Key ideas: Published in 1954. “THIS WAS, to be sure, ‘the home of the free and the land of the brave.’ Americans were free simply because the government was too weak to intervene in the private affairs of the people—it did not have the money to do so—and they were brave because a free people is always venturesome. The obligation of freedom is a willingness to stand on your own feet… The Constitution, then, kept the federal government off balance and weak. And a weak government is the corollary of a strong people. The Sixteenth Amendment changed all that. … The economic power which the federal government secured by the Sixteenth Amendment enabled it to bribe the state governments, as well as the citizens, into submission to its will. In that way, the whole spirit of the Union and of its Constitution has been liquidated. Income taxation has made of the United States as completely centralized a nation as any that went before it; the very kind of establishment the Founding Fathers abhorred was set up by this simple change in the tax laws. This is no longer the ‘home of the free,’ and what bravery remains is traceable to a tradition that is fast losing ground. For those of us who still believe that freedom is best, the way is clear: we must concentrate on the correction of the mistake of 1913. The Sixteenth Amendment must be repealed. Nothing less will do.” (J. Bracken Lee, Governor of Utah)
Tradition has a way of hanging on even after it is, for all practical purposes, dead. We in this country still use individualistic terms—as, for instance, the rights of man—when, as a matter of fact, we think and behave in the framework of collectivistic doctrine. We support and advocate such practices as farm-support prices, social security, government housing, socialized medicine, conscription, and all sorts of ideas that stem from the thesis that man has no rights except those given him by government.
Despite this growing tendency to look to political power as the source of material betterment and as the guide to our personal destinies, we still talk of limited government, states rights, checks and balances, and of the personal virtues of thrift, industry, and initiative. Thanks to our literature, the tradition hangs on even though it has lost force.
But there are many Americans to whom the new trend is distasteful, partly because they are traditionalists, partly because they find it personally unpleasant, partly because reason tells that it must lead to the complete subjugation of the individual, as in Nazi Germany or Communist Russia, and they don’t like the prospect. It is for these Americans that this book was written. For their opposition to the trend takes the shape of reform, while nothing will turn it but revolution. And by “revolution” I mean the return to the people of that sovereignty which our tradition assumes them to have. I mean the return to them of the power which government confiscated by way of the Sixteenth Amendment.
When you examine any species of government intervention you find that it is made possible by revenues. A government is as strong as its income. Contrariwise, the independence of the people is in direct proportion to the amount of their wealth they can enjoy. We cannot restore traditional American freedom unless we limit the government’s power to tax. No tinkering with this, that, or the other law will stop the trend toward socialism. We must repeal the Sixteenth Amendment.
IT IS TOLD—1 Kings, Chapter 12—that the people of Israel petitioned their new ling, Rehoboam, son of Solomon, to relieve them of the “yoke” his father had suffered them to bear. The “yoke,” we learn from the story, was the cost of maintaining the political establishment; it was an income tax.
The designation of a levy on one’s production as a “yoke” is interesting; it shows how keen is the mind unencumbered with erudition. The yoke symbolizes the beast of burden, who, of course, has no right of property. When the human is similarly deprived of what he has produced—which is the essence of income taxation—he is indeed degraded to the status of an ox….
The Constitution, then, is held in high esteem only because of the high esteem Americans put upon the doctrine of natural rights. Any law, political practice, or even amendment that infringes those rights is automatically deemed “unconstitutional.” The infringement is “evil.”
With this definition of “evil” in mind, it is the purpose of this book to show that many laws and governmental practices are impregnated with it, and to trace this wholesale infringement of our rights to the power acquired by the federal government in 1913 to tax our incomes—the Sixteenth Amendment. That is the “root.” Furthermore, proof will be offered to support the proposition that the “evil” has reached the point where the doctrine of natural rights has been all but abrogated in fact, if not in theory.
As a consequence, the kind of government we are acquiring is distinctly different from that envisaged by the Founding Fathers; it is fast becoming a government that conceives itself to be the source of rights, which it gives and can recall at its own pleasure. The transformation is not yet complete, but it will be seen as we go along that completion is not far off—if nothing is done to prevent it. …
In the case of the practices resulting from income taxation, it will be shown that most of them are demanded or supported by large segments of society; the government merely compounds the evil. A people who are intent on getting something-for-nothing from government cannot cavil over the infringement of their rights by that government; in fact, if the price demanded for the gratuities is the relinquishment of rights, they are not averse to paying it. There is evidence enough that this trade is often made, and that the government is able to enter into it because of its income-tax revenues.
When an “evil” becomes customary, it tends to lose the negative value put on it and in men’s minds tends to become a “good.” And so, we hear much these days in praise of the very kind of government which the Founding Fathers tried to prevent by their blueprint; that is, of a paternalistic establishment ruling for and over a subject people. A virtue has been made of what was once considered a vice.
This transmutation of political values has been accompanied by a transmutation of moral values, as a matter of necessity; people who have no rights are presumably without free will; at least, there is no call for the exercise of free will (as in the case of a slave) when a paternalistic government assumes the obligations of living.
This treatise on the Sixteenth Amendment will proceed under these general lines:
That as a consequence of this law our government is being transformed into one alien to the American tradition.
That social and individual values are likewise undergoing transmutation.
That, in short, America is no longer the America of the Declaration of Independence.
Finally, and most important, we shall suggest a means for reversing the trend and restoring the “good” of our tradition.
Income and inheritance taxes imply the denial of private property, and in that are different in principle from all other taxes.
The government says to the citizen:
Your earnings are not exclusively your own; we have a claim on them, and our claim precedes yours; we will allow you to keep some of it, because we recognize your need, not your right; but whatever we grant you for yourself is for us to decide.
In short, when this amendment became part of the Constitution, in 1913, the absolute right of property in the United States was violated.
That, of course, is the essence of socialism. Whatever else socialism is, or is claimed to be, its first tenet is the denial of private property.
All brands of socialism, and there are many, are agreed that property rights must be vested in the political establishment. None of the schemes that are identified with this ideology, such as the nationalization of industry, or socialized medicine, or the abolition of free choice, or the planned economy, can become operative if the individual’s claim to his property is recognized by the government. It is for that reason that all socialists, beginning with Karl Marx, have advocated income taxation, the heavier the better. *
So then, when the Sixteenth Amendment became part of the Constitution, the American political order, which rested on the axiom of inalienable rights, underwent a major operation. The great debate in the Constitutional Convention of 1789 was over the question as to whether this country should have a republican or democratic form of government; the question was finally resolved in 1913, when the door was opened for the introduction of the socialistic forum. …
So long as the confiscation of private property is legalized, this country is not immune to the advent of ultimate socialism, which is communism.
The basic tenet of communism is the vesting of all property rights in the state. Already nearly one third of our national income is being taxed away from us. One or two more national “emergencies” can well bring about the confiscation of the other two thirds, and thus effect the final transition to communism. We could slither into it quite without being aware of it.
Any effort to reverse the trend must begin with the reestablishment in the American culture of the inviolability of private property. If Americans were again to put that right at the pinnacle of their values, the repeal of the Sixteenth Amendment would follow as a matter of course.
The axiom of socialism is that the individual has no inherent rights. The privileges and prerogatives that the individual enjoys are grants from society, acting through its management committee, the government. That is the condition the individual must accept for the benefit of being a member of society. Hence, the socialists (including many who do not so name themselves) reject the statement of rights in the Declaration of Independence, calling it a fiction of the eighteenth century….
The senselessness of the socialistic axiom is that there would be no society, and therefore no government, if there were no individuals. The human being is the unit of all social institutions; without a man there cannot be a crowd. Hence, we are compelled to look to the individual to find an axiom on which to build a nonsocialistic moral code. What does he tell us about himself?
