Author: Bill Bianco
bbianco@biancostroh.com
In the last presidential election, one of the rallying points for voters was President Trump's desire to "drain the swamp." The "swamp" is a metaphor for the bureaucracy of the federal government and the special interests that control our laws. President Trump never said how this goal would be accomplished, but one thing for sure is he has failed to use the one true vehicle to accomplish this goal -- the United States Tax Code.
Article One of the United States Constitution gives Congress the power to "lay and collect Taxes, Duties, Impost, and Excise." However, it was not until 1913 and the passing of the 16th Amendment that the federal government obtained the power and "authority" to impose income taxes.
People may disagree on the size and type of government America needs, but generally agree that the purpose of income tax is to fund government operations. Unfortunately, funding the government seems to be one of the last items thought of when tax laws and regulations are being drafted. Since the passing of the 16th Amendment, the tax code has evolved into a highly complex and massive beast. The tax code is the federal government's chief mechanism to control your behavior and that of your fellow citizens.
The most recent example you may be aware of was the 2012 case involving the Affordable Care Act ("ACA"), also known as Obamacare. The Supreme Court upheld the section of the ACA that required people to buy health insurance upon tax policy law. Putting your politics aside, do you really think the purpose of the 16th Amendment was to force people to buy a product, such as health insurance?
The tax code pits people against people, people against businesses and businesses against businesses. The best illustration of this is the special interest groups now vying for favorable treatment on Capitol Hill with the new tax bill. Lobbyists and politicians are storming Capitol Hill seeking preferential treatment and protecting their interests as established in prior tax laws.
The power to use the tax code to control personal behavior and business behavior is not funding the government. The tax code is the most powerful tool the government has to manipulate behavior and control industries. Justice John Marshall famously wrote in McCulloch v. Maryland - "the power to tax includes the power to destroy.” Unfortunately, Justice Marshall’s ominous warning in 1819 has been ignored and the sword of an unjust system continues to be freely wielded by the federal government.
If President Trump truly wants to "drain the swamp," the new tax code must disarm the federal government. Tax policy must return to the sole purpose of a "tax," which is funding the government. The favoritism of one group over another and redistribution of income built into the existing tax code must end and then, we can return to a government by the people. Without such an effort, the swamp will not be drained and will continue to grow more toxic.
Author: Bill Bianco
bbianco@biancostroh.com