In the beginning, Jefferson said, “a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities” (1st Inaugural Address, March 4, 1801) [emphasis added].
Seventy-one years later Karl Marx wrote in The Communist Manifesto:
“The proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie,…in the most advanced countries, the following will be pretty generally applicable:…(2) A heavy progressive or graduated income tax. (3) Abolition of all right of inheritance….(5) Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly” [emphasis added].
Fifty-six years later the Socialist Party of the United States had in their party platform in the 1928 elections, the following as their 14th plank:
“Increase of taxation on high income levels, of corporation taxes and inheritance taxes, the proceeds to be used for old age pensions and other forms of social insurance.”
Finally, today, in 2010, what rhetoric do we hear coming from the mouths of the Fascist Democrats in Congress and the Obama Administration? Are they the words of Thomas Jefferson, the author of our Declaration of Independence and staunch defender of individual liberty and limited republican-based government, or the words of the father of Communism and the American Socialists who grew out of the Progressive Movement ─ a movement that began in the later part of the nineteenth century and which molted into the Democrat party of Woodrow Wilson and FDR? To paraphrase the words of the slogan for a brand of cigarettes aimed at women, “You’ve come a long way, USA”!
As we now turn our attention to the onerous income tax system under which our economy struggles, it is very evident that we are far from being the free people who first heard those words of Jefferson as he assumed the office of President in 1801. Milton and Rose Friedman clarified that you cannot have freedom without being economically free, and you cannot be economically free unless you have complete control over your property, or in Jefferson’s words, “the mouth of labor the bread it has earned.” In their book, Free to Choose, they wrote:
“An essential part of economic freedom is freedom to choose how to use our income: how much to spend on ourselves and on what items; how much to save and in what form; how much to give away and to whom. Currently, more than 40 percent of our income is disposed of on our behalf by government at federal, state, and local levels combined” [mind you, this was written in 1979 and this is most certainly an even higher percentage now].
“Freedom to own property is another essential part of economic freedom….We refer to ourselves as a free private enterprise society, as a capitalist society. Yet in terms of the ownership of corporate enterprise, we are about 46 percent socialist” [again, this number is now significantly higher since in just the past eighteen months Obama has nationalized major sectors of our manufacturing, financial and healthcare industries].
The argument made in support of the income tax is classic Marxist/Fascist class warfare, namely it is not “fair” that certain individuals should by the use of their talents, ingenuity, hard work and sacrifice acquire more wealth than others in society, and therefore they must be punished by having the government take a larger portion of their wealth and “redistribute” it to those who are less wealthy. This idea of using coercive taxation policies to assist those less fortunate is a direct assault on liberty. Again, in Free to Choose, the Friedmans stated:
“There is no inconsistency between a free market system and the pursuit of broad social and cultural goals, or between a free market system and compassion for the less fortunate, whether that compassion takes the form, as it did in the nineteenth century, of private charitable activity, or, as it has done increasingly in the twentieth, of assistance through government ─ provided that in both cases it is an expression of a desire to help others. There is all the difference in the world, however, between two kinds of assistance through government that seem superficially similar; first, 90 percent of us agreeing to impose taxes on ourselves in order to help the bottom 10 percent, and second, 80 percent voting to impose taxes on the top 10 percent to help the bottom 10 percent ─ William Graham Sumner’s famous example of B and C deciding what D shall do for A. The first may be wise or unwise, an effective or an ineffective way to help the disadvantaged ─ but it is consistent with belief in both equality of opportunity and liberty. The second seeks equality of outcome and in entirely antithetical to liberty” [emphasis added].
Clearly this is the nature of our current income tax system and as I mentioned earlier, the rhetoric of the Fascist Democrats reverberate with Sumner’s equation mentioned by Friedman. The more they proclaim the need to “make the rich pay ‘their fair share’”, the more the lower classes who pay no income tax whatsoever cheer them on and back them at the ballot box. F. A. Hayek bluntly stated that this amounts to nothing more than a tyranny of the majority to satisfy their envy of those who are better off than they.
“It has come to be generally accepted once more that the only ground on which a progressive scale of over-all taxation can be defended is the desirability of changing the distribution of income and that this defense cannot be based on any scientific argument but must be recognized as a frankly political postulate, that is, as an attempt to impose upon society a pattern of distribution determined by majority decision….The only major result of the policy has been the severe limitation of the incomes that could be earned by the most successful and thereby gratification of the envy of the less-well-off” (The Constitution of Liberty) [emphasis added].
