include these minor legal revisions in his personal
platform without calling much attention to them. Mr. Gore would
find it difficult to campaign against them. Conservatives would
like them. But hardly anyone would pay much attention. He could
promote the first with this slogan: "Itís your money to use
until itís due." He could promote the second with this slogan:
is yours." Are these proposals too radical for Mr. Bush? Probably.
Gary North runs www.freebooks.com.