Any entity, which can exercise control over our finances and our health, has at its disposal the means of absolute control over the individual and thus, Society as a whole. Our intent in this policy is to address the control exercised over us through the use of tax laws. The government would like to cushion the emotional blow by referring to it as the “Tax Code,” but it is Law, and do not be misled, it is ultimately enforced through the threat of violence. Although we mentioned the subject of governmental control over our health, we will leave that for another time. Please remember, here at “Who’s That Candidate?” we view all our topics and solutions through the foundational principle of Individual Liberty. This is the singular principle upon which our Country was founded. All the Civil Liberties which we enjoy and which our Constitution was written to safeguard, extend from this single core principle.
While it is an important consideration, the first priority of “Who’s That Candidate?” – in the context of solutions – is not to make things safe; our solutions focus on protecting the sacred principle of Individual Liberty. We are in complete agreement with Benjamin Franklin’s opinion on this matter, when he famously penned, “Those who would give up essential Liberty, to purchase a little temporary safety, deserve neither Liberty nor Safety.”
The title of this policy is Tax Freedom and we would like to start by saying, the ideas we are about to propose may appear very counterintuitive at first glance, but if you will take the time to think through what we propose, we believe you will understand the solutions and how they can benefit both us as individuals and our State. It will benefit us as individuals because it will eliminate governmental leverage over our financial lives. Not only this, but it will eliminate a fundamental means whereby politicians manipulate the system for self-enrichment. It will also benefit our State by making us extremely attractive to outside business investment, which will provide jobs and reduce the need for government financial assistance for our citizens.
Abolish Corporate Tax
We stated above that what we propose may seem counterintuitive, so we start with the toughest, which is this: corporations do not pay taxes. This is a bold statement, but it is absolutely true. For corporations, taxes are an overhead budget item and are, year over year, incorporated into the price of their products or services. Thus, taxes are passed along to consumers.
There is simply no way to force them to pay taxes. NONE. Most corporations, but not all, pay out most of their revenue in overhead, wages, bonuses, and shareholder dividends. There are almost no companies in the world that have profits so great that the money accumulates faster than it can be put back out the door.
Facebook and Microsoft are two extremely rare examples. With the exception of these extremely rare few, the money that is left in an “account” that can be “taxed”, is used for future capital expenditures. And though they may write a check to the government this year for those “taxes,” it is then incorporated into the price of the product next year. In other words, by taxing this money that is future building projects, business development, and job creation, we stymie these companies’ ability to be more productive, which has a depressive effect on our economy and job availability.
As hard as it seems for some people to understand, corporations are not individual persons that are getting rich. But what of mega-corporations’ “obscene” compensation for CEOs and executive staff? In most companies, if we took all of their salaries and bonuses away, redistributing these monies across the board to all the remaining employees, it would amount to less than a nickel raise for each member of their respective workforces. We understand that this is an extremely simplistic treatment of the subject, but we contend that it is an accurate assessment of the subject, as a whole. All overhead in business is passed downstream and taxes are part of the overhead. The only people who truly pay taxes are the workers (blue collar, white collar and executives) and shareholders, who pay income tax, and then the consumer, who pays in the form of sales tax.
As stated before, there is no real way to get Corporations to actually pay taxes unless you can figure out a way to keep them from incorporating taxes into their cost of doing business. That is an unrealistic goal, based on misguided ignorance of business operation itself. Thus, the real question is, why tax them at all? Because taxing them provides cover for politicians to enrich themselves. Complicated tax codes are the tall weeds they can move around in, giving cover to their dirty deeds.
Make Property Tax Illegal
Further, we must also address the subject of property taxes. We do not believe there is much which needs to be said on this subject. If you believe you own your property, stop paying taxes on it and see who really owns it. To say you really own something you must have absolute control over its possession. The government holds that position, not you. Property taxes leave the property “owner” in an extremely vulnerable, submissive, and coercible position to the government. It is one thing to place your property in a position of collateral by choice, but a very different matter if it is being placed in a position of collateral for the purposes of coercion, by a government, to make you act in a manner it deems appropriate.