In the first place, he tells us that above all things he wants to live. He tells us this even when he first comes into this world and lets out a yell. Because of that primordial desire, he maintains, he has a right to live. Certainly, nobody else can establish a valid claim to his life, and for that reason he traces his own title to an authority that transcends all men, to God. That title makes sense.
When the individual says he has a valid title to life, he means that all that is he, is his own; his body, his mind, his faculties. Maybe there is something else to life, such as a soul, but without going into that realm, he is willing to settle on what he knows about himself—his consciousness. All that is “I” is “mine.” That implies, of course, that all that is “you” is “yours”—for, every “you” is an “I.” Rights work both ways.
But, while just wanting to live gives the individual a title to life, it is an empty title unless he can acquire the things that make life livable, beginning with food, raiment, and shelter. These things do not come to you because you want them; they come as the result of putting labor to raw materials.
You have to give something of yourself—your brawn or your brain—to make the necessary things available. Even wild berries have to be picked before they can be eaten. But the energy you put out to make the necessary things is part of you; it is you.
Therefore, when you cause these things to exist, your title to yourself, your labor, is extended to the things. You have a right to them simply because you have a right to life.
That is the moral basis of the right of property. “I own it because I made it” is a title that proves itself. The recognition of that title is implied in the statement that “I make so many dollars a week.” That is literally true. …
In other words, your ownership entitles you to use your judgment as to what you will do with the product of your labor—consume it, give it away, sell it, save it. Freedom of disposition is the substance of property rights.
Interference with this freedom of disposition is, in the final analysis, interference with your right to life. At least, that is your reaction to such interference, for you describe such interference with a word that expresses a deep emotion: you call it “robbery.”…
Suppose the freedom of disposition is taken away from you entirely. That is, you become a slave; you have no right of property. Whatever you produce is taken by somebody else, and though a good part of it is returned to you, in the way of sustenance, medical care, housing, you cannot under the law dispose of your output; if you try to, you become the legal “robber.”
Your concern in production wanes and you develop an attitude toward laboring that is called a “slave” psychology. Your interest in yourself also drops because you sense that without the right of property you are not much different from the other living things in the barn. The clergyman may tell you you are a man, with a soul, but you sense that without the right of property you are somewhat less of a man than the one who can dispose of your production as he wills. If you are a human, how human are you?
It is silly, then, to prate of human rights being superior to property rights, because the right of ownership is traceable to the right to life, which is certainly inherent in the human being. Property rights are in fact human rights.
A society built around the denial of this fact is, or must become, a slave society—although the socialists describe it differently. It is a society in which some produce and others dispose of their output. …
The economic decline of a society without property rights is followed by the loss of other values. It is only when we have a sufficiency of necessaries that we give thought to nonmaterial things, to what is called culture. On the other hand, we find we can do without books, or even moving pictures, when existence is at stake. Even more than that, we who have no right to own certainly have no right to give and charity becomes an empty word; in a socialistic order no one need give thought to an unfortunate neighbor because it is the duty of the government, the only property owner, to take care of him; it might even become a crime to give a “bum” a dime. When the denial of the right of the individual is negated through the denial of ownership, the sense of personal pride, which distinguishes man from beast, must decay from disuse.
The income tax is not only a tax; it is an instrument that has the potentiality of destroying a society of humans.
THE CONSTITUTION of 1789 barred the income tax. The Fathers could not have put it in, even if they had a mind to, and there is no evidence that they had. A century later, when Americans were flirting with this invasion of property rights, legal minds tried to twist the language of the Constitution to their support. Whatever crumbs of comfort they got out of word juggling, the fact is that the Americans of 1789 would have none of this income tax. They were not that kind of people.
Behind these people lay a century and a half of training for freedom.
Individualism—which is nothing but a high regard for oneself—had been beaten into their souls; their conquest of nature had taught them the lessons of self-reliance and self-respect. When it was necessary to wage war in defense of the freedom they had wrung from the wilderness, they were well prepared, not materially, but spiritually. John Adams, writing in 1818, said: “the Revolution was in the hearts of men”… it was effected “before the war commenced.” They had come by freedom the hard way and they meant to hold on to it.
In point of fact, they went to war with King George III over what we might deem trifles. When you compare the disabilities put on the Americans by the British Crown, as listed in the Declaration of Independence, with what other peoples have complacently suffered from governments, you recognize the high price these Americans put on freedom.
How petty the indictment of George reads when one thinks of what the Germans endured under Hitler, the Russians under Stalin! And if we could penetrate our own adjustment to bureaucratic interference, and could see things as they really are, we would write a new Declaration that would make Jefferson’s sound picayune.
One of the principal causes of the Resolution was taxation. The Americans summed up their attitude toward taxation in the slogan “Taxation without representation is tyranny.” The fact is, they looked upon taxation as a form of tyranny, or an invasion of their property rights, with or without representation, but were willing to make some sort of compromise with it as a matter of necessity; the compromise was “representation.”
Judging by their reluctance to suffer taxes imposed by their own governments, local or state, it is a certainty that if the Crown had given them representation in Parliament they would have disliked taxes only a little less. The levies laid upon them by the Crown were so minuscule, compared to those their progeny have learned to endure, that the fuss they made seems ridiculous. It seems ridiculous only because we are a different kind of people. …
The Constitution did not give Americans freedom; they had been free long before it was written, and when it was put up for ratification they eyed it suspiciously, lest it infringe their freedom.
The Federalists, the advocates of ratification, went to great pains to assure the people that under the Constitution they would be just as free as they ever were. Madison, in particular, stressed the point that there would be no change in their personal status in the new setup, that the contemplated government would simply be the foreign department of the several states. …
In the important matter of taxation, the Constitution quite definitely granted the new government very limited powers: import tariffs and excise taxes. Even the latter were grudgingly admitted. The only federal taxing powers on which there was general agreement were tariffs; the “infant industry” argument—the need of encouraging manufactures in the new country by protection from foreign competition— carried weight with the people, and it was conceded that a federal monopoly of tariffs would be better than different tariffs by the thirteen states.
Hamilton, however, pleaded (in The Federalist Papers) the inadequacy of income from tariffs alone. He had in mind not only the expected expenses of the new government, and the need of establishing its credit position, but also the funding and paying off of the Continental debts. He asked for the privilege of sharing internal taxes with the states. He specifically rejected the idea of income taxation, both because it would yield little and because it would be repulsive to the people.
And so, the government of the United States got along with what it could get out of tariffs and a few excise taxes until the Civil War; it is interesting to note that the excise levies were dropped in 1817, and not restored until the Civil War. As a consequence, it was a weak government, in the sense that it could not become bothersome; and the freedom of the people made them strong, so that wealth multiplied and the country flourished. …
But, on the whole, previous to the Civil War the government of the United States confined itself to the business for which it was created, that of protecting people in the enjoyment of their God-given rights. It should not be forgotten that the Founding Fathers, agreeing with John Locke, with whose writings they were familiar, thought of government principally as an instrument for safeguarding private property; and that was considered the prime business of the United States government until 1860.
In 1862, Lincoln instituted the first income-tax law in American history. The debate in Congress over this major change in our fiscal policy makes curious reading. It was tacitly agreed that the law was unconstitutional, because it was a direct tax. A few Congressmen tried to stick the “excise” label on the proposed tax, thus forcing it into the formula of the Constitution. But, on the whole, the argument for it rested on the need for money to carry on the war. It was a matter of expediency only. The Constitution was set aside. …
So, if war is justified, unlimited and unrestrained income taxation can also be justified. The question is: when is war justified?
Every war is fought with current wealth. There is no way of shooting off cannons that have not yet been made, no way of feeding soldiers with the produce of the next generation. The argument that a future generation can be made to pay the costs of a present war is both specious and deceptive; it cannot be done. All the labor and all the materials expended in the struggle are current, not future, labor and materials. We pay as we fight.
