Fix Healthcare in the U.S.

Healthcare in the U.S. is a train wreck in motion!

American's For Tax Reform (ATR) believes that individuals should control America's healthcare system, making informed health decisions with their own money and chosen healthcare experts.

ATR believes that America’s healthcare system should be controlled by individuals, not by third party payers like governments or insurance companies. People should be in charge of making informed health decisions with their own money and in consultation with their chosen healthcare experts. Insurance should be reserved for catastrophic health events, much like car insurance is reserved for catastrophic automobile events. The best type of insurance is a high-deductible health insurance plan in conjunction with a health savings account (HSA).

Healthcare Taxes
ATR believes that the tax treatment of health insurance should be neutral, no matter whether you get health insurance from an employer or on your own. That’s why we believe in expanded health savings accounts (HSAs) with higher contribution limits and the ability to pay for health insurance premiums with pre-tax dollars. We believe that flexible spending accounts (FSAs, or “flex plans”) should work more like HSAs. We believe that you should be able to purchase health insurance across state lines. We believe that trial lawyers should not be able to drive up the cost of care with lawsuits. In general, healthcare markets can and should work like any other market to provide efficient services and goods to savvy consumers.

Obamacare
ATR opposes Obamacare principally because it created two dozen new or higher taxes. These tax increases include a higher capital gains and dividends tax, various new taxes on health insurance plans, taxes on FSAs and HSAs, a “medicine cabinet” tax, a new tax on medical device manufacturers, a “Cadillac plan” excise tax on health premiums, an individual health insurance mandate, an employer health insurance mandate, and many others.

HSA/FSA
Tax-free savings accounts allow consumers to be empowered to purchase healthcare services themselves, without governments or insurance companies interfering. They are an essential tool in moving toward a consumer-driven healthcare system that puts patients in charge, not government or corporate bureaucrats. HSAs, in particular, have proven effective at bringing down cost inflation, saving for future healthcare needs, and empowering families. A flexible spending account or “flex-plan” (FSA) is a “use it or lose it” account which ATR believes should work more like HSAs.

Support the Fair Tax to Jump-Start Economic Growth!

Support the Fair Tax

An Open Letter to the House Committee on Ways and Means.

July 26, 2011 

National Taxpayers Union Letter

Dear Chairman Camp, Ranking Member Levin, and Members of the Committee:

On behalf of the 362,000 members of the National Taxpayers Union (NTU) we urge you to give your strongest endorsement to H.R. 25, the “Fair Tax Act of 2011,” and support its passage on the floor of the House. Throughout NTU’s 40-year-plus history we have advocated for fundamental tax reform that achieves lower, flatter, and simpler taxes for all Americans. By repealing the current onerous system in favor of a national retail sales tax, the Fair Tax Act, introduced by Representative Woodall (R-GA), is an excellent plan to achieve those ends. We feel that the passage of this legislation would not only restore transparency and simplicity to the Tax Code, but would also result in substantial economic and social benefits.

Our present Tax Code, replete with an impenetrable maze of deductions, credits, and loopholes, has become an impediment to economic growth and good government. The withholding process, for example, makes it difficult to determine how much of a worker’s earnings are being used to fund the government. Consumers’ true tax burdens are also obscured by levies such as payroll and corporate income taxes, which are embedded in the price of every good and service. By instituting a sales tax with a simple 23 percent tax-inclusive rate, the Fair Tax would eliminate all income and payroll taxes and make the cost of government plainly visible on cash register receipts. This would provide taxpayers with better information and enable them to more effectively hold elected officials accountable for allocating revenues wisely.

The Fair Tax would also eliminate the complexity and high rates that dampen economic growth and place us at a significant competitive disadvantage globally. According to a new study from the Oxford University Centre for Business Taxation, the effective average tax rate for corporations in the U.S. is the second-worst among G20 nations. In addition, taxes on capital gains and dividends create distortions that steer resources toward tax-minimization efforts and away from productive activities. By eliminating these taxes, H.R. 25 would allow companies to reinvest their profits in jobs as well as allow individuals to set aside more for retirement. At a time when Americans are simultaneously being squeezed by a poor economy and increased competition from emerging markets, the Fair Tax would make the United States a prime destination for investment and growth. Furthermore, as NTU’s 11^th annual “Taxing Trend” study indicates, the value of the time alone that individuals and businesses spend complying with the individual and corporate tax laws now exceeds $227 billion. H.R. 25 would substantially reduce this and other tax-induced deadweight losses.

