The adage “money is the mother’s milk of politics” is well known and widely accepted. When a politician talks about money, there are two points to his speech. First, he wants to condemn the “special interests” giving to his opponent, and to condone the “voice of the people” supporting his own campaign. The problem with that is the two opposing groups are often the same donors.
In 1956, total campaign spending totaled $155 million. In 2012 Presidential election came at a cost of $2.6 billion. In the intervening 57years most of the campaign finance laws ever enacted were passed to stop abuses in political contributions. Something tells me we are missing the point.
Every election cycle brings new cries to “get the money out of politics.” In spite of that, campaign spending continues to rise. If America really wants to get the money out of politics, the answer lies in getting the politics out of money. With the ratification of the Thirteenth Amendment to the Constitution in 1913, the Federal Government was given the power to influence the money of every American citizen through tax policy. As long as money is used politically by the government, politics will continue to be about money.
A number of proposals have been made to change this reality by reforming the US Tax Code. That code now contains 74,608 pages, and is growing every year. Reforming that size document is like transferring the Atlantic ocean into the Pacific with a tea cup. The effort is just as effective by the way since the two oceans are connected.
The answer to getting politics out of money is to abolish the IRS (and its code), stop taxing income and start taxing expenditures. By taxing spending, an individual can avoid paying taxes by not spending money. Savings and investments would soar, thereby fueling economic growth and keeping interest rates low. More money available to lend means less competition for dollars, therefore, lower prices (interest) for the commodity.
Taxing spending also eliminates tax avoidance schemes. Every dollar spent on goods or services is taxed. That includes the millions of dollars now escaping taxes because it is unreported income (drugs, illegal aliens, tax fraud).
Changing procurement of revenue from income to spending also takes the ability of Congress to do base line budgeting out of the picture. Presently, the Federal Budget is set by allowing Congress to determine what they want to spend and then creating taxes to fund it. By taxing spending, Congress is told by the people, here is what you have to work with, now determine how to spend it.
For those who are running for your bunkers in fear of a government shutdown due to having no money, I just want to ask one simple question. The Federal Government began functioning with the ratification of the US Constitution in 1791. Since the government did not tax incomes until 1913, just how did we manage to fight several wars and become the most prosperous nation on earth producing half of all the products and services of the entire planet in that time? That question is worth asking, and the answer will lead you directly to taxing expenditures rather than incomes.