A THOUGHT ON TAXES
By Publius II
Here are two grim truths about government: government is a parasite on the private sector of the economy, and government is force. Government takes the money it needs by taxing individuals and businesses in the private economy. The bigger the profit, the bigger the taking — until the process ultimately goes into reverse as businesses fail and workers are laid off.
It can also borrow but later the debt must be paid, also by taxation. To summarize, government seeks out success and penalizes it thru taxation.
In her powerful book Discovery of Freedom, Rose Wilder Lane provided a warning that should scare the pants off any taxpayer. “Government must take the money it needs from the wealth that productive men create. How much can it take safely? Because it uses force it has no way of knowing the answer to this question (emphasis added).”
Charles Adams wrote For Good and Evil: The Impact of Taxes on the Course of Civilization. In it he showed that time and again thruout world history tax systems started out good but later turned evil.
The Constitution gives authority to tax to the congress. It also gives congress the power to spend. While the Constitution was and is an impressive document, this combination is a serious mistake.
How could the founding fathers have done this? Back then people trusted their congressmen and presidents freely vetoed bills that called for excessive spending. That was then.
The Constitution provides that citizens govern themselves thru a congress consisting of elected officials who would ascertain the public will on a federal issue. (Guided by the Constitution, citizens would grant authority to the Congress to act, but only on certain and expressly permitted issues.) Each member would then argue for their constituents’ position on the issue before voting on a bill. If it passed the bill would go to the president for his/her approval.
Back then citizens granted only very limited authority and limited funds to the federal government. When taking office congressmen swore to answer to the will of their bosses/citizens.
They still do, but today top officials believe that an oath does not bind them to public service. A thinking citizen did not know whether to laugh or cry on January 20, 2009 when Chief Justice Roberts flubbed the giving of the oath to Barack Obama.
The Constitution was designed to belong to the people and not the government. September 1787:
“WE THE PEOPLE OF THE UNITED STATES, ——————– DO ORDAIN AND ESTABLISH THIS CONSTITUTION FOR THE UNITED STATES OF AMERICA.” This was a totally new idea for government. Would it work?
The intent of the self-government provision was for citizens to exert force on their government. They would make elected representatives listen to them and do what they order them to do. Because what government does is also force, it is vitally important that citizens actively restrain it. Logically, it follows that they must keep their representatives in the congress constantly under their thumbs.
George Washington said (paraphrased), “Government is like fire. A little is good, as it heats our homes and cooks our food. But when out of control it is devastating.”
It is appalling what man will do to his fellow man when he knows he can get away with it. Human nature and lack of under-the-thumb accountability combine to enable oppressive government to prosper at public expense.
And it forces the people to pay for it thru taxation that is put into law without the public consent. This sad situation prevails over much of the world today.
In the late 18th century Thomas Paine described this condition as “the excess of slavery.” Adam Smith in 1776: “There is no art which one government sooner learns from another than that of draining money from the pockets of the people.”
James Madison: “Every shilling with which they overburden the inferior member is a shilling saved to their own pockets.” Note his reference to the citizen as inferior. Madison is known as the father of the Constitution for a good reason.
In 1905 the typical family of four had just one breadwinner. It was forced to pay total taxes at all levels of government of five percent of its annual income. This included estimated costs to the consumer of government regulation of business.
Today that bite totals 53-55 percent of a typical family’s income, including estimated costs of regulation. Today’s average necessitates the two-income family, latchkey children, juvenile crime, and drugs. It includes serfs who sheepishly obey orders from public officials while they drain their pockets.
Benjamin Franklin understood human nature. On September 17, 1787 the new Constitution was complete and ready for discussion, debate and approval by citizens. When he and the other delegates exited Independence Hall in Philadelphia for the last time he said government will be wise and safe for a period of years.
But eventually big government will prevail when the citizens become “so corrupted as to demand it, being incapable of any other.” Today it is obvious that Ben had a point. At age 82 he was a student of human nature.
The passage of 232 years has buried the self-government provision. Members of Congress know and appreciate the great potential benefits of this provision, which forms the core of democracy.
But over the years they have worked to keep this secret from their bosses, the citizens. Congress has acted to provide those benefits all right, but the kicker is that most go to themselves. And at taxpayer expense.
Nearly all of those who have “served” for at least a decade have become very wealthy on the public tab. Career politicians in office for at least 3-4 years have learned how to game the system and get re-elected over and over.
Veteran politicians coach rookies in these skills. This is why in politics experience is a negative asset. Citizens should not re-elect experienced politicians. How much experience is needed to ask folks what they want and then help them to obtain it?
Including accompanying regulations and IRS rulings, the income tax code is a 67,500-page mishmash loaded with tax breaks, loopholes and credits for the wealthy elite class. In 2005 the Tax Foundation said it cost the public 6 billion hours and $265 billion to complete tax returns.