What is most striking about this argument of equality set forth by these individuals who, as Friedman and Hayek have shown are the enemies of liberty, is that while they want the equality of the benefits of wealth re-distribution, they reject the notion of equality of taxation. Returning to Hayek’s monumental work quoted previously, he wrote:
“J. R. McCulloch expressed the chief objection in the often quoted statement: ‘The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit.’…the general attitude was still well summed up in A. Thiers’s statement that ‘proportionality is a principle, but progression is simply hateful arbitrariness,’ or John Stuart Mill’s description of progression as ‘a mild form of robbery’….
The social reformers, while generally disavowing any desire to alter the distribution of incomes, began to contend that the total tax burden, assumed to be determined by other considerations, should be distributed according to ‘ability to pay’ in order to secure ‘equality of sacrifice’ and that this would be best achieved by taxing incomes at progressive rates. Of the numerous arguments advanced in support of this, which still survive in the textbooks on public finance, one which looked most scientific carried the day in the end….Its basic conception is that of the decreasing marginal utility of successive acts of consumption….Modern developments within the field of utility analysis itself have, however, completely destroyed the foundation of this argument….There can now be little doubt that the use of utility analysis in the theory of taxation was all a regrettable mistake (in which some of the most distinguished economists of the time shared) and that the sooner we can rid ourselves of the confusion it has caused, the better” [emphasis added].
Despite this evidence of a failure from a scientific and economic basis on the income tax to deliver as promised, much less that of a candid review from the standpoint of justice, the question must be asked, why then does it persist as a means of funding the government? The answer is not to be found in the science of economics, but rather in the halls of power and tyranny. Clearly, the income tax, as these above quotes indicate, is the main instrument of stirring up class enmity and hatred so as to cement the power base for these Fascists. As Marx defined it in the Communist Manifesto, “Political power, properly so called, is merely the organized power of one class for oppressing another.” This is completely antithetical to the philosophy of our founders in their construction of our Constitution, which was to allow the voice of the majority to prevail, but not to the point of the oppression of the minority. Indeed, one of their primary concerns, both Federalist and Anti-Federalist, was to strike a balance between these two groups so that the minority could not checkmate the will of the majority, but at the same time to give protection to the rights, liberties, and voice of the minority. The reason that we still have the income tax and will continue to have it is we have Fascists in control of our government whose sole interest is their own grip on power ─ a grip that can only be maintained by employing divisive tactics among the citizenry, using the envy of those who have less to wage war against those who have more by promising to “redistribute” the income of the one class to the other. As Hayek said back in 1959 when he wrote The Constitution of Liberty, “Whatever may happen in the future, for the present at any rate, progressive taxation is the chief means of redistributing incomes, and without it, the scope of such a policy would be very limited.”
The income tax will continue to oppress us until we elect men and women to Congress who will not bow to the special interests by “tinkering” around the fringes of the tax code, but instead will champion the interests of we, the people ─ rich, poor or middleclass ─ men and women who will put the future of our children, grandchildren, and all future generations above any personal ambition and who understand and will follow these economic truths from the wisdom of men such as Friedman and Hayek.
In his inaugural address Jefferson also stated that not only should a wise government “not take from the mouth of labor the bread it has earned” but that such a wise and good government would also be “frugal”. I hesitate to even ask if you feel the portion of your “bread” produced by your labor that is taken from you by our government is spent wisely, and if the central government acts frugally in its dissemination of these monies. Adam Smith, in his classic work, The Wealth of Nations, gave this assessment of the impact of money taken by the government out of the private sector:
“All taxes upon the transference of property of every kind, so-far as they diminish the capital value of that property, tend to diminish the funds destined for the maintenance of productive labour. They are all more or less unthrifty taxes that increase the revenue of the sovereign, which seldom maintains any but unproductive labourers; at the expense of the capital of the people which maintains none but productive.”
So according to Smith, the only result that taxes on income can produce is a decrease in the productivity that would otherwise be possible had those taxes not removed that capital out of the hands of the laborers. Instead, he says, those taxes go into the treasury of the government which seldom creates any productivity. Contrast this with what you hear constantly coming from the Obama Administration that it is the responsibility of the government to increase taxes so that they can use the money for the creation of jobs! Clearly, Obama’s economic philosophy towards taxation and job productivity is at odds with the renowned Adam Smith!
Words and actions have consequences, no matter how hard those on the left try to expunge that basic principle from our society and government. Since that principle still holds true, though, exactly what are the consequences of our current tax code, and specifically a system of taxation based upon income? Adam Smith’s statement above has already brought one consequence to the fore ─ that being a reduction of productivity. But, that is just the tip of the iceberg ─ there are many, many more devastating consequences of the income tax upon not just our economy but upon our freedom and liberties, all of which demand its elimination. This will be the subject matter of next week’s post.
- Epaminondas
