In the middle of the spending debates in Washington, it’s easy to focus on the symptoms – crushing deficits, an immoral and economically inefficient tax code, a weak economy, etc. – and not the sources of the problems facing America. Recently, Steve Forbes highlighted two of the worst changes in the history of the United States, both of which happened 100 years ago: the creation of the Federal Reserve and the implementation of the federal income tax.

Regarding the income tax, Forbes had this to say:

Income taxes punish the very things we want more of: productive work, risk-taking and success. We can’t say this enough: A tax on income is the price you pay for working; a tax on profits, the price you pay for success; and a tax on capital gains, the price you pay for taking risks that work out.

Exactly right. Additionally, the tax – initially implemented on top earners – has trickled down to hit almost all taxpayers. Washington, of course, subsequently implemented tax credits and loopholes for a “friends and family” system of corruption and special interests. Thus, economic activity is misallocated, slowing economic growth and causing harm to those who wish to work.

Forbes has long supported a flat income tax, and does so again in this column. This is a great alternative to the current system, though it still leaves a tax on income on the books. The Fair Tax is also a better option, though many accuse it of being regressive. Tea Party Patriots quickly examined both systems of taxation last year – check out what we found.

Forbes finishes the income tax portion of his column by pointing out how states are leading the fight against the current form of the income tax:

Governor Sam Brownback of Kansas has been unrelenting in pushing for lower income tax levies….Brownback triumphed and is now putting Kansas on the path to eliminating this exaction altogether. Governor Dave Heineman of Nebraska wants to do the same thing, as does Governor Bobby Jindal of Louisiana. Other governors are pushing to reduce rates sharply, including Governors Pat McCrory of North Carolina, Mary Fallin of Oklahoma and John Kasich of Ohio.

States with taxaholic governors, such as Illinois, California, Maryland and Connecticut, are being hit hard. Jerry Brown claims his massive retroactive tax increase on upper-income Californians is balancing his budget. Not for long. Businesses and individuals are fleeing the once Golden State.

Golfer Phil Mickelson was trashed by liberals and the liberal media when he dared voice his disgust with having most of his earnings go to government bureaucracies. But shouting critics won’t alter reality. Is it a coincidence that such athletes as Tiger Woods, Derek Jeter and countless others have official residences in places like no-state-income-tax Florida? Or that numerous Californians have their official residences just across the border in no-state-income-tax Nevada?

When it comes to the Federal Reserve, Forbes pulls no punches:

When the dollar is weakened, investment is misdirected. Less goes into financing productive activities and more into defensive hard assets. During the 1970s, the last time the Fed went off the rails, oil went from $3 a barrel to $40. When the early inflation in the 1980s ended, oil crashed to $10 a barrel before moving up a bit. From the mid-1980s to the early part of the last decade it averaged around $21. Now look at it: $97. Another example is the price of farmland, which has doubled in recent years. The Fed breeds destructive bubbles, as it is now doing with bonds.

And:

Even the Bank of England, for example, has been voicing deep skepticism about the efficacy of quantitative easing.

That institution, by the way, conducted a couple of studies that showed how destructively volatile the world’s financial systems have become since the end of the gold standard in the 1970s. Given current antigold orthodoxy, the Bank of England surveys didn’t draw logical conclusions, but events will make even policymakers see the light.

Why should the dollar be linked to gold? Because more than any other thing on earth, gold keeps its intrinsic value. It’s like the North Star, always constant. Thus it’s a handy measuring rod for keeping the value of money steady.

In 2009, then-Representative Ron Paul (R-TX) outlined exactly how the Federal Reserve has caused much of today’s economic and budget concerns. His comments can be seen below:

It is important, as 2013 wears on, for Tea Party activists to push for a balanced budget, tax reform, and a better policy approach for economic growth. But we should do so without missing the forest for the trees – without forgetting that imbalanced budgets and immoral tax policies would be far less problematic if these two centenarians had never existed.