Dam You Prohibition (No Taxation Without Representation)

Imagine living in a country without income taxes.  A place where you took home every cent of your hard earned salary.  That sounds crazy, right?  Sounds like something that could never exist in the US, right?  Well, it's the way things were before 1913.  And the cause of enacting an income tax?  PROHIBITION.  The crazy idea that didn't work very well in the early 1900's directly led to the income tax.  Prior to prohibition, 1/3 of all government revenue came from taxing alcohol sales.  Without it, the government needed another source and looked directly at the hard working citizens of the US.  What better way to ensure government revenue than to take the money directly out of your paycheck and then force people to file a tax return!  

A better tax policy would be a direct sales tax.  Taxation should be based on consumption and not on what you earn.  Why should the government be entitled to a portion of my hard work?  Well, it originally wasn't.  But I digress....

After nearly 100 years of income taxes we have come to accept the current policy.  The founding fathers are shaking their heads.  After all, disagreements about taxation helped bring upon the revolutionary war.  ("No Taxation Without Representation", remembered that one from elementary school)  As it stands now, taxation changes require congressional approval by a majority.  Also, as it stands we have a progressive tax policy where the tax rate increases as the taxable income increases.  The top ten percent of wage earners currently pay close to 65% of all income taxes.  

What happens when the majority realizes that they have the power to take advantage of the financially empowered minority?  You already see glimpses of this happening in California where initiatives are put on ballots for funding special interest projects that are funded entirely by extra charges to the top tax brackets.  There is nothing that prevents the majority from increasing the tax rate on the wealthy to 60, 70, 80 or even 90 percent of their income.  

Do the top earners move to other countries?  Will top earners be less motivated to work hard?  Would it lead to civil unrest?  Who knows...