12 Things Wrong With America’s Tax System


1: Americans can’t vote directly on what their taxes are spent on.

Few, if any, of the problems listed below would exist if Americans were able to vote directly on what they want their taxes spent on, but there are only a few minor times and places where Americans are allowed to do that. Despite the fact that Americans have no say in how their taxes are spent, they’ll be sent to jail at gunpoint if they don’t pay whatever amount the government demands of them. This is the definition of extortion, and it’s the opposite of freedom. If your political representatives don’t spend your taxes on what you want them to, then that constitutes taxation without representation.


2: Americans aren’t allowed to know what a lot of their taxes are spent on.

The White House, Pentagon, CIA, NSA, FBI, each branch of the military operate top secret facilities the average American isn’t allowed to know anything about. There are other agencies taxpayers don’t know exist. Taxpayers aren’t even allowed to know how much they’re spending on these programs, but if you don’t pay for them, you’ll go to jail.



3: Billions are spent spying on Americans, controlling them, and destroying their lives.

In 2013 Edward Snowden leaked information detailing how the U.S. government is using the NSA, in cooperation with the military, to spy on American citizens. The government responded to this by labeling him an enemy of the state and reminding the rest of America that whistle-blowing is punishable by death or life in prison.

Since September 11, 2001, the average police department is militarizing, but they’re not using their expensive resources to protect the people who pay them. They’re using their power to hunt civilians and dole out enough fines to fill their quotas to pay for more militarized gear. At the same time, the police are filling private, for-profit prisons with non-violent offenders.

The entire world knows America’s “War on Drugs” is a failure that creates more problems than it solves. Every expert and most laymen agree on this, but America won’t change its laws because there are too many industries with lobbyists that are making too much money off of it.

Americans not only have to put up with this constant intrusion into their lives, but they have to pay for it all, and they have no way to opt out.



4: Billions are spent funding industries that rely on selling their product to the government and are allowed to lobby the government for more funding.

Industries like the prison system, standardized testing companies, weapons manufacturers, military contract staffing agencies and mercenary groups are funded almost completely by taxpayer money. Those industries then take that money and use it to lobby politicians to buy more of their products and services. The healthcare industry’s lobbyists were able to go as far as to strong-arm the government into forcing every taxpayer to buy nearly-useless health insurance and be fined if they don’t, and law enforcement is complicit in fining and jailing anyone who doesn’t obey the insurance companies’ demands. The cost/benefit analysis of funding these industries doesn’t add up to the taxpayer. They’re not getting a positive return on their investment.


5: Billions are lost on subsidies for the rich.

Private businesses that sell their products and services directly to the public can also lobby politicians to give them taxpayer money. When the government gives away subsidies to big businesses, the taxpayer doesn’t get anything in return. In theory, they should get cheaper products, but the rich don’t get rich charging as little as possible. They get rich by selling the cheapest product for the highest price they can get away with.



6: Billions are lost to legal tax evasion.

The law frowns upon people putting their tax dollars in off-shore tax havens, but there are ways to legally do that. You can also legally take advantage of tax loopholes that allow you get out of paying the same rates as everyone else.


7: Billions are lost on pork barrel legislation:

When a government-funded industry becomes big enough to lobby politicians, they’re almost guaranteed to be able to fleece taxpayers indefinitely. For every business that relies solely on the government, there are hundreds more that will successfully lobby politicians to give them one-off payouts that benefit the business owners more than they benefit taxpayers.



8: Other countries can lobby the government to give them taxpayer money and representation in government.

America gives away at least $70 billion to foreign interests annually. Foreign governments and businesses can use this money to lobby American politicians to give them more money or vote on policies that benefit them regardless of whether or not it’s in the best interest of the American public.


9: The tax code is literally impossible to understand.

The federal tax code is so big, the IRS doesn’t even know how big it is, but it estimates it to be about 7,400 pages long. This doesn’t include state and county taxes. It’s so difficult to calculate how much you owe in taxes, people spend $7 billion annually to hire tax experts to calculate how much they owe. Even those experts are only trained in niche sectors of the tax code. Nobody understands it completely.



10: Small businesses are choked by convoluted taxes.

Working class citizens are frustrated by the fact that they don’t know how much taxes they have to pay or why, but as long as they cough up enough money to stay out of jail, their lives can go on as normal. Small business owners’ livelihood depends on their ability to navigate the labyrinth of tax codes that apply to them. If your business is small enough, it’s possible to file your taxes yourself, but if you’re not good at math, you won’t be able to open a lemonade stand. This is a huge part of why half of all small businesses fail. However, if you were born rich, you can pay someone to manage all of that for you.



