Could America Become a Tax-free State? 

Part I: The Lock Box 

You start with the idea of a Lock Box.  Money that goes into the Lock Box never comes out, it just stays there and generates interest forever.  Half of each year's interest goes back into the Lock Box to increase the principle and half goes to finance current spending. 

When the day comes that half of the current year's interest equals the whole of current year's spending, America becomes a tax-free state.  Moreover, since the other half of each year's interest is being put back into the Lock Box unendingly, the total interest generated increases unendingly.  The America of the future could be a country where the government provides everything the public could ever want, not only free of charge but also without anyone being taxed to pay for it all. 

How long would this take? Probably a long time.  There's a chance that everyone alive today would be dead and in the ground before America ever reached such a goal. 

Still, that's no reason not to get started.  President Kennedy never lived to see man land on the moon and yet others did, because of his vision.  Likewise, we may never live to see a Tax-free America and yet others might, because of our vision. 

 

Part II: The Exemption Line 

But the Lock Box by itself isn't enough.  It's good but it's incomplete.  What's also needed is a refinement that phases out taxes over the years by means of an ever-increasing Exemption Line. 

Imagine an Exemption Line below which all income is tax-free.  Starting modestly, the Exemption Line might be, say, $3,000.  No one pays tax on the first $3,000 of income.  Babysitters, paper boys, kids who wash cars on weekends, all these will be exempt from paying taxes if their income never rises above $3,000. 

But the Exemption Line can be raised slowly.  At first the Exemption Line might be $3,000, but it can be raised to $4,000, then $5,000, and on and on and on.  As the Exemption Line rises, the tax burden gradually shifts from the middle class to the rich.  Sooner or later the Exemption Line reaches the $50,000-$100,000 range, at which point the middle class effectively no longer pays taxes, only the rich do.  But even the rich are paying less and less because more and more of the tax burden is being paid by the ever-growing interest from the ever-growing Lock Box. 

The ever-growing Lock Box and the ever-rising Exemption Line, given time, leave America a tax-free state.  Just because it might take a hundred years or more is no reason not to get started.  It's said that man is the only animal who realizes he has a future.  Is it true? 



Part III: Strategy 

In America there are two ways to change the law: 

1] an Act of Congress, and 
2] an Amendment to the Constitution. 

An Act of Congress requires a mere Congressional vote and is much easier to get than an Amendment to the Constition which requires three-quarters of the 50 states to agree to the Amendment (which in practice is a stupendous political undertaking involving the co-ordinated efforts of thousands of people in all 50 states). 

The peril is that the easy-to-get Act of Congress can be overthrown by any subsequent, just-as-easily-gotten Act of Congress.  Today Congress may vote the Lock Box sacred and inviolate but tomorrow they could as easily vote to raid it for spending money. 

An Amendment to the Constitution, on the other hand, can be undone only by another Amendment to the Constitution.  Just as the original decision to create the Lock Box required three-quarters of the 50 states, likewise any decision to raid the Lock Box for spending money would also require three-quarters of the 50 states. 

The winning strategy then would appear to be to create the Lock Box and Exemption Line by an Amendment to the Constitution, rather than a mere Act of Congress.  This would be a more difficult path but a more reliable one.  If followed faithfully it would eventually make America a tax-free state.