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Taxes for Revenue Only?

The IRS’s corruption has deep historical roots.

Jun 3, 2013, Vol. 18, No. 36 • By JAY COST
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What’s more, the federal government now learns answers to all sorts of personal questions. How many children do you have? What are their ages? How much did you pay in student loans this year? How much did you spend on health care? How much did you give to charity? To which charities did you give? And soon: Where do you get your health insurance? What ailments are covered? Americans 100 years ago did not have to reveal such intimate details to Washington, D.C., but nowadays most of us simply take this kind of invasion of privacy for granted.

And what of the tax breaks for special interests? They are, of course, plentiful in the tax code, so much so that both sides agree it is time to clean them out (something that happened just 25 years ago). The special favors in today’s tax code remind one of Phillips’s complaints more than a century ago:

To relate the treason in detail would mean taking up bill after bill and going through it, line by line, word by word, and showing how this interpolation there or that excision yonder meant millions on millions more to this or that interest, millions on millions less for the people as merchants, wage or salary earners, consumers; how the killing of this measure meant immunity to looters all along the line; how the alteration of the wording of that other “trifling” resolution gave a quarter of a cent a pound on every one of hundreds of millions of pounds of some necessary of life to a certain small group of men; how this innocent looking little measure safeguarded the railway barons in looting the whole American people by excessive charges and rebates. Few among the masses have the patience to listen to these dull matters—and, so, “the interests” and their agents have prosperity and honor instead of justice and jail.

Is it any wonder that IRS agents abused their authority by targeting groups for political purposes? If anything, they simply followed Congress’s lead—the tax code as it exists today is largely political in nature. The legislature, with the assent of the executive, gives payoff after payoff to this interest or that faction while the compliance burdens falling upon the whole country grow heavier and heavier. The republican principle of treating similar people similarly does not apply to the tax code as written by Congress.

A mere 100 years after the United States threw out the politicized mess that was the old tariff system, the new tax code is just as politicized, just as messy, and substantially more intrusive. History has repeated itself, and that says something about the nature of government.

Liberals complain about the inefficiencies and inequities of the free market. And, in some circumstances, their complaints are valid. An unregulated marketplace is not necessarily going to produce the social outcomes we consider just. This is why both sides agree on a basic regulatory regime; the differences between left and right are usually reducible to a debate over its size and scope. But the history of taxation in America demonstrates that the political marketplace can be just as inefficient and unfair, sometimes even more so. If the profit motive is not necessarily conducive to social harmony, neither is the reelection motive.

In light of this, maybe it is time for conservatives to rethink their approach to tax policy. Implicitly, many on the right still see the tax code in the same way that Hamilton and Clay did, as a wonderful tool to redirect social and economic outcomes for the betterment of all. But the history of American taxes demonstrates that the noble cannot exist without the ignoble, and the latter inevitably triumphs. For after the work of men like Hamilton and Clay is done, men like Aldrich invariably emerge to pervert public policy toward their own, selfish ends. And the Aldriches always seem to outnumber the Hamiltons and the Clays.

The rallying cry of small-government advocates in the late 19th century was a “tariff for revenue only!” They understood the kind of corruption that a complicated tariff or tax code inevitably breeds, despite the best intentions that the public-spirited might have. The IRS scandal demonstrates just how right they were.

Jay Cost is a staff writer at The Weekly Standard.

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