The deception that some of the costs may be put on the future is created so as to ease the strain that total confiscation would put on patriotism. To prevent dissatisfaction with the war from getting out of hand, the government takes what it needs, and gives I.O.U’s (bonds) to the owner. But, this I.O.U. is not payment for the goods taken; it is a claim on future production. So that, the holder of the I.O.U., the grandson of the one whose goods were taken for the war, can demand from other grandsons a share of their production. The bondholder is simply a partner of the tax collector. But how is this payment for a past war?
It has been argued that if the government could not borrow it could not wage war. This may be true; neither could it wage war without soldiers. But if people will not give up their property or risk their lives, then the war is not wanted. If the war is not wanted, why should it be waged? If, instead of resorting to loans, the government should confiscate whatever it needs for the purpose, perhaps a waning patriotism would cause the war to be called off.
Its first income-tax law called for a flat three percent of net income over $600 a year; this was quite an exemption in itself, since at that time a man could buy an all-wool suit of clothes for $6. The method of collection was simplicity itself: the citizen declared his income on his own estimate, unchecked, and his estimate was published in the newspapers, the idea being that public opinion would compel a degree of honesty.
However, the amount brought in by this tax was not enough to carry on the war, and within two years Lincoln got around to the graduated income tax. Thus was brought into our fiscal policy the ability-to-pay doctrine. This doctrine, new at the time, has since attained the dignity of an axiom of taxation. Yet, when we examine it under the light of ethics it does not shine so well; and it is a complete denial of the equality principle that guided the Fathers in establishing the Republic. The taxing power of the federal government was thus limited in the Constitution:
No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
There is no tax that can be more properly described as “direct” than an income tax. In order to get around this prohibition in the Constitution, the Lincoln administration arbitrarily declared its income levy an “excise” tax, and the Supreme Court upheld this perversion of language in a decision rendered in 1868; showing that the art of proving a point by changing a definition was practiced long before the discovery of the modern “science” of semantics.
Reinforcing the prohibition of a direct tax is the requirement that taxes shall be levied in proportion to the population. The meaning is clear: that in respect to the law all citizens are to be considered equal, as persons, and should be taxed accordingly; their possessions have nothing to do with their legal status.
A man who has acquired (presumably by honest methods) a large amount of wealth is legally on a par with the one less fortunate or less proficient. The dictum that “all men are created free and equal” held in the matter of taxes as it did in the matter of social stratification; the Constitution recognized no caste system. No one, and no group, could be singled out by the government for special spoliation.
The ability-to-pay doctrine proceeds from a direct violation of this principle of equality(1) . It establishes a legal classification of society. It sets up a principle of government that was not contemplated when this nation was formed; it is a reversion to the caste system that had existed in Europe.
Students of political science insist, however, that an economic oligarchy like the United States cannot be a political democracy in the best sense; that inevitably a few powerful capitalists and financiers will assume power in political affairs, which is inconsistent with genuine democracy; and the only way to maintain a real political democracy is to restore economic democracy though progressive taxation or otherwise.” (Page 619.)
Despite such devious logic, the professor cannot avoid a gleam of sense. On the very next page of his textbook he says: “Any tax on man-made wealth or on income therefrom is a penalty on industry and thrift and an encouragement to laziness, improvidence and incompetence.” Then he adds, “Yet it is inevitable that taxes should be levied in this way because the state must get revenues from people who have the money.” So, our students are being taught that it is right to get where the getting is good.
The easy argument that is used to slide this caste idea into our law is that those who are rich became so because they enjoy more of the benefits of government and therefore ought to pay more of its expenses.
Is that so? Did the government make them rich? If so, then the government is at fault; the only way the government can enrich a citizen is by giving him a special advantage over other citizens, and in that case the government violates its trust.
The government has nothing of its own to give, for it is not a producer of wealth. In granting one citizen a special advantage it automatically creates a disadvantage for other citizens. Thus, if it grants me tariff protection, it compels those who buy my merchandise to pay a higher price than they would have had to pay for similar merchandise from abroad; that extra price is my advantage, my customers’ disadvantage. Or, if the government subsidizes my rent, it simply takes from other citizens what it hands me; it enriches me at the expense of other citizens.
It is obvious that in handing out special privileges the government is doing what it ought not to do; it is using its power not for the purpose of dispensing justice, but for the purpose of creating injustice. This is in violation of the principle of equality, and the violation is not corrected by taxing some of the proceeds of privilege; the privileges should be abolished. If I have acquired wealth by way of a special privilege granted me by the government, then when it lays a tax on my ill-gotten wealth it is sharing my unfair advantage; it is, so to say, a partner in my loot.
The advocates of ability-to-pay, however, do not distinguish between wealth obtained by production and wealth obtained by privilege. They simply assert that one could not get rich unless one operated under a government. This is true only in the sense that if there were no government to maintain order and protect property no one would try to acquire property; in a society where thievery is prevalent, production must fall to the point of mere subsistence. But the protection afforded to any one citizen is afforded to all; that is why men institute governments.
It is not police protection that makes one rich, the other poor. The differences in personal wealth that arise in any society—barring special privileges granted by government—are due either to accident or to qualities inherent in the individual: industry, thrift, abstinence. But it so happens that those who have and exercise these qualities do not injure others; their very substance indicates that in acquiring it they have benefited their fellowmen.
If I become rich by making and selling shoes, it follows that many people have found my shoes desirable, and they have thus profited by my efforts. The wealth of society is in proportion to the productive efforts of the individuals who compose that society, and government has nothing to do with it—beyond the negative function of maintaining order and protecting property. People make wealth; government can only take it.
THE CIVIL WAR income-tax law, or laws, underwent several changes; but each change specified the same terminal date, 1870. Political promises being what they are, the last law was continued until 1872. This adherence to a terminal date is worth noting; it is a left-handed admission that the taxation of incomes was generally held to be obnoxious, perhaps unconstitutional, and was tolerated only as a temporary necessity. It was a war measure. Several Congressmen, from time to time, offered bills for the resumption of these taxes, but their efforts died a-borning. Two generations had to come and go, and two depressions had to be suffered, before Americans were ready to accept complacently the confiscation of their property.
The socialists had also imported the idea of a graduated income tax. Their prophet had written that this is the ideal instrument for destroying the hated capitalistic system, and they were in duty bound to promote it. It took Americans a long time to see eye-to-eye with the socialists on this matter of abolishing capitalism, for the tradition of private property was too strongly imbedded in their culture; but the income tax appealed to them as a means of wreaking their vengeance on those they hated—that is, those who had more than they had.
By 1891, the Populists, who had by that time coagulated into the People’s Party, included an income-tax plank in their platform; the Democratic Party later appropriated it.
Lots of learned treatises have been written on income taxation, and a wealth of erudition has been expended in its support. But when one looks to bottom causes one finds them quite simple:
Income taxation appeals to the governing class because in its everlasting urgency for power it needs money.
Income taxation appeals to the mass of people because it gives expression to their envy; it salves their sense of hurt.
The only beneficiaries of income taxation are the politicians, for it not only gives them the means by which they can increase their emoluments but it also enables them to improve their importance. The have-nots who support the politicians in the demand for income taxation do so only because they hate the haves; although they delude themselves with the thought that they might get some of the pelt the fact is that the taxing of incomes cannot in any way improve their economic condition. So that, the sum of all the arguments for income taxation comes to political ambition and the sin of covetousness.
A tariff duty is a tax on consumption, and it is a tax from which the protected manufacturers derive a profit. The Populists, representing areas that had no manufactures quite soundly denounced tariffs as an imposition on farmers and wage earners and as a special privilege conferred upon a small class in the East. The argument had too much weight to be easily ignored. Yet, the fact was that the government depended on tariffs for nearly half its revenue, and a cut in tariffs was a threat to the United States Treasury. For this argument the Populists were prepared with their cherished “soak the rich” proposal, the income tax.