The Fair Tax accomplishes these ends while answering several concerns from defenders of the status quo. The 23 percent tax-inclusive rate is designed to replace revenues from the current scheme of income and payroll taxes dollar-for-dollar, ensuring a stable funding base for federal programs and a suitable starting point for a national discussion on the future size of government. The Fair Tax also preserves every household’s ability to provide for itself, through a universal “prebate” based on the poverty level. This has the effect of protecting against regressivity while also treating all taxpayers, all income, and all products the same.

By promoting freedom, fairness, and economic opportunity the Fair Tax proposal under your consideration would be a dramatic step forward for a Tax Code in dire need of reform. NTU thanks the Committee for its consideration of the Fair Tax Act of 2011 and we encourage you to report it favorably.

Sincerely,

Brandon Greife

Federal Government Affairs Manager

Stop Farm Welfare Now!

Top 10 Reasons to Oppose Farm Welfare

Nan Swift
National Taxpayers Union
August 8, 2012

1. The Farm Bill is reform we can’t afford: The 2012 House Federal Agriculture Reform and Risk Management (FARMM) Act weighs in at a budget-busting $960 billion  over the next ten years! For comparison, when ObamaCare passed, we were told it would cost $940 billion (the price tag later went way higher). The Troubled Asset Relief Program, or TARP, cost $700 billion in initial outlays.

2. Congress can’t keep spending money we don’t have:  Our economy is staggering under a $1.2 trillion federal deficit and $16 trillion in federal debt. We can’t keep wasting taxpayer dollars on unnecessary programs like the Farm Bill. Congress should be shrinking government spending, not growing it.

3. The farm economy remains robust: Thanks to high commodity prices and bigger crop yields, the financial outlook for American farmers has been improving.  The Department of Agriculture reports that productivity has soared in the past 60 years.  Since the 1990s, farm income has trended upward at a much faster pace than for other U.S. households.  In 2010, the average annual income for a farming household was $84,440, well above the national mean of $64,000. The current debt-to-asset ratio in the agriculture sector is less than 9 percent and fewer than one in 200 farms fail each year.

4. This isn’t the spending cut we were promised: The media and Big Ag proponents have been touting the new bill as a major cut, but this legislation is 60% BIGGER than the Farm Bill that passed in 2008.

5. The farm bill is full of new entitlements for Big Ag:  The new farm bill does cut the indefensible direct payment program, where farmers received a check from taxpayers regardless of market conditions, but it is replaced by “shallow-loss” crop insurance programs that have the potential to cost billions more for taxpayers should prices fall even slightly to their 15-year averages.

6. There’s far more “Food Stamp” than “farm” in the Farm Bill:  Almost 80% of the funds in the bill go toward the Supplemental Nutrition Assistance Program, or SNAP.  This makes for a strangely hypocritical bill, whereby at the same time farm policies try to prop-up food prices, SNAP tries to make food more affordable for low-income Americans. The truth is that without buying votes from both sides of the aisle through taxpayer-funded handouts, the package would never pass. Congress should evaluate both parts of the bill on their individual merits and embrace cost-saving policies like block-granting Food Stamps, a common-sense reform that has had great success in other welfare programs.

7. The Farm Bill is full of hidden costs to our economy: The taxpayer-funded subsidies and other price support programs in the Farm Bill distort free markets and increase the price of food. Federally funded crop insurance programs create a perverse incentive to farm on land that shouldn’t be cultivated and drive up prices, hurting small farmers in the process.

8. We need to repeal the sugar program: The House Farm Bill preserves the nefarious sugar cartel that costs U.S. consumers $1.9 billion a year thanks to trade restrictions and price supports. Fully 42% of sugar subsidies go to only 1% of sugar growers, and for every one sugar producing job saved, three are lost by industries that use sugar for their products. The result is lost economic activity and employment opportunities, both of which end up flowing to other countries.

9. The Farm Bill is full of costly special interest carve-outs:  Just two examples include a duplicative catfish inspection program costing taxpayers $44 million and a cotton subsidy that violates free trade agreements and for which taxpayers pay Brazilian cotton growers $150 million per year. Want more? How about a Soviet-style dairy price support program that costs taxpayers billions of dollars, stifles innovation, transfers wealth from consumers to certain dairy businesses and hurts downstream producers. Then there are all the programs for mustard seeds, garbanzo beans, lentils, popcorn, rice, and peanuts. The list goes on and on.

