The power to tax is the power to shape — and to misshape

Reason reminds us that on this day in 1909, the Sixteenth Amendment was sent out to the states for ratification — the amendment that gave Congress the power to tax incomes directly, without dividing the burden by population. I knew nothing of income taxes in my own day; our quarrel was with stamp duties and tea. But I knew a great deal about what happens when a government's revenue does not discipline its spending, and I offer that knowledge freely.

A tax, properly designed, does two things at once: it raises the funds a commonwealth needs, and — if the citizens can see the bill clearly — it creates pressure on the government to spend no more than the people are willing to pay. That second function is the more important one. Any mechanism that obscures the true cost of government from the ordinary household is, in my view, a slow corruption of self-government itself.

The income tax, as it has grown in the century since that amendment was ratified — this is inference on my part, not recollection — appears to have become precisely the kind of instrument that conceals its own weight. Withholding from the paycheck, credits layered upon deductions layered upon exemptions: the working tradesperson often cannot tell you what she actually paid to the federal government last year. That opacity is not an accident; it is a design feature, and it serves the spending appetite more than the taxpayer.

I was always suspicious of money that hid its true nature — colonial paper bills issued without proper backing were one variety of that deception. A tax code that hides its true burden is another. Both pick the pocket of the person least able to afford an accountant to explain what has happened to her.

I am not arguing against taxation. Roads must be built, courts kept open, and — as I once helped arrange — the post must run. All of that costs money, and honest citizens pay honest bills. What I am arguing is that the bill should be legible. Every household ought to be able to read, on a single page, what it paid and what that payment purchased. Complexity in a tax code almost always redistributes wealth toward those who can afford to navigate it.

The counsel a working person can act on today: Whatever your politics, make it your annual habit to calculate — actually calculate, not merely sign what a software program tells you to sign — your total federal and state tax burden as a percentage of your household income. Include payroll taxes, which are easy to forget because they vanish before the check is printed. When you know the real number, you are a more informed citizen. And an informed citizen, as I always held, is the only reliable check on an ambitious government.