Hence, the bill of 1894 and the several income-tax bills introduced later, linked tariff reduction with income taxation. Not until the constitutional amendment was passed by Congress was the fiction dropped that tariff reduction and income taxation are related.
The Populists, as do all reformers, assumed that social good can be achieved through political action. They ignored the age-old fact that whenever the government does “good” it acts in the interests of some at the expense of others, meanwhile acquiring power for itself. The end product of government intervention in the economy of the country is more power for government. It never gives up power; it never abdicates.
Hence, the idea that the government would give up tariff revenue in exchange for income-tax revenue was contrary to all experience. It promised to make the swap, and perhaps its leaders believed the promise, but the nature of government is such that it cannot give up one power for another; not permanently, at any rate.
The historic fact is that tariffs rose higher than ever after income taxation was ultimately constitutionalized… The effect of income taxation on tariffs can be seen when we reflect that in 1894 the government’s income from tariff duties amounted to 44 percent of its total revenues, while in 1950 less than 2 percent came from that source. …
However, the Wilson tariff bill of 1894, with income-tax attachment, was passed. It was passed for two reasons: first, it reflected the growing “soak the rich” enthusiasm of Americans; second, it catered to the socialistic idea that was getting hold, namely, that the government is the ideal agency for the economic redemption of mankind. How much headway this second notion had made can be guessed when one reads the following argument by Representative David De Armond, of Missouri:
The passage of the [Wilson] bill will mark the dawn of a brighter day, with more sunshine, more of the songs of birds, more of that sweetest music, the laughter of children, well fed, well clothed, well housed. Can we doubt that in the bright, happier days to come, good, evenhanded Democracy shall be triumphant? God hasten the era of equality in taxation and in opportunity. And God prosper the Wilson bill, the first leaf in the book of reform in taxation, the promise of a brightening future for those whose genius and labor create the wealth of the land, and whose courage and patriotism are the only sure bulwark and defense of the Republic.
The do-gooding promises of such bilge, with which the debate was liberally sprinkled, were not implemented with specific “social” legislation, the kind that came upon the country when income taxation attained fulfillment. But, they bespoke the secret desire for a golden calf to lead Americans to the promised land. They prepared the ground for Big Government.
It should be pointed out, however, that throughout the debate emphasis was placed on raising money only for the proper expense of government. None of the advocates of income taxation spoke of expanding the functions of government, and while the opposition mentioned “socialism” it seems doubtful that they had any idea of a New Deal.
The American mind of the nineteenth century was incapable of comprehending paternalism, regulation, and control; it was too strongly rooted in the past for that.
Even those who advocated the tax method of undermining private property were not aware of what they were doing, and would probably have stopped in their tracks if they could have foreseen the consequences of their proposal. It was not any urgency for Big Government—which they could not even have understood—that prompted them to advocate income taxation. It was simply an urgency to “soak the rich”—the very common sin of envy.
The debate is heavily spiced with the desire to pare down fortunes, and for further relish there was a generous dash of sectionalism. For the fortunes that irritated their envy were located in the East; they were after “foreigners,” not neighbors. For example, Senator William A. Peffer, of Kansas, who, by the way, was even more “advanced” than the bill in that he advocated a graduated income tax, expostulated thus:
The point to be made is that because wealth is accumu lated in New York, and not because those men are more industrious than we are, not because they are wiser or better, but because they trade, because they buy and sell, because they deal in usury, because they reap in what they never earned, because they take in and live off what other men earn, they shall be exempt from taxation, and that we who are hewing wood and carrying water shall continue to bear the burdens of government.
William Jennings Bryan, of Nebraska, spoke for the impoverished West when he said:
Gentlemen have denounced the income tax as class legis lation because it will affect more people in one section of the country than in another. Because the wealth of the country is, to a large extent, centered in certain cities and states does not make a bill sectional which imposes a tax in proportion to wealth. If New York and Massachusetts pay more tax under this law than other states, it will be because they have more taxable incomes within their borders. And why should not those sections pay most which enjoy most?”
In reading these speeches one wonders whether there ever would have been an income tax in this country if the advocates of it could have held off until Chicago was able to stand up to New York, and Nebraska farmers, sporting limousines, became the envy of Boston workers.
Even the opponents of the bill seemed little aware of the concentration of political power that income taxation would generate, and directed their arguments mostly to the principle of private property, to the unconstitutionality of the bill, to the doctrine of class legislation. Bourke Cockran, Representative from New York, almost touched on the vital subject when he said:
…to persuade a majority to oppress a minority is not to serve the people but to injure them; it is not to vindicate popular power, but to discredit it; it is not to conserve free institutions, but to undermine republican government.
After the bill was passed, and it came to the Supreme Court, some references to the subject of individual rights and limited government were made; there seemed to be no awareness that income taxation might destroy the American tradition of freedom. Thus, Justice Field, in a brilliant argument supporting the majority opinion declaring the bill unconstitutional, quotes approvingly the point brought up by counsel:
There is no such thing in the theory of our national government as unlimited power of taxation in Congress. There are limits of its powers arising out of the essential nature of all free governments; there are reservations of individual rights, without which society could not exist, and which are respected by every government. The right of taxation is subject to these limitations.
When William Howard Taft became president, not only the Democrats but also an “insurgent” segment of the Republicans had been captured by the Populist philosophy, and the combination worked strenuously to put over the “great reform.”
Mr. Taft, a former judge, opposed this amendment because he was solicitous for the reputation of the Supreme Court, which would be compromised whether it upheld or reversed the decision of 1895. A political deal was put over; the tariff bill was passed with a rider taxing corporation incomes, and the opposition was promised a bill for a constitutional amendment.
This promise was later kept by the Republican leadership, which was opposed to income taxation; they were sure that not enough states would ratify the bill. By 1913, forty-two states did ratify it, and the Sixteenth Amendment became part of the Constitution.
In name, it was a tax reform. In point of fact, it was a revolution.
For the Sixteenth Amendment corroded the American concept of natural rights; ultimately reduced the American citizen to a status of subject, so much so that he is not aware of it; enhanced Executive power to the point of reducing Congress to innocuity; and enabled the central government to bribe the states, once independent units, into subservience. No kingship in the history of the world ever exercised more power than our Presidency, or had more of the people’s wealth at its disposal. We have retained the forms and phrases of a republic, but in reality we are living under an oligarchy, not of courtesans, but of bureaucrats.
It had to come to that. The theory of republican government is that sovereignty resides in the citizen, who lends it to his elected representative for a specified time. But a people whose wealth is siphoned into the coffers of its government is in no position to stand up to it; with its wealth goes its sovereignty, its sense of dignity. People still vote, of course, but their judgment in the ballot booth is unduly influenced by handouts from their government, whether these be in the form of “relief,” parity prices, or orders for battleships. Though it is not exactly an over-the-counter transaction, the citizen’s conscience is bought. Nor are voters immune to the propaganda issued by the bureaucrats, in their own behalf, and paid for by the voters themselves.
With America’s immunity of property went the immunity of body. Notice that Mr. Lincoln had great difficulty in enforcing a moderate form of conscription, even in wartime; now we have peacetime conscription, apparently as a permanent policy. Mr. Lincoln had difficulty with his draft because he did not have the wherewithal to hire an army of enforcement agents. Thanks to the income tax, our present government is not so handicapped.
Resistance is so dangerous that we have made a virtue of compliance; the conscript army is described as a “democratic” army, and the conscientious objector is often looked down upon as little better than a traitor.
So completely have we become adjusted to this detestable practice of the Czars, that every mother is reconciled to the fact that her newborn son will be a soldier if, unfortunately, he grows up sound of mind and body.