Government not only paid nothing to tax preparers for this service. It also forced employers to act as tax collectors while paying them nothing. This massive fiasco supports a budget that runs to $4+ trillion (proposed for FY 2020). Rose Wilder Lane’s warning has thinking citizens deeply concerned, — nay, angry.Pocket Gofer 14 elaborates.
Here is a truth that explains much of today’s sad tax situation. Great as it is, the Constitution is only a piece of parchment. Without active citizens to watch their public servants closely it is little more than the next piece of parchment. That a-word is paramount.
The first individual income tax was passed during the Civil War. Immediately after the war it was repealed. An attempt was made in 1894, but the Supreme Court struck it down as unconstitutional.
Charles Adams listed ten conclusions generated by the great philosophers and thinkers of the 17th century Enlightenment. No. 5 reads “Direct (income) taxes are the badge of slavery, and indirect taxes the badge of liberty.”
The founding fathers’ thinking and discussions were guided by these philosophers’ writings. Madison, Franklin, Hamilton and others tapped into their ancestors’ thinking when they compiled the Constitution.
For a frustrated Congress to make the income tax legal it was necessary to amend the Constitution. The 16th amendment did this in 1913. Why did citizens not raise hell at that time?
Actually, people had a different attitude then. Government was widely regarded as good, limited and equitable. Chief Justice Oliver Wendell Holmes said he enjoyed paying taxes to help support what he considered good government.
Promises that the rate would never exceed a few percentage points were believed. Today everyone knows the meaning of politicians’ promises.
A law subsequently passed provided for a progressive tax rate. The wealthy paid a higher rate than the masses. Shortly after 1913 members of Congress saw the potential. By 1921, well after the end of World War I, the top rate had gone from 7 to 77 percent. Adams surely had a point.
But then came a surprise for the government. Total revenues were about the same at 77 percent as they were at 7 percent. Nine tenths of the wealthy payers had disappeared. Even more intriguing is the fact that under the uniformity clause in the Constitution taxing some payers at a higher rate than others is a violation.
Well, government learned something from this experience. Today it keeps growing bigger and more oppressive just as yesterday, but now it does this through stealth.
For example, in 1981 the Reagan government cut income tax rates accompanied by a media blitz. Later it quietly increased the payroll tax (Social Security) by more than the amount of the income tax cut.
When excessive, taxation is no different than the Mafia extorting “protection” money. Citizens have been slowly programmed by the news media to fear almost everything and to look to the Great Father and Protector. This programming creates a continuing open season for taxation.
Without thinking they just hunker down, pay more taxes and depend on government to solve their problems. Jefferson’s advice was that government should fear the people, but this admonition has been sneakily reversed.
Recall the 67,500-page mishmash mentioned above. Insertions of thousands of unconstitutional tax breaks for the wealthy have been going on for decades. It has got to where no one, not even the IRS, can understand this bucket of worms.
These tax breaks are purchased with dirty money. The super-rich send their lobbyists to see congressmen and to buy tax breaks, loopholes and credits.
Members of Congress are happy to sell them if the price is right. But these breaks reduce government revenues, and so the average Joe/Jane Taxpayer is forced to make up the slack. In this way and others wealth is transferred from the middle class to the rich. Is this part of the public will that congressmen swore to act on when entering public office?
This is corruption. Adams: “It is just as immoral for governments to grant exemptions as it is for citizens to hide their income.” Maverick congressman and 2008 presidential candidate Ron Paul: “I lean towards a flat tax, but I want to make it real flat, like zero.”
The national debt is now up to $20 trillion and counting. That is about $250,000 for every US citizen, including babies. Including promises of future goodies the total tab comes to around $50-70 trillion. Unless severe action is taken the unborn will pay because politicians are spending tomorrow’s money today.
Seniors today are benefitting from yesterday’s politicians doing the same thing yesterday. Jefferson warned against the dead taxing the living.
In 1916 the nation’s richest man, John D. Rockefeller, could by himself retire in total the national debt. Today the nation’s two richest men, Bill Gates and Warren Buffet, would go broke trying to pay eight months’ interest on the debt.
A new documentary film was released on August 21, 2008. It is called “I.O.U.S.A.” Comptroller General David Walker is crossing the country warning about the fiscal train wreck coming.
During the 2008 campaign he worked just as hard as Obama and McCain, but the news media ignored him. This is intriguing because what Walker said then and is (probably) still saying was far more important to the future of the nation than anything the candidates said during the campaign.
When the smoke and dust finally settles the taxpayer, as usual, has been and will get dinged for a substantial part of four trillion or so dollars. Publius II believes that this will not help much. What got the society into this mess was bad regulation by a meddling government.
This caused the Great Depression of the 1930s. Roosevelt spent megabucks on social programs, but his bureaucrats failed. It was World War II that finally did the job after ten years of misery.
Wall Street is loaded with very smart money people. Whenever a new regulation comes into force they figure ways around it so they can make lots of money for their rich clients and themselves.