10. Taxpayers assume the most risk: Taxpayers currently cover about 60% of the costs for farmers’ crop insurance.  That means that taxpayers assume much of the risk for crops planted in unsuitable areas or for poor business choices.   Congress has created a moral hazard by eliminating the incentive for following prudent farming and other cost mitigation practices like crop diversification.

We need to tell Congress to stop letting Big Ag feed at the taxpayers' trough. Go here to sign the petition and urge your lawmakers to oppose H.R. 6083, the House Farm Bill!
 

Economic Wisdom

       When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else's money to buy something for himself, he is very careful about what he buys, but doesn't care at all how much he spends. And when a man spends someone else's money on someone else, he doesn’t care how much he spends or what he spends it on. And that's government for you. – Milton Friedman

       The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another. – Milton Friedman

        If you think health care is expensive now, wait until you see what it costs when it's free. – P.J. O'Rourke (1993)

       In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other. – Voltaire (1764)

       There is no virtue in compulsory government charity, and there is no virtue in advocating it. A politician who portrays himself as caring and sensitive because he wants to expand the government's charitable programs is merely saying that he's willing to try to do good with other people's money. Well, who isn't? And a voter who takes pride in supporting such programs is telling us that he'll do good with his own money – if a gun is held to his head. – P.J. O'Rourke

       Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. – Frederic Bastiat

       Whoever prefers life to death, happiness to suffering, well-being to misery must defend without compromise private ownership in the means of production. – Ludwig von Mises (1920)

       We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. – Winston Churchill (1903)

       If you have been voting for politicians who promise to give you goodies at someone else's expense, then you have no right to complain when they  take your money and give it to someone else, including themselves. – Thomas Sowell (1992)

       Government cannot make man richer, but it can make him poorer. – Ludwig von Mises

       The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced. If the nation doesn't want to go bankrupt, people must again learn to work, instead of living on public assistance. – Marcus Tullius Cicero, 55 BC

       America's abundance was not created by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. – Ayn Rand

       Every individual necessarily labors to render the annual revenue of society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own gain, and he is, in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention. – Adam Smith, Wealth of Nations

       When you subsidize poverty and failure, you get more of both. – James Dale Davidson, National Taxpayers Union

       The welfare state reduces a citizen to a client, subordinates them to a bureaucrat, and subjects them to rules that are anti-work, anti-family, anti-opportunity and anti-property … Humans forced to suffer under such anti-human rules naturally develop pathologies. The evening news is the natural result of the welfare state. – Unknown

       Manufacturing and commercial monopolies owe their origin not to a tendency imminent in a capitalist economy but to governmental interventionist policy directed against free trade and laissez faire. – Ludwig  von Mises

       Tariffs, quotas and other import restrictions protect the business of the rich at the expense of high cost of living for the poor. Their intent is to deprive you of the right to choose, and to force you to buy the high-priced inferior products of politically favored companies. – Alan Burris, A Liberty Primer

       Perhaps the removal of trade restrictions throughout the world would do more for the cause of universal peace than can any political union of peoples separated by trade barriers. – Frank Chodorov

       The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws. We regard the minimum wage law as one of the most, if not the most, anti-black laws on the statute books. – Milton Friedman, Nobel Prize winning economist

       Every man has a property in his own person. This nobody has any right to but himself. The labor of his body and the work of his hands are properly his. – John Locke, 1690

       Taxation of earnings from labor is on a par with forced labor. Seizing the results of someone's labor is equivalent to seizing hours from him and directing him to carry on various activities. – Robert Nozick, Harvard philosopher

       What's *just* has been debated for centuries but let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree?  Well then tell me how much of what I earn *belongs* to you – and why? – Walter Williams

       A society that robs an individual of the product of his effort … is not strictly speaking a society, but a mob held together by institutionalized gang violence. – Ayn Rand

       There are people who think that plunder loses all its immorality as soon as it becomes legal. Personally, I cannot imagine a more alarming situation. – Frédéric Bastiat

       The New Deal began, like the Salvation Army, by promising to save humanity. It  ended, again like the Salvation Army, by running flop-houses and disturbing the peace. – H. L. Mencken

