Income Tax and Privacy
In light of the government takeover of personal health care, there’s been a lot of chatter, from those that care about such things, about the inevitable rise of taxes to pay for this massive expansion of government control and power (yes, I’m deliberately loading my language with as many scary words as I can reasonably manage :). One of the ideas against increased taxes which I rather like (and which is neither new nor original) is that income tax is an invasion of privacy. Rather than making both of my readers suffer through my attempts to stumble through the idea, I’ll turn to a professional wordsmith and general funny man, National Review’s Jonah Goldberg. He discusses this idea in his “Goldberg File” for April 8.
So I wrote this piece on taxes and tyranny for USA Today this week. In the course of researching the column, I went back and looked at newspaper coverage of the income-tax debates in the late 19th century and again around the time of the 13th amendment’s passage. It was a really interesting exercise for a bunch of reasons, even if I didn’t end up using that stuff. For starters, it was neat to discover that the Washington Post considered the income tax an “odious measure” in 1894. I was also intriguing to discover that, at least according to some foes of the income tax, it was in part an attempt by the South to shake down the North. Here’s what Senator Smith (oddly, the Post doesn’t say what Smith’s first name or his state was in the article, and I don’t have time to look it up because I’m heading to a plane) said on the Senate floor in 1894:
The income tax is especially unjust, because, as openly confessed by the Southern members of Congress, and it is upon this ground that they favor it, nearly the whole burden will fall upon the Northern States, while those that were in rebellion will escape its provisions. In thus combining to unjustly tax the North the Southern Congressmen are at least consistent with their traditions and prejudices. Their allies from the North are demagogues, pure and simple, in that they affect to protect the common people by a wickedly oppressive measure directed against another class of citizens. Such hypocrisy is rarely rewarded by temporary benefit even, and in this case the disguise is too transparent to deceive any but fools, or meet the approval of any but knaves.
More interesting, however, was how one of the major arguments against the income tax at the time was its grotesque violation of privacy. You still hear criticism about the “intrusiveness” of the tax code, but that usually has an economic connotation to it, as if the only problem is the inefficient burden of compliance and not the violation itself.
The other week, I wrote in the G-File and in my column about how overblown the hysteria over the Patriot Act was. The ACLU and all of the other usual suspects insisted that “sneak-and-peak” warrants were an unholy invasion of our privacy, even though the FBI needed a FISA court warrant to conduct them. Meanwhile, every American who files an income-tax return, or at least those who itemize, must account for their travel, their purchases, their place of work, most of their habits, and so on, and nobody thinks anything of it.
I’m not going to bust out the slippery-slope or boiling-frog metaphors (though, for the record, the boil-the-frog-slowly story isn’t true). But this is really a profound point (“If you do say so yourself . . .” — The Couch). When the income tax was first introduced, it applied to only a tiny fraction of Americans. Today, the share of Americans paying income taxes is still small in percentage terms, but in absolute numbers it’s huge. I could look it up, but I have to keep typing. Take my word for it.
So, imagine that for the last 200 years we’d been paying for government some other way — a sales tax or a super-property tax or some vast Gulag Archipelago of Abu Ghraibs where we forced Leprachauns to give us their gold — and then along came a politician proposing that millions of Americans should have to open up their lives to the income tax. There would be a huge outcry. But we’ve grown acclimated to these petty intrusions.
It makes me read this passage from Mark Steyn with increasing dread:
Every time I retail the latest indignity imposed upon the “citizen” by some or other Continental apparatchik, I receive e-mails from the heartland pointing out, with much reference to the Second Amendment, that it couldn’t happen here because Americans aren’t Euro-weenies. But nor were Euro-weenies once upon a time. Hayek’s greatest insight in The Road to Serfdom is psychological: “There is one aspect of the change in moral values brought about by the advance of collectivism which at the present time provides special food for thought,” he wrote with an immigrant’s eye on the Britain of 1944. “It is that the virtues which are held less and less in esteem and which consequently become rarer are precisely those on which the British people justly prided themselves and in which they were generally agreed to excel. The virtues possessed by Anglo-Saxons in a higher degree than most other people, excepting only a few of the smaller nations, like the Swiss and the Dutch, were independence and self-reliance, individual initiative and local responsibility, the successful reliance on voluntary activity, noninterference with one’s neighbor and tolerance of the different and queer, respect for custom and tradition, and a healthy suspicion of power and authority.”
Two-thirds of a century on, almost every item on the list has been abandoned, from “independence and self-reliance” (40 percent of people receive state handouts) to “a healthy suspicion of power and authority” — the reflex response now to almost any passing inconvenience is to demand the government “do something,” the cost to individual liberty be damned. American exceptionalism would have to be awfully exceptional to suffer a similar expansion of government and not witness, in enough of the populace, the same descent into dependency and fatalism. As Europe demonstrates, a determined state can change the character of a people in the space of a generation or two. Look at what the Great Society did to the black family and imagine it applied to the general population: That’s what happened in Britain.