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The Taxman at Your Service

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At a time when federal revenues are the highest percentage of gross domestic product since the peak of World War II-over 20 percent-we are asked to feel sorry for the IRS. According to the tax agency, recent legislation has turned it into a shell of its former self. It is unable to collect what is “due.” The number of audits and property seizures has slipped. Agents are even afraid that if they collect revenue as they used to, they might lose their jobs. Oh horror!

Before we shed tears for the much-abused IRS, we need to keep some things in mind. The income tax and IRS are vile institutions that have no place in a society that aspires to be free. We have them for one reason alone: they bring in revenues like no other source of taxation, and revenue is the lifeblood of the leviathan state.

Whether or not the IRS is telling the truth about its incapacity to collect taxes, we can be sure that all champions of activist government-Democrat and Republican alike-will rally to its rescue. President Clinton has promised to beef up the agency’s budget and staff, and we’ve heard no opposition from the GOP. Quite the contrary. As the New York Times reported, “Republicans in Congress who have criticized the I.R.S. said they were open to the idea that more money might be needed.” Clinton has called for a 9 percent increase in its budget. It doesn’t take a clairvoyant to predict that the agency will get what it wants. That’s 633 more auditors breathing down our necks.

IRS Commissioner Charles O. Rossotti’s response to his agency’s alleged troubles deserves scrutiny. He warned that continued lax enforcement will “undermine our entire system of voluntary tax compliance.” One of the mysteries of life is the federal government’s insistence that the income tax is voluntary. Considering that it threatens to punish employers who don’t withhold employees’ taxes and citizens who fail to file tax returns or pay any money “owed,” one is at pains to locate precisely the voluntariness in the system. If the system is voluntary, an involuntary system would be one in which the government withheld 100 percent of everyone’s income and sent each person a monthly allowance.

Rossotti’s statement is reminiscent of a remark by Rep. Charles Rangel, the top-ranking Democrat on the House Ways and Means Committees: “What makes the voluntary system work is the fear of sanctions and penalties.” People in Washington actually talk like that-and mean it!

Let’s put the obvious on the record: no tax system is voluntary. “Taxes,” as Judge Learned Hand said some time ago, “are forced extractions, not voluntary contributions.” A voluntary tax is like a square circle. It is not to be found in the natural world.

Anyone who believes in voluntary taxation probably also believes that what the IRS provides is “customer service.” That’s another term the tax enforcers like to use. We are being lulled into thinking the IRS exists for our benefit. It wants to help us. Help us do what? Comply with the tyrannical demands it enforces in behalf of its sponsor, the money-grubbing members of the U.S. Congress. As the comedian Shelley Berman said in an old routine, “Do me a favor: don’t do me any favors.”

Rossotti recently told a congressional committee: “Customer satisfaction is not achieved by failing to collect taxes that are properly due.” Speak for yourself, Mr. Commissioner.

The intrepid Americans who opposed the income tax early in the century were prophetic. The tax has become the inquisitorial monster they predicted. Moreover, it has permitted the government to act as though it has a valid claim to 100 percent of our income; whatever we get to keep is by kind permission, and we should be darned grateful. Any mention of a tax cut is met with questions about whether it is really needed or whether the government can afford it. The default position for the money is in the government’s coffers. The rights of those who produced the wealth don’t matter.

We’ve come along way since that minuscule tea tax incited a revolution.

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.