But regulations and working around them both distort the money markets, so the bureaucrats jump in with more distorting regulations and the superbrains keep working to avoid their impact (and avoid being fired by their fat cat bosses).
This vicious cycle has been going on for at least 20 years until the result is today’s situation. But this truth does not faze the bureaucrats, who will go on doing the job. The politicians will not stop them because they see meddling in markets as part of their job.
The unavoidable conclusion is that, no matter how much taxpayer money public officials throw at the problem they cannot solve it. Eventually the market will get it done, but not until after some very expensive mistakes and some outright fraud.
The Fed (Federal Reserve Board of Governors) 20+ years ago distorted the money markets with low interest rates. This enabled Wall Street to “earn” megabucks while it created what economists call bubbles: dotcom, finance, housing (prices zooming upward). When these burst as they always must both Wall Street and Main Street (especially homeowners) were overextended and in deep financial trouble.
There is a huge kicker here. As in the 1930s and in many instances since, government meddling in private markets has caused distortion and abuse by those who are smart and in the right place at the right time.
Both the financiers, the politicians and lobbyists are guilty of abuse. Now the government is combining its efforts with Wall Street to once again distort markets with its meddling.
But government policies got the economy into this mess in the first place. And now it is going to solve the crisis with more meddling, with the taxpayer being deeply gouged without his/her consent? Whoa! What happened to “consent of the governed” (Declaration of Independence)?
Impractical as it might seem, a solution is possible if citizens unite to support it. The kicker here is how to organize some 140 million individual and business taxpayers. Publius II wrote the pocket gofers with this task in mind.
As of fall 2010 the Tea Party movement had acquired some momentum. The citizens who are active in this movement are disgusted with the two major political parties in Washington and they apparently had the courage to stand forth in promoting their views. An NBC/Wall Street Journal poll ranks it as more popular than either democrats or republicans. (Apparently the elitists ordered the news media to avoid publishing information about the Tea Party; we have heard nothing recently.)
The first thing to do is gather to discuss, debate and improve the preliminary draft of a new constitution. (See the essay on government over the long term or Pocket Gofer 21.) Then put the result into effect. This process would roughly repeat what citizens of the infant nation did during 1787-1789.
The existing Constitution provides three methods for proposing amendments: 1) two-thirds of both houses of Congress; 2) two-thirds of the state legislatures; and 3) by citizen conventions in three-fourths of the states. The language in Article V is a bit vague, but if citizens own the Constitution they can and should interpret the document in their favor.
Next, at least one citizen in each neighborhood or community must have the courage to stand forth. He/she would call a meeting to accumulate votes for an amendment that would bring an end to the existing Constitution. This would take some time, but discussions and debate about the new one could begin immediately.
Then citizens must push for ratification by citizens via constitutional conventions in three-fourths of the states. On the day the 38th state ratifies it the finished new constitution would come into full effect. It would displace the existing one.
The next step is take the entire income tax code plus supporting documents and trash them. No exceptions. The document is beyond repair and anyway under the new document there would be no income tax. Millions of taxpayers would rejoice as the IRS goes down.
Note that the new proposed constitution also eliminates the Congress. These thieves have betrayed the citizens’ trust and stolen from them for far too long.
Years ago someone said, “We put the petty criminal in jail. But the really big thieves we elevate to high public office.”
There would be no congress to sell tax breaks and many other favors to the elite class. In fact, under the proposed democracy there would be no taxpayer-financed elite class. The electoral college would vanish.
The federal government would petition state governments for operating funds. Once the citizens have approved an operating budget each state government would pay in proportion to its number of registered voters.
With bottom-up government voters would be anxious to register because their votes would mean something for a change. See the essay on elections.
The citizens would approve only very limited funds through their state governments. They would give the federal government permission to do only specific tasks such as foreign policy and regulation of the money supply.
Washington could not force some 140 million unorganized individuals and businesses to pay taxes. Rather, it would be forced to beg for money from just 50 well-organized state governments. These governments would also be forced to bend to the citizens’ will, and these officials are close by so they would feel the heat in the kitchen.
If federal officials did not use these funds wisely citizens and their state governments would be all over them. They earned that money. Even the highest government officials would live in constant fear of the wrath of their citizens. There would be nothing sneaky about this reversal.
Today the IRS has unconstitutional authority (violating the 4th Amendment) to render the taxpayer financially naked. It follows instructions from above and finds a way to tap into all. As Charles Adams showed time and again, it is then only a matter of time until the system bleeds the taxpayer dry.
Long before that point of rebellion, a government committed to protect citizens’ liberties begins to take away what it is protecting. The US government has been following that time-honored pattern. It intends to continue, establishing a police state in the name of protecting citizens’ liberties. (Of course they won’t admit this.)
Jefferson: “If I know the manners and spirit of the people they will act before the venom has got beyond control.” Would the great thinker about democracy know the same about today’s citizens?
What would citizens think about a democracy that hums along without the IRS, the Pentagon and the Congress? Publius II thinks it would prosper because the citizens would make damn sure it does.