While we are on this subject of immunity of the body, we should mention the fact that though we long ago abolished debtors’ prisons, we do have prisons for those who violate the income-tax laws. We can cheat one another with impunity, but not the government. So thorough and so ruthless is the machinery of tax collections that it is used to catch and incarcerate suspected criminals against whom legal evidence of criminality cannot be adduced. Professional gamblers, hoodlums, and racketeers of all sorts, aware of the swift and certain punishment dealt out by the minions of the income-tax law, are scrupulous in the making out of their tax reports.
Thus, the Sixteenth Amendment, enacted to increase the government’s revenues, has spawned another police department, another means of forcing the citizen into line.
The third great immunity is that of the mind, the freedom to think as one wishes. The impairment of this immunity is not easy to detect, for the operation can be conducted in such a way that the victim is never aware of it. It is necessary to look at the methods employed by the government to shape thought, to know that the shaping is being done; when the job is completed it takes a keen observer to realize that people think differently from the way they used to think.
Thus, the farmer who receives checks for not planting does not realize that his grandfather would have thought the practice immoral; he accepts the taking of gratuities as the regular order of things, as quite proper, because government propaganda has got him into that frame of mind.
Free school lunches do not strike the modern mother as an insult, as suggesting that she is unable and unwilling to carry out the responsibility of motherhood; the convenience of free lunches, plus the saving of expense, plus the government’s leaflets have changed her way of thinking. And so with every activity of government turned Santa Claus by the income tax: a mass of propaganda introduces the new practice and more propaganda justifies it, until the people think as the government wants them to think. Free judgment becomes next to impossible.
Not content with direct propaganda, the opulent government goes in for shaping the mind of the future by invading the educational machinery.
Not content with direct propaganda, the opulent government goes in for shaping the mind of the future by invading the educational machinery. In this it is aided by the very operation of the income tax. The rich cannot be as generous with their contributions to the colleges as they used to be, for the government has the money that they might have given. So the government comes to the rescue of these institutions with grants. It cannot be said with certainty that the government determines the curricula of the colleges as a condition of the grants. But the generosity cannot fail to impress the professors, particularly since the professors have learned to look forward to jobs in the ever-growing bureaucracy.
It is interesting to note that in nearly all the economics courses it is taught that the income tax is the proper instrument for the regulation of the country’s economy; that private property is not an inalienable right (in fact, there are no inalienable rights); that the economic ills of the country are traceable to the remnants of free enterprise; that the economy of the nation can be sound only when the government manages prices, controls wages, and regulates operations. This was not taught in the colleges before 1913. Is there a relationship between the results of the income tax and the thinking of the professors?
There is now a strong movement in this country to bring the public-school system under federal domination. The movement could not have been thought of before the government had the means for carrying out the idea; that is, before income taxation. The question is, have those who plug for nationalization of the schools come to the idea by independent thought, or have they been influenced by the bureaucrats who see in nationalization a wider opportunity for themselves? We must lean to the latter conclusion, because among the leaders of the movement are many bureaucrats.
However, if the movement is successful, if the schools are brought under the watching eye of the federal government, it is a certainty that the curriculum will conform to the ideals of Big Government. The child’s mind will never be exposed to the idea that the individual is the one big thing in the world, that he has rights which come from a higher source than the bureaucracy.
Thus, the immunities of property, body and mind have been undermined by the Sixteenth Amendment. The freedoms won by Americans in 1776 were lost in the revolution of 1913.
“FROM ANY source derived” includes wages. To be sure, the original Populists, and the aping Democrats and Republicans, to say nothing of the conscious Socialists, little thought that their income-tax gadget would ever be used to “soak the poor.” It was an instrument, they thought, that could lend itself to no other purpose than to expropriate the rich in favor of the poor. How the poor would benefit from the expropriation, they did not explain; their intense hatred of the rich conveniently filled this vacuum in their argument. Their passion blinded them to the fact that this “soak the rich” law would enable the government to filch the pay envelope.
The class-war doctrine is most vicious not in that it sets man against man, producer against producer, but in that it diverts the attention of the contestants from their common enemy, the State.
Men live by production, but the State lives by appropriation.
While the haves and the have-nots struggle over the division of existing wealth, it is the business of the State to improve itself at the expense of both; it picks up the marbles while the boys are fighting. That has been the story of men in organized society since the beginning.
That this lesson of history should have escaped the reformers of the nineteenth century, when the habit of freedom was still strong in America, can be easily understood; what is not easily explained is the acceptance of the doctrine of benevolent government in our day, when all the evidence to the contrary is before our eyes.
However, one good “reason” followed another for making better use of the Sixteenth Amendment. After 1913, the government, which for over a century had managed to get along without income taxation, felt a continuing need for more funds. The income-tax rates kept climbing, and the exemptions kept declining; the mesh of the dragnet was made finer and finer so that more fish could be caught.
At first it was the incomes of corporations, then of rich citizens, then of well-provided widows and opulent workers, and finally the wealth of housemaids and the tips of waitresses.
This is all in line with the ability-to-pay doctrine. The poor, simply because there are more of them, have more ability to pay than the rich.
The wage earners have votes, many votes, and in order not to alienate these votes, it was necessary to devise some means for making the taxation of their incomes palatable. They had to be lulled into acceptance of “soak the poor.”
The drug that was concocted for this purpose was “social security.” The worker was told that he was not paying an income tax when his pay envelope was opened and robbed; he was simply making a “contribution” to “insurance” against the inevitable disabilities of old age. He would get it all back, when he could no longer work, and with a profit.
This is sheer fraud, as can be readily seen when comparison between social security and legitimate insurance is made. When you pay a premium on an insurance policy, the company keeps part of it in reserve. The amount thus set aside is based on actuarial experience; the company knows from long study how much money it must keep on hand to meet probable claims. Most of your premium is invested in productive business, and out of the earnings from such investment the company pays its running expenses and builds up a surplus to meet unexpected strains; or it pays the policy holders a share of this extra income, in dividends. Without going into the intricate details of the insurance business, the guiding principle is that benefits are paid out of the reserve or the company’s earnings from investments.
Is that what happens to your “contribution” to social security? Not a bit of it.
Every cent taken from wages is thrown into the till of the United States Treasury, and is spent for anything the government decides upon. So, too, are the “contributions” from the employer. That is to say, social-security taxes are taxes, pure and simple; they are “forced dues and charges” levied by the sovereign on his subjects for the expenses of state. None of the money is held in reserve, none of it is invested in business. All is spent, and it is spent long before the “insured” is entitled to benefits. …
Now, the money taken from the worker’s pay envelope is worth more, will buy more goods, than the money he will get when he is old, simply because these bonds are in existence. This social-security scheme was started in 1937.
One does not have to be an economist to know that in 1937 the dollar bought more bread and shoes than it does in 1954. The man who in 1954 begins drawing old-age benefits gets dollars that will fetch him less of the things he needs than the dollars he was compelled to “contribute” in 1937 and during the years that followed. …
This book deals with income taxation, not with social security, which needs a book in itself. But we started out with the purpose of showing how the Sixteenth Amendment changed our country economically, politically, and morally, and there is no better example of this change than the operation of the social-security branch of income taxation and its effects on the character of the nation.
Despite the fact that social security is a fraud in every respect, there are many who, ignoring the evidence, support it because “we must not let the old folks suffer destitution.” This implies that before 1937 it was habitual for children to cast their nonproductive parents into the gutter.
There is no evidence for that, and there are no records supporting the implication that all over sixty-five regularly died of hunger. The present crop of children are just as considerate of their old folks as were the pre-1937 vintage, and it is a certainty that if their envelopes were not tapped they would be in better position to show their filial devotion. Besides, if the government did not take so much of our earnings, we would be better able to save for our later days.