       Everyone wants to live at the expense of the State. They forget that the State lives at the expense of everyone. – Frédéric Bastiat

       We are living in a sick society filled with people who would not directly steal from their neighbor but who are willing to demand that the government do it for them. – William L. Comer

       Fundamentally, there are only two ways of coordinating the economic activities of millions. One is central direction involving the use of coercion – the technique of the army and of the modern totalitarian state. The other is voluntary cooperation of individuals – the technique of the marketplace. – Milton Friedman

       Past studies by and large confirm the prediction that higher minimum wages reduce employment opportunities and raise unemployment, particularly among teenagers, minorities and other low-skilled workers. – Masanori Hashimoto

       It's no accident that capitalism has brought with it progress, not merely in production but also in knowledge. Egoism and competition are, alas, stronger forces than public spirit and sense of duty. – Albert Einstein

       Depressions and mass unemployment are not caused by the free market but by government interference in the economy. – Ludwig von Mises

       It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money. – P.J. O'Rourke

       The higher entry standards imposed by licensing laws reduce the supply of professional services … The poor are the net losers, because the availability of low-cost service has been reduced. In essence, the poor subsidize the information research costs of the rich. – S. David Young

       People who create things nowadays can expect to be prosecuted by highly moralistic people who are incapable of creating anything. There is no way to measure the chilling effect on innovation that results from the threats of taxation, regulation and prosecution against anything that succeeds. We'll never know how many ideas our government has aborted in the name protecting us. – Joseph Sobran May 13, 1998 (commenting on US vs. Microsoft)

       The politician attempts to remedy the evil by increasing the very thing that caused the evil in the first place: legal plunder. – Frédéric Bastiat

       Conservatives and liberals are kindred spirits as far as government spending is concerned. First, let's make sure we understand what government spending is.  Since government has no resources of its own, and since there's no Tooth Fairy handing Congress the funds for the programs it enacts, we are forced to recognize that government spending is no less than the confiscation of one person's property to give it to another to whom it does not belong – in effect, legalized theft. – Walter Williams

       Wealth comes from successful individual efforts to please one's fellow man … that's what competition is all about: "out-pleasing" your competitors to win over the consumers. – Walter Williams

       Ever since its founding in 1913, the Fed has described itself as an "independent" agency operated by selfless public servants striving to "fine-tune" the economy through monetary policy. In reality, however, a non-political governmental institution is as likely as a barking cat. – Thomas J. DiLorenzo

       Public works are not accomplished by the miraculous power of a magic wand.  They are paid for by funds taken away from the citizens. – Ludwig von Mises

       A [tax loophole is] something that benefits the other guy. If it benefits you, it is tax reform. – Russell B. Long

       There's another major hurdle to a new year of prosperity: our tax code. No human being understands it. The current code, which runs over 8,000 pages and countless thousands more pages of IRS rulings and interpretations, is beyond redemption... Incalculable amounts of the nation's intellectual brainpower are devoted to the dead-end task of coping with the current tax code. Over one-half million people in the U.S. make their living off it, whether in lobbying, lawyering, tax preparing, or accounting. … Americans spend five and one-half billion hours a year filling out tax forms … and spend between $100 billion and $300 billion to comply with the current code. – Malcolm S. Forbes

       In increasing numbers, Americans believe that it is the responsibility – nay, the duty – of the federal government to take the earnings of some Americans and redistribute them to other Americans for various and sundry "good" reasons including "fairness." Citizens who know it is wrong to use force to take money from a neighbor have rationalized that it is OK for the government to do it for them. – Linda Bowles, nationally syndicated columnist

       Once upon a time, government budgets were balanced, our money was sound, the streets were safe, and taxes imposed by all levels of government took less than 10% of our income. – Harry Browne

       By the year 2012, projected outlays for entitlements and interest on the national debt will consume all tax revenues collected by the federal government … There will not be one cent left over for education, children's programs, highways, national defense, or any other discretionary program. – Bipartisan U.S. Commission on Entitlement and Tax Reform

       Christmas is a time when kids tell Santa what they want and adults pay for it.  Deficits are when adults tell the government what they want and their kids pay for it. – Richard Lamm, former Gov of Colorado

       A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz, Debts & Deficits

       The Social Security system did not begin as an attempt to sabotage people's ability to plan for retirement, but it has worked out that way. The politicians who originally planned the system probably had no idea how it would turn out. But today's politicians know the system is rotted, and yet they refuse to make the changes necessary to free the American people from it. Instead, they make it worse. – Ed Clark 1980 Libertarian Party presidential candidate, A New Beginning