11: Regressive taxes oppress the poor.

Some people would say America has a progressive tax system, because the more money you make, the more you have to pay in taxes. But consider that if you make $1,000 per month, the government will take a little over $100 out of each paycheck. If you only make $1,000 per month, you almost certainly don’t have any savings. So you’re paying 10% of your total net worth in taxes every month.

Millionaires who pay 40% of their income to taxes annually will complain that they’re taxed too high, but they can still afford to eat steak and lobster dinners, buy their own home and pay for their kids to go to college. The consequence of poor people paying 10% of their net worth to taxes every month is the difference between eating fresh food or boxed food, fixing your car or walking, seeing a dentist or buying Ibuprofen.

The 10% the poor pay in federal taxes don’t include sales taxes, property taxes, auto taxes, county taxes and state taxes. When you add it all up, taxes cripple the poor more than they help them. Once they run out of money, they may be able to qualify for some kind of welfare, but it’s not enough for them to have a decent quality of life. With or without government assistance, the poor still live in constant fear of starvation and homelessness. This regressive tax code amounts to institutionalized economic oppression.


12: Billions are wasted on corrupt, ineffective social programs that treat the symptoms of poverty, not the causes.

Millions of taxpayer dollars are wasted every year on ludicrous bureaucratic expenses like requiring a military veteran who lost his legs to submit forms every year stating he still doesn’t have any legs. It doesn’t take many internet searches to find more examples of government waste.

America spends over $1,066 billion on Medicare, welfare, and other social services each year, but poverty, fear, and misery still exist. Doubling the money spent on these programs wouldn’t solve the problem because this money is spent addressing the symptoms of poverty, not the cause.

No matter what you do, you’ll still have to pay for taxes, food, clothing, utilities, and housing. There is no finish line in the rat race. There’s no point where you can stop working and live your life free from the bill collector. You’ll always be forced to pay landlords, banks, grocers, utility companies and the IRS, and everyone is charging their customers as much as possible. Giving the poor handouts to pay banks and big businesses ultimately amounts to redistributing the nation’s wealth to the rich.




Taxes keep citizens mildly safe from criminals and terrorists. Taxes also build roads, schools and other services that help people fulfill their potential, but we all live in a predatory economy that is designed to bankrupt the poor, and there’s no safety net. Once the rich succeed at taking all your money, you have to sleep on the streets, which is illegal in many cities. Until you reach rock bottom, you have to live in fear of running out of money. That fear drives the poor to work as much as possible without complaining, and they’ll never be free to stop working long enough to join a successful protest. Even if they could, the police will beat them and send them to jail.

Given the choice, no rational person would agree to this social contract. This raises the question, what’s the alternative? The answer to that question is deceptively simple. In order for a person to be secure, free and happy, they need the basic necessities of life: food, water, shelter, and education.

If it costs $86,100 to build an apartment unit, the government could build an apartment for all 318 million taxpayers for $274 billion, which is well within America’s budget. This would eliminate homelessness and the gut-wrenching fear that comes from barely being able to afford rent.

It would only cost $30 billion to feed the entire world. If the American military spent 5.4% of its $664 billion budget, it could feed everyone on the planet. At the very least, it could feed every American very well. Then no American would ever have to live in fear of starvation again.

For another $100-$200 billion, every American could have free utilities and education, especially if the government isn’t paying inflated prices to private utility companies and schools.

For about $500 billion per year, every American could be housed, fed and cared for. This would eliminate the need for social security and welfare, which Americans currently pay more than twice that amount for. It would also eliminate the desperation that drives so many people to use drugs and commit violent crimes.

You don’t need to raise taxes to accomplish this, you just need to stop spending taxes on things that don’t benefit taxpayers. Instead, use the money people already pay to help them directly. If that sounds radical, then that just proves how dystopian America’s tax system has become. We’ve strayed so far from reality that sanity looks crazy.


If you enjoyed this post, you’ll also like these:

Predatory Capitalism Creates Poverty
Socialism and Communism
The Life of the Rich
The Life of the Poor
Oppression in the Workplace
Success and Retirement
The Housing Market
Healthcare in America
The Stock Market
Fixing the Economy
My Tweets About Economics

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