The fact is, there is no such thing as social security; only the individual grows old and is in need. Society is never in want and never grows old, simply because society is not a person. Security against the exigencies of old age has always been a problem of life, and each person in his own way has tried to solve it. Paying up the mortgage on the old home so that one would always have a roof over one’s head was one way; laying up a nest egg was another; annuity insurance is the most recent form of security.
These methods of taking care of oneself through thrift, however, call for self-reliance, and that is exactly what the advocates of social security would destroy. It is contrary to the whole philosophy of socialism. If the individual is allowed to shift for himself, there is no need for the services of the self-anointed do-gooders.
Hence it is necessary to develop a slave psychology, a feeling of helpless dependence on the group. If this calls for the use of police power—and it always does—so much the better; that means the organization of a bureaucracy with a vested interest in continuing poverty.
Lurking in the background of social-security thinking is a concept of organized society that is gall and wormwood to fundamental Americanism. It is the idea that in the nature of things some men are destined to rule and others to obey.
As a matter of fact, social-security advocates must take resort in the caste system of society to support their “insurance” scheme. They maintain that social security is necessary because most wage earners are incontinent and must be secured against their own weakness. Who is best qualified to look after them? Why, those who have been anointed with the proper college degrees and are crowned with the power of the State.
It was exactly this father-child concept of society that Bismarck held, and for that very reason he took to social security. In his political philosophy it was axiomatic that the Junker class was ordained by God to rule over Germany. As a correlative, it was an obligation of that class to look after the welfare of the ruled.
In a feudal society, where the economy is almost wholly agricultural and people do not move from place to place, it was quite simple for the ruling lord to see that his sick and old tenants were provided for. But this direct relationship between ruler and ruled could not be maintained in an industrial economy, and in Bismarck’s time, industry was upsetting the comfortable feudal system. Social security came to his rescue; it was just what he needed to make his feudal concept of government work.
If anybody could make social security work, it would have been the Junkers. They were by tradition and economic independence free from the petty temptations of office; they were not beholden to an electorate for either their income or their position. And yet, they were unable to build a healthy society upon social security.
The reason for the failure of social security in Germany, and wherever else it has been tried, is psychological, not political. When the individual is relieved of the obligation of self-respect, he acquires the habits of helplessness; he is inclined to retreat to the security of the prenatal state. The more he is taken care of the more he wants care.
In the past twenty years, thanks to the prevailing social-security philosophy, it has become a habit of mind with American youth to look upon government as its permanent guardian; the idea that one is responsible for oneself is sneered at as “reaction.” It is nearly impossible to convince a young man born after 1920 that to accept a government handout is degrading—or that the whole social-security business is a fraud. …
Any attempt to limit security payments by actuarial figures would raise a howl of protest, a howl that would be recorded at the next election. The politicians have convinced the American citizen that the government owes him a living, as a matter of “right,” and what is easier than to ask for more? And the aspirant for office would have to be much above the average if he did not promise more. Were he to tell the citizen that the whole thing is a fraud, that only a private insurance company could manage the business on a sound basis, he would be inviting defeat at the polls.
In Germany, the social-security philosophy of government led to that moral decadence which facilitated the advent of Hitler. In England, it made a once-proud people into a nation of panhandlers. What will it do to America?
The real reason for withholding taxes is the unwillingness of workers to share their incomes with the government and the consequent difficulties of collection. To overcome this handicap, the government has simply impressed employers into its service as involuntary and unpaid tax collectors. It is a form of conscription.
Disregarding the right of privacy, which is an essential of liberty, the government’s agents may, under the law, invade the employer’s office, demand his accounts, and punish him for any infraction which they believe he has committed; they can impound his property and inflict a penalty for not having collected taxes for the government.
This violation of our vaunted rights was highlighted by Miss Vivien Kellems, a Connecticut manufacturer, several years ago. To test the constitutionality of the law, Miss Kellems refused to collect these taxes and notified the government of her intention. She asked that she be indicted so that the matter could be brought to court. At the same time, she instructed her employees to pay their taxes regularly, helped them compute the amounts, and saw to it that they had proof of payment.
The government refused to indict her. Rather, its agents, without court order (the government is not hampered by such formalities), impounded her bank account and demanded a penalty from her for not collecting taxes which had been paid. The only thing she could do under the circumstances was to sue the government for recovery of her money. In this she was successful. But the matter of constitutionality was assiduously avoided by the government’s attorneys, by legal tricks, and she was never able to get to it. Laws are made for citizens, not the government, to obey.
Freedom is a condition of living based upon inherent and inalianable rights. It’s about the rights, not about man-made laws…
“It is not desirable to cultivate a respect for the law, so much as for the right.” (Civil Disobedience, Henry Thoreau)
“The whole purpose of this legislation is simply to keep one class of men in subordination and servitude to another.” (Natural Law, L. Spooner)
“When they took up criminality, they invented justice and enacted whole codes of law to preserve it, while for the maintenance of the codes they set up guillotine.” (The Dream of a Ridiculuous Man, F. Dostoevsky)There is grave question as to the constitutionality of the withholding taxes. But that is not a point of consequence; the Constitution has often proved itself amenable to political considerations. The main point is that the Sixteenth Amendment has widened the area of government power, and as a consequence has reduced the area of liberty.
The imposition of the [income] tax will corrupt the people. It will bring in its train the spy and the informer. It will necessitate a swarm of officials with inquisitorial powers. It will be a step toward centralization…. It breaks another canon of taxation in that it is expensive in its collection and cannot be fairly imposed;… and, finally, it is contrary to the traditions and principles of republican government.
REPRESENTATIVE ROBERT ADAMS, January 26, 1894.
This is what the late Senator Schall of Minnesota had to say about this phase of corruption:
The one glaring governmental agency that constitutes a menace to the citizens is the Income Tax Bureau, which often goes outside the constitutional limitations and frequently harasses citizens by unjust exactions and by the oppressive conduct of its agents. This system has one defect that is fundamental. That is its lack of certainty, involving not only the time and manner of payment but also the clear, definite and fixed amount. While the Bureau is a Babel of conflicting regulations and opinions, it believes it is so entrenched by authority granted and assumed, and by its anonymous character, that it even dares to attack the citizens by a charge of fraud without substantial pretext or cause….
The bureau is inquisitorial. It is bureaucracy. Washington is cluttered up with its offices. Its forces swarm over the country, and the cardinal doctrine under which it operates is to inspire the citizen with fear. Agents, spies and snoopers annoy and plague the citizens. The agents, rarely of high order in point of skill or character, must show some kind of results. The Bureau grades them for promotion to increased salary, or better still for the honor roll, not on what taxes are finally returned to the government, but by the amounts they mark up first or charge against the taxpayer.
That practice permits and promotes, if it does not direct, a species of blackmail against the American citizen…. Once having started in pursuit, the agent assumes authority to impute fraud to the most innocent transactions, and the perfectly honest taxpayer must submit to indignities, odium and accusations of criminality and be put to heavy expense to prove to his own government that he is not a criminal.
The corruption of freedom on the individual level is bad enough. But the corruption of freedom on a mass scale is worse….
The Civil War income-tax laws did not exempt churches or educational institutions. While it seems that the government did not get much revenue from them, churchmen and educators had no special reason to support income taxation. They did not like it any more than did other citizens.
Whether or not the later advocates of income taxation recalled this fact is not known; but they did advertise it around, when the Amendment was under consideration, that the proposed law would exempt the incomes of institutions “not operated for profit.”
Furthermore, they promised, the law would permit contributors to such institutions to deduct donations from their taxable incomes. Clergy and educators were quick to see that this privilege would give them an advantage in soliciting contributions, an advantage that gave rise to the slogan: “You might as well give it to us as to the government.” Income taxation thus won over a large body of opinion farmers. They were bribed into support of an immoral law. ## The corruption of freedom
The corruption of freedom is in proportion to the moral deterioration of the people. For a people who have lost their sense of self-respect have no need for freedom. And the income tax, by transferring the property of earners to the State, has disintegrated the moral fiber of Americans to such a degree that they do not even recognize the fact.