       The one with the primary responsibility to the individual's future is that individual. – Dorcas Hardy, Director, Social Security System

       It is a socialist idea that making profits is a vice; I consider the real vice is making losses. – Winston Churchill

       It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. – Henry Ford

       The standard of living of the common man is higher in those countries which have the greatest number of wealthy entrepreneurs. – Ludwig von Mises

       Voters who live off taxpayers are the Democrats' ace in the hole. The Democrats created big programs and never let the recipients forget it. This gives them an initial advantage of tens of millions of votes in any presidential election. – Joseph Sobran

       If you would not confront your neighbor and demand his money at the point of a gun to solve every new problem that may appear in your life, you should not allow the government to do it for you. – William E. Simon

       Taxation with representation ain't so hot either. – Gerald Barzan

       We have rights, as individuals, to give as much of our own money as we please to charity; but as members of Congress we have no right so to appropriate a dollar of public money. – David Crockett, Congressman 1827-35

       You can't get rid of poverty by giving people money. – P.J. O'Rourke

       Politics is the art of obtaining money from the rich and votes from the poor on the pretext of protecting each from the other. – Anonymous

       The free market punishes irresponsibility. Government rewards it. – Harry Browne

       Political leaders in capitalist countries who cheer the collapse of socialism in other countries continue to favor socialist solutions in their own. They know the words, but they have not learned the tune. – Milton Friedman

       The welfare state is the oldest con game in the world. First you take people's money away quietly, and then you give some of it back to them flamboyantly. – Thomas Sowell

       If politicians were serious about day care for children, instead of just sloganizing about it, nothing they could do would improve the quality of child care more than by lifting the heavy burden of taxation that forces so many families to have both parents working. – Thomas Sowell

       The economic miracle that has been the United States was not produced by socialized enterprises, by government-union-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline. – Milton Friedman

       Economic freedom is an essential requisite for political freedom. By enabling people to cooperate with one another without coercion or central direction, it reduces the area over which political power is exercised. – Milton Friedman

       The elementary truth is that the Great Depression was produced by government mismanagement [of money]. It was not produced by the failure of private enterprise. – Milton Friedman

       Consider Social Security. The young have always contributed to the support of the old. Earlier, the young helped their own parents out of a sense of love and duty. They now contribute to the support of someone else's parents out of compulsion and fear. The voluntary transfers strengthened the bonds of the family; the compulsory transfers weaken those bonds. – Milton Friedman

       The fact throughout history is that whenever government dominates the economic affairs of its citizenry, a free society is eroded, then destroyed, and a minority government ensues. Personal liberty without economic liberty is an absolute contradiction; the one cannot exist without the other. – William E. Simon

       Throughout forty centuries of human experience, price controls at their best have always been a miserable failure. At their worst, they have led to famine and bloodshed – to defeat and to disaster. – Irving S. Olds

       Somehow, the fact that more poor people are on welfare, receiving more generous payments, does not seem to have made this country a nice place to live – not even for the poor on welfare, whose condition seems not noticeably better than when they were poor and off welfare. Something appears to have gone wrong; a liberal and compassionate social policy has bred all sorts of unanticipated and perverse consequences. – Irving Kristol

       The essential quality of a free economy is that it cannot be planned. It leaves the solution of problems to the inspiration of the individuals in the untrammeled population. When something approaching a free economy has existed, it has always worked better than the schemes of any planners. – Thomas H. Barber

       The greatest productive force is human selfishness. – Robert Heinlein

       Don't go around saying the world owes you a living. The world owes you nothing. It was here first. – Mark Twain

       A traffic jam is a collision between free enterprise and socialism. Free enterprise produces automobiles faster than socialism can build roads and road capacity. – Andrew Galambos

       According to the Tax Foundation, taxes now consume more than 38% of the average family's budget. That is more than is spent on food, clothing, housing, and transportation combined. Compare this to the plight of medieval serfs. They only had to give the lord of the manor one-third of their output -- and they were considered slaves. So what does that make us? – Daniel Mitchell, The Washington Times, 3/9/99

       He who disdains the fall in infant mortality and the gradual disappearance of famines and plagues may cast the first stone upon the materialism of the economists. – Ludwig von Mises

