Taxes Are Getting Weaponized for Partisan Purposes

Reason – by J.D. Tuccille

Government agencies and laws have devolved into weapons to be wielded against political opponents in this country. Why wouldn’t taxes follow?

Too many Americans promote taxes as a means of hurting people they dislike, putting the raising of revenue as a secondary consideration—or dropping it entirely.  

Given the destructive nature of taxation, it’s a potentially effective strategy, at least for a while. But it may also totally delegitimize the tax system in the eyes of the people who are supposed to pay the bills.

Social Engineering Takes to the Tax Code

With simmering partisan animosity in the U.S. has come a growing willingness to use government to extirpate anything perceived as bad or politically different. Financial regulators, law enforcement, and legislation have already been conscripted to the cause of hurting political enemies. Taxation is the just the latest weapon in the war.

Insisting that “a system that allows billionaires to exist … is wrong,” Rep. Alexandria Ocasio-Cortez (D-NY), a self-identified socialist, wants to slap punitive taxes on the prosperous. Yes, Ocasio-Cortez thinks a 70 percent marginal rate will raise some money for her pet projects, but that seems to take a back seat to using taxes to remake the economic system and eliminate a class of people she believes shouldn’t exist.

Sen. Elizabeth Warren (D-Mass.) warned that “a small group of families has raked in a massive amount of the wealth American workers have produced.” Warren wants to confiscate part of their accumulated assets. “My proposal will help address runaway wealth concentration,” said the likely 2020 presidential candidate.

“I can’t wait to tax Howard Schultz back into the middle class,” tweeted progressive columnist Ian Millhiser, after the former Starbucks CEO had the temerity to float a possible independent presidential run. For Millhiser, revenue isn’t even a consideration—it’s all about harming a partisan foe.

Not that Team Blue has a monopoly on valuing taxation for its power to destroy. The current resident of the White House likes that characteristic, too.

“They will be taxed like never before,” President Donald Trump vowed after motorcycle-manufacturer Harley Davidson announced plans to move some production overseas in defiance of the president’s nationalistic economic policies. Trump also threatened both tax and antitrust actions against Amazon, explicitly linking his threats to criticism of his administration by The Washington Post, which shares Jeff Bezos as an owner.

The potentially destructive power of taxation isn’t exactly a new discovery. It was U.S. Supreme Court Chief Justice John Marshall who wrote in 1819, “That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create.”

Governments have deliberately used that destructive power before. Notably, politicians impose “sin taxes,” to economically suppress activities and products that they don’t have the votes or the will to explicitly prohibit.

Teaching Tax Contempt

Sin taxes are a popular tactic—but never a successful one. They just drive people to the black market, failing both to suppress their targets or to raise revenue since underground sales aren’t taxed at all.

Where sin taxes do succeed is in breeding evasion of and contempt for taxes. For example, more than half of the cigarettes sold in high-tax New York are smuggled or otherwise illegally sourced.

And after people have learned contempt for the tax system, unlearning may be difficult or impossible.

“Once tax evasion becomes deep-rooted, it is almost impossible to root it out,” tax historian Charles Adams wrote in his classic 1993 book, For Good and Evil: The Impact of Taxes on the Course of Civilization.

https://reason.com/archives/2019/02/04/taxes-get-weaponized-for-partisan-purpos?utm_medium=email