Creation of Wealth
Wealth creation and abolishing the income tax
The most important change we can make to expand our economy, and limit our regressive government, is to remove all taxes that result from production (income, investment, inheritance); and replace them with tariffs to fight the unfair practices of our competitors, or consumption taxes applied once at the lowest level of manufacturing and production.
Prior to 1913 and Woodrow Wilson, we had no permanent income tax. We raised all the money we needed through tariffs. Wealth spread throughout the country. However, in 1913 perhaps the worst year in American history, Wilson and the Progressives replaced tariffs with the income tax and installed the Federal Reserve System, as a non-governmental central bank. Both moves concentrated power and wealth in the hands of a few at the expense of the many. Also, each state’s authority to choose US Senators was transferred to the federal government.
Consumption taxes, unlike production taxes, don’t punish those who produce the most or award those who choose to produce little. Incentive shifts to the most productive and relying on the dole becomes less attractive. At the same time consumers are more careful in seeking better products that cost less and last longer. Honest, more efficient businesspeople will offer consumers more value for their dollars; and American companies that already have a reputation in manufacturing superior products will prosper.
With tariffs, American companies who manufacture overseas are encouraged to return to the USA and restore jobs here. It’s in their interest as taxes and regulations are reduced. Foreign companies won’t be able to compete with re-established American companies unless they improve the quality of their products and reduce prices; all of which benefit American consumers.
Tariffs and consumption taxes will eliminate the huge bureaucracy of the IRS and end the distortions in our economic activities caused by its rules and regulations. People make inefficient economic decisions now, based on the best way to avoid taxes on their income. When the tax system is changed, an expansion of wealth, more economic activity, and new jobs follow. Tariffs and consumption taxes will change the psychology between citizens and their government. Taxpayers will support office holders and seekers who promote smaller, more efficient and cheaper government. Since the private sector can deliver higher quality services, at a lower price, tariffs and consumption taxes will speed up the trend towards privatization affecting everything from education to social security. Because of the new wealth created by the change in tax systems people will have more money for medical care. Medical savings accounts and other innovative reforms will increase. And the move toward government-controlled medicine will be defeated.
The expansion of wealth generated by tariffs and consumption taxes will in fact shrink the real or imagined need for government bureaucracy. The deep state, the administrative state will lose its legitimacy. As the psychology between citizens and government changes “Faith based”, and other non-profits, also benefitting from wealth expansion will be able to handle most of the social welfare still needed.
The rich, who consume more will pay more taxes, but all of us will want to be rich so that our tax burden becomes a smaller and smaller percentage of our wealth. More wealth creation will reduce financial stress on families, a leading cause of divorce.
These new tax sources will be good for the environment. More careful consumption using fewer resources will mean less throw away items ending up in landfills.
Among arguments used by the opponents of the consumption tax is that it will hit hardest on the poor. The poor who now pay a large proportion of their incomes on groceries and other basic items, would no longer have to deal with the hidden business taxes in the prices of their groceries (which amounts to 17%). Eliminating those business taxes would lower the final cost of their groceries; and most poor people, when given a clear path toward wealth creation will leave poverty behind.
Eliminating production taxes will eliminate noncompliance with the tax system. Production taxes require hundreds of millions of collection points. While consumption taxes or tariffs require a miniscule fraction of that amount. Finally, there is one other obvious and long-noted result of tax reform. The black-market economy and the money resulting from criminal activity will become taxable. Annually, several hundred billion up to a trillion dollars previously free of taxes, will have the tax burden as honest money.
Wealth creation is the great liberator. And shifting to tariffs and the consumption tax system is the best way; indeed, the only way, to vanquish poverty, expand the middle class, and make it easy for people to create and acquire wealth.
William R. Chaisson
601 Papaya Circle
Sebastian, FL 32976
570-618-9750