       Asking liberals where wages and prices come from is like asking six-year-olds where babies come from. – Thomas Sowell

       The whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. – Henry Hazlitt in Economics in One Lesson

       The average American family head will be forced to do twenty years' labor to pay taxes in his or her lifetime. – James Bovard, Lost Rights

       It's illegal to say to a voter "Here's $100, vote for me." So what do the politicians do? They offer the $100 in the form of Health Care, Social Security, Unemployment Insurance, Food Stamps, tobacco subsidies, grain payments, NEA payments, and jobs programs. – Don Farrar

       Every movement that seeks to enslave a country, every dictatorship or potential dictatorship, needs some minority group as a scapegoat which it can blame for the nation's troubles and use as a justification of its own demand for dictatorial powers. In Soviet Russia, the scapegoat was the bourgeoisie; in Nazi Germany, it was the Jewish people; in America, it is the businessmen. – Ayn Rand

       All the fiery rhetoric of the Founders was directed at a "tyrant" who taxed his subjects at a rate of about three percent. Today, we in "the land of the free" are taxed at about 50 percent when you add federal, state, and local taxes. What kind of government would do this? A dictatorship would. – Doug Newman

       We don't have a budget crisis. We have a spending crisis. – Jonathan Hill, Citizens for a Sound Economy

       If taxation without consent is not robbery, then any band of robbers have only to declare themselves a government, and all their robberies are legalized. – Lysander Spooner

       If you feel driven to feed the poor, get your checkbook out and keep your tyrannical mouth shut about it. – Lew Goldberg

       Underlying most arguments against the free market is a lack of belief in freedom itself. – Milton Friedman

       We have a system that increasingly taxes work and subsidizes non-work. – Milton Friedman

       I feel obliged to withhold my approval of the plan to indulge in benevolent and charitable sentiment through the appropriation of public funds … I find no warrant for such an appropriation in the Constitution. – Grover Cleveland, 22nd and 24th US President

       It is easy to be conspicuously "compassionate" if others are being forced to pay the cost. – Murray N. Rothbard

       The desire of businessmen for profits is what drives prices down unless forcibly prevented from engaging in price competition, usually by governmental activity. – Thomas Sowell

       All the Congress, all the accountants and tax lawyers, all the judges, and a convention of wizards all cannot tell for sure what the income tax law says. – Walter B. Wriston

       An inevitable consequence of socialism is the division of society into two groups: those who are consuming government "services" and those who are paying for them. – Lee Robinson

       It is much cheaper and enormously more profitable for the special interests to purchase the regulatory favors of Washington's political harlots than to compete in a fair, unsubsidized marketplace. – Lee Robinson

       Expecting the government to fight the deficit is like expecting the Mafia to fight crime. – Anonymous

       The power to tax, once conceded, has no limits. – Anonymous

       We cannot restore traditional American freedom unless we limit the government's power to tax. No tinkering with this, that, or the other law will stop the trend toward socialism. We must repeal the Sixteenth Amendment. – Frank Chodorov

Milton Friedman Interviewed

Originally published in the The Times Herald, Norristown, Pennsylvania; Friday, 1 December, 1978

Question: I find income tax totally antagonistic to true free enterprise. Can we run the country without income tax? 

Dr. Friedman: There's a sense in which all taxes are antagonistic to free enterprise . . . and yet we need taxes. We have to recognize that we must not hope for a Utopia that is unattainable. I would like to see a great deal less government activity than we have now, but I do not believe that we can have a situation in which we don't need government at all. We do need to provide for certain essential government functions - the national defense function, the police function, preserving law and order, maintaining a judiciary. So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago. 

The next least bad tax is a flat-rate tax on income above an exemption. I could design my ideal tax system it would contain an income tax, but it would not be the kind of monstrosity we have now. It would be a flat-rate tax on all income, from whatever source derived, less only a personal deduction and strict occupational expense, and that kind of income tax I think would be the least inconsistent with a strong free enterprise system. 

Question: Dr. Friedman, you have been quoted as saying the Social Security tax is the worst tax on the books and should be abolished. What would you use as a substitute? 

