Pee Pee Pee.... WHY??

Canyon has been potty trained for about a year now. He has done very well. Our biggest problem is keeping the carpet dry, yes the carpet. He pulls his pants down and gets the carpet even though the potty is 10 feet away.  I don't understand he knows this is naughty. I ask him why he pees on the carpet and he answers "that's naughty". WHY, why is he peeing?  I have tried taking his favorite toy away, I've tried time out, I have even tried spanking. I never wanted to get to that point but I did. And it failed miserably. So I switched tactics, rewards. I've tried the potty jar, or giving him a treat each time the carpet was dry. That worked for a little while but now we are back to wetting the carpet. WHY?  Today I took every single toy away except for one truck for Bridger to play with.  Other than that all the toys are gone. TV is gone. Canyon doesn't seem to care that all his toys are gone. What do I do? I need help.  Any suggestions????