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As hurricanes assail the nation, President Trump is tweeting up a storm on a “once-in-a-generation” opportunity to cut taxes and simplify the tax code. So far, the president is short on details, but he did say, “It’s your money, not the government’s money,” and tax reform should start with that reality.
The money that workers earn belongs to them and is “proper” to them, their property, and nobody else has a prior claim to what any worker earns. Yet government policy is geared otherwise. In fact, government gets workers’ money before the workers do, through withholding from their paychecks, but it was not always so. Withholding dates from World War II, and it was supposed to be a temporary measure. Politicians chose to keep it in place. As Charlotte Twight explained in her 2002 book Dependent on D.C., “Withholding is the paramount administrative mechanism that since 1943 has enabled the federal government to collect, without significant protest, sufficient private resources to fund a vastly expanded welfare state.”
Withholding suggests to workers that only their “take home” pay is theirs. In reality, it all belongs to the worker, but much of it has already been lifted by government. If workers received all their money and had to write monthly or quarterly checks to the IRS, protest would be significant. For their part, politicians are locked and loaded on the current system, and it’s hard to think of a single public official who has decried withholding, much less called for its abolition.
Politicians regularly call for the abolition of the IRS but never make any move to do so. The nation’s most powerful and most intrusive agency serves as a convenient strike force against political enemies, particularly those who advocate smaller government and lower taxes. Lois Lerner was the IRS official who led the charge, but now the Justice Department is letting Lerner off the hook. Republicans talked of tossing IRS boss John Koskinen, a prevaricator of unusual prowess, but Koskinen remains at the helm.
The workers, meanwhile, certainly deserve a tax cut. On the other hand, real tax reform will not come about until the workers get their own money before the government does.