Due to the revenues from income taxation, the government is now the largest employer in the country, the largest financier, the largest buyer of goods and services; and, of course, the largest eleemosynary institution. Millions of people are dependent upon it for a livelihood. They lean upon the State, the one propertied “person,” even as a bonded servant leans upon his master. They demand doles and subsidies from it, and willingly exchange their conscience (as at the ballot booth) for the gift of sustenance. Wardship under the State, by way of unemployment insurance, public housing, gratuities for not producing, and bounties of one kind or another, has become the normal way of getting along; and in this habit of accepting and expecting handouts, the pride of personality is lost.
THE AMERICAN brand of socialism known as the New Deal was made possible by the income tax. But with the advent of income taxation, socialism was unavoidable.
There have always been, and perhaps always will be, people who are averse to letting other people alone. Recognizing the human inclination to err, they are impelled by their kindness of heart to overcome this imperfection; invariably they come up with a sure-proof plan that needs only political power to become effective. Political power is the essential ingredient of every one of these plans to improve the human.
Since all the ills of mankind, they argue, follow from the exercise of free will, it follows that the only cure for these ills is to suppress free will and to compel the individual to behave in all things as per the perfect pattern devised by these improvers. Compulsion means force; there must be a policeman to see that the individual does not follow his own inclinations.
But policemen must live. Since they do not produce a thing by which they can live, others must support them. Hence, the planners must have the means of getting at the production of the very people who are to be improved by the policeman. That means taxes, and the more taxes the greater the number of enforcement agents, and therefore the more comprehensive the plan. No plan can be bigger than its bureaucracy.
The income tax is the ideal instrument for the planner. It not only enables him to exercise his imagination to the last dollar that can be taken from the producers—for their own improvement, of course—but it also weakens the will to resist the plan. The less property the individual has at his disposal, the less room there is for the exercise of his will. He must conform as a matter of necessity. That is to say, social power decreases as political power increases. …
The distress caused by the depression made a shambles of the tradition of freedom; hunger, and the fear of it, have a way of wiping out the value of everything but food. Americans were willing to forget everything they had prized for centuries in exchange for even the promise of an improved economy . The planners were ready with promises. They never made good, of course, and finally had to resort to war to stir up some economic activity; but they had acquired power, and that was all that counted.
Most people, unfortunately, will trade freedom for the promise of bread. Socialists always promise bread and always enslave.
… in the end they will lay their freedom at our feet and say to us: “Better that you enslave us, but feed us.” (The Brothers Karamazov, F. Dostoevsky.
…
Once socialism gets hold of a country, there seems to be nothing that will pry it loose except a complete collapse of the political setup, either as the result of a disastrous war or by way of revolution. The revolutionary way is the least promising, simply because under socialism the will to resist weakens in proportion to the people’s adjustment to regulation, control, and domination. Because that is the only way to rub along, they make peace with the conditions imposed on them; they lose the habit of sell-respect.
Thus, in this country it has become quite proper for bankers and industrialists to stand in the Washington line with “tin cups” in their hands, for veterans and the unemployed to press for handouts, for farmers to expect subsidies, for the educational fraternity and the ministry to maintain bounty-begging lobbies. All this is the regular order of things; freedom, which demands self-reliance, is out of style. If the miraculous politician should come along, and urge that all this paternalism should be abandoned, as well as the income tax, he would probably receive short shrift from the public. …
The transition from partial to complete socialism, from the New Deal to communism, will not be easy in this country, because the phases of freedom still sound sweet to us. Given a state of war, or a constant threat of war, or even another depression, and the memories would be obliterated; we will ask for a savior and we will get communism. It will not be exactly what the Russians have; it will be an American version.
THE AMERICAN political terrain, so to speak, is most favorable for a fight for freedom. The tradition of home rule, supported by the constitutional doctrine of States’ Rights, presents a formidable obstacle, if properly exploited, to the forces of collectivism. We have their own admission to that fact.
Early in the socialistic New Deal, its leaders recognized in the division of authority between state and federal governments a difficult impediment to their plans. They set their minds on overcoming it. They went so far as to draw up a blueprint for an arrangement that would circumvent, if not obliterate, the troublesome state lines.
In 1940, Mr. Roosevelt’s National Resources Committee, in a report called Regional Factors in National Planning, proposed that the nation be divided into a dozen regional areas, as a basis for the coordination of federal administrative services.
Recognizing that what they proposed was actually violative of the Constitution, they hastened to give assurance: the regional system, they said, “should not be considered a new form of sovereignty, not even in embryo.” It would have been foolish to say anything else, since the consolidation of the states into a national unit requires, under the Constitution, the joint action of Congress and the state legislatures.
Nevertheless, the report was a bid for a nationalized system, pure and simple. The committee insisted that so long as the “division of constitutional powers remained,” the government is handicapped in handling “national problems.” In those days the inspired propaganda insisted that the states were “finished.”
Thus, the collectivists are on record as to their tactical campaign: the separate states must be wiped out or reduced to parish status. Later, they veered from a direct frontal attack on our traditional system, and went in for liquidation of state autonomy by bribery of state officials.
When you dig down to the psychology of our States’ Rights tradition you see the soundness of the collectivists’ tactics. The legal difficulties that the division of authority presents is not their main trouble; these can be circumvented by new laws, political deals, and judicial interpretations.
The real obstacle is the psychological resistance to centralization that the States’ Rights tradition fosters. The citizen of divided allegiance cannot be reduced to subservience; if he is in the habit of serving two political gods he cannot be dominated by either one.
History supports the argument. No political authority ever achieved absolutism until the people were deprived of a choice of loyalties. It was because the early Christians put God above Caesar that they were persecuted, even though they paid homage and taxes to the established political establishment.
Stalin’s liquidation of the religious and fraternal orders followed from his basic premise that the Soviet was the only deity. Mussolini was always bothered by the hold the Catholic Church had on the people, and Stalin would never have been Stalin if he had not brought the orthodox church to foot. And so, if the Californian thinks of himself as a Californian as well as an American and has two flags to support his contention, the central authority rests on shifting ground.
In no country where centralism got going did the regime have to contend with divided authority such as our Constitution provides. Long before Hitler came on the scene, Bismarck had liquidated the autonomous German states. Mussolini’s march on Rome would not have gotten started in the nineteenth century when Italy was an aggregation of independent units. And, of course, the Czars handed Lenin a thoroughly centralized government.
In this country, the advocates of centralism have had hard going because of our entrenched tradition of States Rights. It is a tradition that is older than the Constitution, older than the Revolution. It is a national birthmark. …
The Founding Fathers were very careful to make clear that the new federal government would have certain specified powers, and nothing more. Whatever powers were not enumerated in the Constitution would remain with the states. No other kind of Constitution could have got by.
In number 45 of The Federalist, Madison writes:
The powers delegated by the proposed Constitution to the federal government are few and defined. Those which remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation and foreign commerce…. The powers reserved to the several states will extend to all objects which, in the ordinary course of affairs, concern the lives, liberties and properties of the people, and the internal order, improvement and prosperity of the state.
And so The Federalist goes on; promise after promise that the state governments will be free in all respects except to deal with foreign governments. At one time, Madison described the federal government as the foreign department for the state governments.
Perhaps the name should be dropped in favor of “home rule”; but the essential point, that divided authority is the bulwark of freedom, is still sound Americanism, and ought to be exploited to the full. It can be invoked in a fight to repeal the Sixteenth Amendment.
But why is the case of freedom stronger when the autonomy of the states is inviolate?
There is no vice in the national government that cannot be duplicated in the government of a subdivision; even county sheriffs have been known to take liberties with the rights of citizens. If we were living in forty-eight separate nations our lot, as individuals, might be worse; it probably would.
