Ron Paul's Texas Straight Talk - A weekly Column

October 16, 2000

Real Tax Reform Still Needed for Texas Families

Earlier this week I received a "Tax Fighter Award" from the nonpartisan National Tax Limitation Committee, based on my pro-taxpayer voting record during the 106th Congress. While I was pleased to receive the award, I realize the tax burden facing Texas families remains far too high. This Congress has proven itself unwilling to make real reforms to our overly complex and burdensome tax system.
Washington politicians love to champion the "budget surplus," as though government created an economic windfall. The truth is quite different. The surplus simply represents an overpayment of your tax dollars. Of course once the government has your money, it characterizes any tax cutting proposals as "costing too much." "We can’t afford to spend the surplus," politicians tell us. This is nonsense, and I urge taxpayers in my district to reject the ludicrous notion that tax reduction will harm the economy. The economy suffers when government takes money from your paycheck that you otherwise would spend, save, or invest. Taxes never create prosperity. Private-sector innovation and productivity are the engines that drive our economy, regardless of what politicians tell us.
Tax reduction is my first priority as your Congressman. The reality is that most working Americans lose about half of their incomes to federal, state, and local taxes. "Tax Freedom Day" (representing the portion of the year you work just to pay taxes) for the majority of Americans is around June 1st. Imagine all of your hard work this year between January and June going to the government! Clearly, the status quo is not acceptable. Texas families cannot continue to work more and more simply to keep pace with their tax bill.
The income tax is the most burdensome of all taxes. Rates are far too high, and the forms are ridiculously complex. The IRS remains an uncontrolled bureaucracy of terror. Public opposition to the current structure has created support for flat tax and national sales tax proposals. My proposal is known as the "Liberty Amendment" (H.J.R 116). This bill would repeal the 16th Amendment, which created the income tax in 1913. It is important to remember that the U.S. government operated for more than 130 years without an income tax. Government revenues were generated by simple excise taxes. It is time to return to a simple, fair method of funding the federal government.
We also must eliminate the very harmful estate tax, and end the terrible practice of imposing a tax on families when a loved one dies. This tax penalizes thrift and savings, denying Americans the right to pass their property to their children. Despite the Washington rhetoric, the estate tax does not apply only to the rich. In fact, it forces the sale of many small family businesses when heirs cannot pay the estate tax bill. Worst of all, the estate tax is imposed on savings and capital that already have been taxed. The estate tax simply takes money away from families and puts it in the hands of the government. There is no moral or economic justification for estate taxes, and I co-sponsored legislation and voted twice to repeal the tax.
Taxes on Social Security benefits also must be abolished. I supported a bill earlier this year which successfully repealed a 1993 tax increase on benefits, and my own bill (H.R. 761) would go farther and eliminate all taxes on Social Security benefits (remember, prior to 1984 benefits were exempt from federal income taxes). Our seniors paid taxes throughout their working lives to fund the Social Security system, and it is immoral to tax them again on their benefits. Why are we taxing a widow’s $700 monthly benefits check? We must repeal this unfair tax so that our seniors receive all of their hard-earned benefits.
Various other taxes also must be eliminated. Capital gains taxes are terribly counterproductive, punishing those who save and invest. Payroll taxes impose a tremendous compliance burden on businesses, especially smaller entrepreneurs who cannot hire an accounting department. Federal gas taxes should be slashed to provide taxpayers relief at the pump. Most importantly, federal spending must be dramatically reduced so that all Americans can go back to working for themselves instead of working to pay their taxes.