Death, No Taxes?

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina…

Last week we floated a dangerous question, cleverly cloaked as an outrageous proposition…

After Donald Trump announced the birth of a brand new federal agency during his inauguration speech, the so-called External Revenue Service, we wondered aloud whether this new, para-market bureaucracy would exist in addition to its malformed, domestic sibling (the Internal Revenue Service)…

…or instead of it?

Bearing in mind Benjamin Franklin’s famous quip, we assumed it would be a case of the former… even though Trump’s own phrasing appeared to imply the latter.

See for yourself, from his Jan. 20 address (emphasis ours):

“Instead of taxing our citizens to enrich other countries, we will tariff and tax other countries to enrich our citizens. For this purpose, we are establishing the External Revenue Service, to collect all tariffs, duties and revenues […] the American Dream will soon be back and thriving like never before.”

The remark echoed an earlier social media post, which Trump began:

“For far too long, we have relied on taxing our Great People, using the Internal Revenue Service (IRS)…”

Hmm…

Was The Donald really toying with the idea of axing the IRS? Had Javier Milei-style “chainsaw economics” really made its way north of the Rio Grande?

Chainsaw Economics

Readers will recall that it was late last year when Argentina’s anarcho-capitalist president radically overhauled the federal tax agency down at this End of the World, slashing the number of public disservants and cutting salaries in the deservedly unpopular ranks by up to 90%.

Still, we doubted whether anything similar would happen at the other end of the Americas.

But lo! What have we here? Not one week into his second term, the 45th and 47th President of the United States of America told citizens at a rally in Las Vegas…

“On day one, I immediately halted the hiring of any new IRS agents. They hired, or tried to hire, 88,000 new workers to go after you. And we’re in the process of developing a plan to either terminate all of them or maybe we’ll move them to the border. And I think we’re going to move them to the border.”

Trump was referring to the ironically named “Inflation Reduction Act,” through which the Biden administration approved $80 billion in new federal funding for the IRS, including hiring tens of thousands of goose-stepping tax collectors over the ensuing decade. Scranton Joe signed that beastly legislation into law back in 2022, when “transitory” inflation turned out to be rather more (shall we say?) enduring than the expert class had led everyone to believe.

Answering a call from a (presumably taxpaying?) attendee at the Vegas rally, who shouted out from the crowd, “How ‘bout no taxes on anything?” Trump answered:

“She said ‘no tax.’ How about just no tax, period? You could do that. You know, if the tariffs work out like I think, a thing like that could happen, if you want to know the truth.”

Trump then reiterated his “no tax on tips” campaign promise, which he pre-stole from the multi-talentless Kamala Harris, even before she thought of it!

“Any worker who relies on tips [as] income, your tips will be 100% yours.”

What’s next, we wondered? Bring the troops home? Balance the budget? Return to market-based money and recognize that only women can have babies?

President Incognito

Naturally, the first thing we did after reading the news was to check our Notes subscriber lists – free and paid. You won’t believe it, but nowhere among our dear readers did we discover the name “Trump” attached to an email address. Not even on the Founding Member rolls!

Assuming, therefore, that the president must be perusing these pages incognito, as a subterrene Notes devotee, we will proceed as if we had what’s left of the man’s ear, just the same…

Here ye, Mr. President! When it comes to handling government hires – old, new, prospective, defective, infective, what-have-you – we’re firmly in the “termination” camp.

Remember Ron Paul’s response when the good doctor was asked: “But if you ‘End the Fed,’ what will you replace it with?”

“When you cut out a cancer, what do you replace it with?”

To switch metaphors, we want less playing cards in the government, Mr. President, not crafty reshuffling from the bottom of the deck.

In other words, if there exists no natural market demand for the so-called “services” provided by a government employee, no real world price for his labor, at least that a real world person is voluntarily willing to pay, the position probably should not exist in the first place.

And in cases where there is a natural demand – for firefighters, say, or nurses, or local community workers – the free market is far better placed to answer the public’s call than some 450lb DEI hire up a wobbly ladder, one whose primary qualification is that they happen to “look like” the poor sap in the burning building they’re supposed to be rescuing.

In a slogan: For all that doesn’t need doing, there’s government. For everything else, there’s the market.

But let us return to our subject at hand: Taxation.

What’s in a Name?

“Inflation reduction”… “a social contract”… “wealth redistribution”… “from each according to his ability, to each according to his need”…

Call it what you will, it all amounts to the same thing at the end of the day. As William Shakespeare himself almost wrote, “That which we call theft, by any other name would still spell a cheat.”

But can the world’s largest (and costliest) government apparatus really get by without direct taxation? After all, individual income tax receipts account for a whopping $2.43 trillion in annual “revenue” for the federal government. That’s enough to cover Social Security outlays ($1.5 trillion), Healthcare ($920 billion) and… well, that’s about it.

And that’s before $900 billion each (give or take) in National Offense, Medicare and Interest on the Debt… to say nothing of Income Security, Veteran’s Benefits, Miseducation, Transportation and “Other,” a miscellaneous category which, itself, commands a cool $311 billion annually.

Mr. Trump argues that tariffs can replace this federal “income,” that making foreigners “pay their fair share” can feed the insatiable government beast. But is this really true?

Certainly, such a scenario is presented as an attractive alternative to those hardworking citizens who see federal income taxes directly deducted (withheld) from their take home pay.

Ah, but the dismal science of economics is not only about that which is seen, as the great Frederic Bastiat reminds us, but also that which is unseen. One must be careful that what the right hand giveth, the left hand does not taketh away.

And here Argentina offers a cautionary tale in protectionism and self-sanctioning, what egghead economists called “import substitution theory.”

How did that work out? We promised an essay on the painful Peronist experiment of economic isolationism last week, but found ourselves obliged to cover the happier occasion of Ross Ulbricht’s unconditional pardoning instead.

Don’t worry, curious reader, we haven’t forgotten you.

Stay tuned for more Notes From the End of the World…

Cheers,

Joel Bowman, Notes From the End of the World