Dr. Friedman: First, you must understand that the Social Security system is not an insurance system. The taxes that people are paying under the system are not in any relevant sense financing the benefits they themselves will ultimately receive. The Social Security system is a combination of a bad tax and a bad expenditure program. I have never heard anybody who would defend either half separately, and taking two bad things and putting them together doesn't generally make something good. But combining the two, and giving the impression that the system is self-financing, tends to support the fiction that Social Security is really an insurance contract. It's not an insurance system at all. What it is is a scheme whereby people today are paying taxes today to provide payments and benefits to other people today. There is a relationship between the amount beneficiaries receive and the amount they themselves pay, but that relationship is very small. Insofar as there is that relationship, you can justify an element of payroll tax; but insofar as a large part of Social Security benefits are properly to be understood as subsidies, welfare payments, there is no justification for financing them out of a payroll tax. In my opinion, if you are going to finance them, they should come out of federal revenues. 

Now you will say to me, "Oh, but that's terrible. Does that mean that you're proposing that we increase other taxes?" No! Let me go back to the fundamental principle: Government is going to spend whatever the tax system will raise plus a little more - lately a good deal more. The only effective way to keep down government spending is to keep down the amount of money available to government to spend. There is no other way you can do it. The effect of giving the impression that Society Security is an insurance system by using the payroll tax, and implying that what each individual pays is linked to what he receives - the effect of that has been to make the American people willing to bear a larger tax loan than they otherwise would bear. I argue the other way: Reduce taxes whenever you can! What you should worry about is total spending. If you reduce the payroll tax and throw the burden on the general tax level, that will be an effective way of stopping even worse programs. 

Question: Can you give us your concept of the welfare situation today? 

Dr. Friedman: There is only one word to describe the welfare situation and that's one of our famous four-letter-word: mess! The so-called welfare program is a collection of a large number of separate programs in which most of the money that is spent does not go to the people whom you would like to get it. The major beneficiaries are intermediaries - the bureaucrats who administer it, the agencies or organizations that benefit from it - and that is also the major obstacle to reform. 

Question: Dr. Friedman. do you believe that we should have an audit of the gold in Fort Knox? 

Dr. Friedman: No, I believe we ought to sell off the gold in Fort Knox at a public auction at the price we can get. I do not see any reason why the storage of gold should be a nationalized industry. I believe private people should be free to own gold to do whatever they want with it. I do not see justification for the government having a large stock of gold in Fort Knox. You might justify a strategic reserve; beyond that, I see no justification. 

Don't kid yourself into thinking that we're going to have a gold standard again. The kind of gold standard we had in the 19th century had something to be said for it, but we haven't had that kind of gold standard since 1914 and we aren't about to have it again. Therefore, in my opinion, the right thing to do with the gold in Fort Knox is to auction it the highest bidder. 

Question: Do you believe we should have an audit of the Federal Reserve System? 

Dr. Friedman: If you are going to ask me about the Federal Reserve System, my ultimate solution is to abolish it and that would eliminate the necessity for an audit. But that isn't going to happen tomorrow. The problem with the Federal Reserve System is that it is following the policy Congress imposes on it, and in my opinion what we want is not a more independent Federal Reserve System; what we want is to require Congress to be responsible for setting forth specific rules for the conduct of monetary policy. I believe we need a more responsible monetary policy and I do not believe that an audit of the Federal Reserve System would in any way contribute to that more responsible policy. 

Milton Friedman on Tax Policy

Friedman was not a specialist in the economics of taxation, but he served a brief stint in the Treasury Department's division of tax research during World War II. While there, he helped design the modern withholding system -- an administrative innovation that he later disparaged as a prop for bloated government.

Friedman is widely considered the father of the modern flat tax. The consumption-based flat tax popularized and championed by economists Robert Hall and Alvin Rabushka commands center stage in current policy debate. But the Hall-Rabushka tax plan drew its inspiration from the flat rate tax on income that Friedman proposed in 1962.

In his classic brief for libertarian ideology, Capitalism and Freedom, Friedman devoted relatively few pages to taxation. But those pages loom large in the political history of contemporary tax reform. The book challenged the legitimacy of progressive taxation when it enjoyed nearly universal support (a few legal skeptics like Walter Blum and Harry Kalven notwithstanding). Friedman believed that progressivity in the service of redistribution was indefensible. "I find it hard, as a liberal, to see any justification for graduated taxation solely to redistribute income," he declared. "This seems a clear case of using coercion to take from some in order to give to others and thus to conflict head-on with individual freedom."