Abolish State Income Tax
Lastly, we advocate for ending State income tax. We know from the examples set by multiple States – which have already abolished state income taxes – that these decisions have positively impacted their States. Our neighbor to the south, Tennessee, has enjoyed this tax freedom for a long time.
Replace all with Uniform Consumption Taxes
All the aforementioned have been proposed for the express purpose of providing the foundation for the concept we ask that you embrace, which is as follows. We want you to support eliminating the complexity of our state income and property tax system and converting to a total end-user consumption tax system for the State of Kentucky. We also want you to advocate, through your vote, to exempt businesses from paying any and all taxes, including sales taxes when purchasing equipment or inventory for their businesses. By doing so, their tax liability will no longer be built into their products as overhead expenditures. Thus, opportunities for “business deductions,” e.g., “entertainment,” golf, and “corporate business trips” will cease.
Further, for those businesses which are pass-through corporations and sole proprietorships, it will greatly reduce their ability to hide personal income, because there will be no write-offs available to anyone. Yet simultaneously, these individuals will enjoy increased income, because they will now pay taxes based on their consumption choices. We believe history has demonstrated that while there have been some abuses when corporate tax levels have been reduced, generally speaking, those tax savings are applied to business reinvestment.
Historically, tax reduction has caused new jobs to be created and more revenue to be collected by the government. And since our state government already uses tax liability reductions or tax exemption as a tool to attract new companies to our state, our legislators already know that tax exemption works. When issuing these exemptions, the tax base and tax revenues increase, due to new jobs creation. Further, corporate tax exemption eliminates tax code cover for the backdoor deals that enrich legislators. This is the rationale underlying the ubiquitous sunset clauses on tax-exempt status.
Our State’s tax code is a complicated mess, facilitating abuse. The more weeds there are, the easier it is to hide among them. The more complex the codes are, the more leverage politicians have for self-enrichment. Our tax codes and regulatory bodies create the Lobbyists who enrich our “representatives.” As a side bar, we will discuss regulatory bodies and how they are used to enrich government officials in short order.
We recognize that making businesses tax-exempt is a radical departure from even most plans which deal with consumption, end user, and sales tax plans. Most of the problems that arise in these plans are in the business tax sphere, and are the predominant reason some call for a flat tax instead of our current system. Our approach eliminates these problems and greatly decreases the ability of politicians to manipulate the codes for personal gain. Our proposed solution will remove extreme government intrusion from our lives, and place control of our taxes into our hands, based on our consumption choices.
Lastly, for those who would argue this approach might not be revenue-neutral: we can surely all agree that if our state government brought an end to unnecessary/wasteful spending, the state could function on a much smaller budget, but only if we concede that it won’t be revenue-neutral. We do not concede this point at all. It is our belief that it will increase tax revenue while spreading the pain more equitably across everyone.
We would ask now that you consider how attractive Kentucky would be to companies if we simply do not tax them. By being the most business- friendly state in the country, can we go from being a net taker of Federal money to a self-sufficient state that can deal with its own social needs internally? Is the Commonwealth of Kentucky so desperate to ensure corporations are taxed, that it will cause its citizens to be less free from the government, in essence, cutting off its own nose to spite its face?
Since there is no way to prove businesses pay taxes right now – and for the few exceedingly rare instances, such as Facebook and Microsoft, that have massive cash reserves which couldn’t possibly be fully reinvested into their operations – is it worth the negatives that our present tax system brings into politics? When it comes to business, our tax code is just a massive paperwork money shuffle. If we eliminate these taxes, every Kentucky resident will be freed from interactions with the Kentucky Department of Revenue. Businesses will continue to do what they are already doing. As an added benefit, the Department of Revenue would be down-sized, creating significant budget savings.
“Who’s That Candidate?” promotes increased Liberty and personal freedom. Getting our state government out of our wallets is the single- greatest method toward achieving that goal. Let’s get out of our own way and make Kentucky the leading example for our Nation of what things can be like when Liberty is our first priority.