Instead, Friedman made the case for a flat rate tax on income. Such a levy was consistent with the benefit principle, he wrote: "A proportional flat-rate-tax would involve higher absolute payments by persons with higher incomes for governmental services, which is not clearly inappropriate on grounds of benefit conferred." More important, a flat rate tax would leave no room for punitive taxation of the rich; people would be unable to impose higher taxes on the rich without imposing the same heavy burden on themselves. In other words, a flat rate tax would constrain the freedom of a vindictive political majority to work its will on a well-heeled economic minority.

Friedman was not a purist on the subject of proportionality; he believed that exemptions could be used to protect the poor from further suffering at the hands of the tax collector. He even proposed a negative income tax to provide a government subsidy for those below some minimum economic threshold. Limited interference in the distribution of market rewards was reasonable, Friedman believed, since it did not derive from the political tyranny of the majority. "It is very different for 90 per cent of the population to vote taxes on themselves and an exemption for 10 per cent," he wrote, "than for 90 per cent to vote punitive taxes on the other 10 per cent -- which is in effect what has been done in the United States."

Friedman loathed tax preferences, insisting that they violated canons of fairness. Using the tax law to advance social goals was unjust, vitiating the principle that all people should be treated equally under the law. Existing taxes were "capricious and unequal," he complained, and riddled with loopholes. His list of nefarious provisions included a few items that might surprise some of his modern-day fans: preferential treatment for capital gains, exemptions for interest on state and local government bonds, and various incentives granted to the oil, gas, and other extractive industries.

Friedman predicted that a flat rate tax of 23.5 percent would raise as much money as the existing graduated rate structure, at least as it existed in 1962. His estimate assumed that lawmakers would broaden the tax base by eliminating a range of credits, exemptions, and other preferences. Indeed, Friedman suggested, the flat rate tax might raise more revenue than the graduated system it replaced, eliminating distortions that hindered tax collection and economic growth.

In the short term, Friedman's tax fell flat, as it were. He later recalled that even his friends dismissed the idea as "radical, impractical, and visionary." But if Capitalism and Freedom was ahead of its time, its time most certainly came. By the early 1980s, Friedman's seminal thinking had paved the way for a range of more successful tax plans. While the flat tax has a checkered history in American politics, the European "flat tax revolution" owes much -- in intellectual fervor, if not in policy design -- to Friedman's work.

The Wisdom of Milton Friedman

Never discount the wisdom and insight of
Milton Friedman

If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.

Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.

Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.

The government solution to a problem is usually as bad as the problem.

Concentrated power is not rendered harmless by the good intentions of those who create it.

We have a system that increasingly taxes work and subsidizes nonwork.

So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.

I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.

Governments never learn. Only people learn.

Nothing is so permanent as a temporary government program.

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.

The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government.

A major source of objection to a free economy is precisely that group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.

And what does reward virtue? You think the communist commissar rewards virtue? You think a Hitler rewards virtue? You think, excuse me, if you'll pardon me, American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout?

I'm in favor of legalizing drugs. According to my values system, if people want to kill themselves, they have every right to do so. Most of the harm that comes from drugs is because they are illegal.

Inflation is taxation without legislation.

The world runs on individuals pursuing their self interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a, from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.

Every friend of freedom must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence.

Most of the energy of political work is devoted to correcting the effects of mismanagement of government.


Universities exist to transmit knowledge and understanding of ideas and values to students not to provide entertainment for spectators or employment for athletes.

Hell hath no fury like a bureaucrat scorned.

Underlying most arguments against the free market is a lack of belief in freedom itself.

There's no such thing as a free lunch.

The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom.

The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system.

The most important single central fact about a free market is that no exchange takes place unless both parties benefit.

History suggests that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.

Inflation is the one form of taxation that can be imposed without legislation.

The black market was a way of getting around government controls. It was a way of enabling the free market to work. It was a way of opening up, enabling people.

The most important ways in which I think the Internet will affect the big issue is that it will make it more difficult for government to collect taxes.

Is it really true that political self-interest is nobler somehow than economic self-interest?

The power to do good is also the power to do harm.

One man's opportunism is another man's statesmanship.

Columbus did not seek a new route to the Indies in response to a majority directive.

The only relevant test of the validity of a hypothesis is comparison of prediction with experience.

Well first of all, tell me, is there some society you know of that doesn't run on greed? You think Russia doesn't run on greed? You think China doesn't run on greed? What is greed?