Some people, using Switzerland as example, maintain that the smaller the nation the more freedom. But the Central American dictatorships refute that argument. The characteristic of the Swiss government that is often overlooked is the division of authority between the federal establishments and the cantons. That is the essential ingredient: only when the central authority is kept off balance by competition from autonomous subdivisions are the rights of citizens more secure.
Freedom is the absence of restraint. Government cannot give freedom, it can only take it away. The more power the government exercises the less freedom will the people enjoy. And when government has a monopoly of power the people have no freedom. That is the definition of absolutism— monopoly of power.
Freedom is the absence of restraint. Government cannot give freedom, it can only take it away. The more power the government exercises the less freedom will the people enjoy. And when government has a monopoly of power the people have no freedom. That is the definition of absolutism— monopoly of power.
The object of monopoly, in any field, is to compel the customer to accept the services offered by the monopolist at his own terms. It is a take- it-or-leave-it arrangement. Competition, on the other hand, compels the servicer to meet the standards set by his competitors, with the customer the final judge as to proficiency. The beneficiary of competition is the buyer. In the matter of government services—which is the protection of life and property—the customer is the citizen. The government will serve him best only if it cannot set its own standards, when it does not enjoy a complete monopoly of power.
“The first object of government,” says Madison in the tenth number of The Federalist, is the protection of “the diversity in the faculties of men, from which the rights of private property originate.” The conception of government held by the Founding Fathers was quite the opposite of what has been gaining currency in this country in recent years.
This brings up a contradiction. The theory is that government must have a monopoly of coercion to prevent us from using coercion indiscriminately on one another; we institute government, and endow it with sole police power, for the purpose of maintaining order. Nevertheless, experience has shown that the monopoly we give government can work for disorder; the power can be used to create disharmony and promote injustice. That, in fact is the record.
Throughout history, those to whom the job of rulership has fallen, whether by heredity or popular selection, have shown a tendency to use their position to dominate, not serve, the ruled. Hence, unless the monopoly of power can be checkmated, freedom is always in danger.
Recognition of that fact gave rise to the idea of constitutional government, with limited powers. And as further restraint on government, popular suffrage was instituted.
The vote is presumed to keep the government from getting out of hand; the threat of being turned out at the next election is supposed to hold down the arrogance and ambition of those in whom the power is vested. However, during its incumbency the elected government does enjoy a monopoly position, and it can use that position to solidify, enlarge upon, and perpetuate its power; it can even use the citizens’ tax money to “buy up” the next election, either by bribery or by propaganda.
Popular suffrage is in itself no guarantee of freedom. People can vote themselves into slavery.
The only way, then, to prevent the monopoly of power from becoming absolute is to create a competitive market for government; to give the citizens, the customers, a choice of jurisdiction. That is exactly what our peculiar American system of divided authority, between states and federal government, accomplished.
The Constitution, as originally conceived, set up independent nations within an independent nation—imperium in imperio—each with delimited powers. In that way, it was hoped, the polarization of power that undermines freedom would be prevented. The central government was given certain specified chores to do; it could not intervene in local affairs, unless the state governments were not able to maintain order. If the state government got rough with its customers, they could easily transfer their allegiance to another state.
This division of powers established the nearest thing to competition in government the world has ever known. As long as it held up, or until the federal government invaded the state lines (though the powers it acquired under the Sixteenth Amendment), the American citizen was as free as it is possible to be in organized society. Except with excise taxes, or during war, the central government never annoyed him.
Sometimes the state governments went in for political innovations, including socialism, that violated his freedom. But they did not get far with these schemes, simply because the citizen could march off to a state more to his liking, or immigration from other states was discouraged; no government likes to lose taxpayers.
From the very beginning the states had the power to impose income taxes and a number of them exercised it. None of these states ever went as far as the federal government has gone, and for obvious reasons.
In the first place, the neighborly relations between local tax collectors and taxpayers made for evasion of this infringement of property rights; the state governments could not import “foreigners” from Washington to do the unpleasant work.
Then, the local politician is more sensitive to the likelihood of retribution at the polls than is the national politician, and he knows that nothing will stir up the people more violently than excessive taxation.
Most important is the fact that, other things being equal, capital, without which production is impossible, is attracted to areas where low tax rates obtain; it was regular practice, before the Sixteenth Amendment, for chambers of commerce to advertise the freedom from income taxes in their states as an enticement to industry, and it was not unusual for men of means to migrate to those states that did not tax inheritances. Running away from taxes is an ancient custom, and no state government wants to see its area depopulated. For these reasons some of the states dropped their income taxes, and none of them went in for oppressive rates.
Right now there is an urgency to have the federal government eradicate by forcible means the stupidity of racial and religious bigotry, particularly in employment practices. This is another example of the fatuous undertaking to make men “good” by law—the socialistic program. It cannot be done.
A “fair employment practices” law can only result in intensifying bigotry, by concentrating attention on it. A New York State law of that kind has done nothing more than stimulate the ingenuity of employers and employment agencies to invent methods of evasion; discrimination is as prevalent as ever. But if the federal government is given the power of a “fair employment practices” act, we can expect an army or corruptible police swarming all over our national industry. That is not freedom.
As long as anything is left of our tradition of States’ Rights, the danger of absolutism in this country can be avoided. In fact, it is that tradition that must be depended upon in any effort to repeal the Sixteenth Amendment.
THE CIVIL WAR did not abolish the autonomy of the states. All that was settled by that conflict was the questions of secession and nullification; no state could pull out of the Union or disregard a regularly enacted national law. After 1865, as before, the states were still the depositories of all powers not specifically delegated to the federal government, as stipulated in the Constitution.
After 1913, however, and without either a war or a change in the law of the land, the states were gradually and almost imperceptibly rid of their sovereign position and reduced in importance to dependent subdivisions of the nation. It was done by the subtle arts of bribery and blackmail, made possible by the Sixteenth Amendment.
The ink was hardly dry on the Sixteenth Amendment before the heretofore picayune federal patronage began to blossom into the program of grants-in-aid.
The first of these came in 1914, when the Agricultural Extension Service was inaugurated with an appropriation of $480,000— not so inconsiderable an amount in those days.
Each year thereafter Congress found reason to pass “general welfare” legislation, with appropriations increasing in importance. Whether the “general welfare” prospered by these expenditures is questionable, but it is certain that the political fortunes of the politicians who could boast of “bringing home the bacon” did not suffer.
The laws multiplied and the appropriations grew bigger. It is a curious fact that as the government’s revenues increase so do its needs.
Before 1913, the country was in difficulty several times, but it never suffered from an “emergency”; that national disease is a product of the income tax, and as the levies increased, the affliction recurred with greater frequency and greater intensity.…
Every post-Sixteenth Amendment “emergency” became an occasion for raising the rates of taxes on incomes and of lowering the exemptions; that is, for taking more of the incomes of more persons. The odd thing about these “emergency” taxes is that they hang on after the original occasion for them disappears.
Just by way of illustration, first-class postage before World War II was two cents an ounce; the rate was raised to three cents “for the duration.” Later legislation made the increase permanent. Perhaps other factors, like inflation, made continuation of the increased rate necessary, although that is a debatable question; the point is that the promise of the original legislation was never kept. In like manner, a great “need” ushered in every increase in income taxes, with the tacit or explicit understanding that the levies would be dropped when the “need” no longer existed; but every “need” hardened into a permanent necessity.
Since an office holder has nothing to offer but laws, his preelection promises amount to the pledging of the political power with which he is invested. But the patriotic citizens who enter into the bargain are not interested in political power in itself; what they are after is an economic advantage that political power can confer upon them. They are interested in sinecures on the public payroll, franchises, public works and contracts that bring jobs to the community and profits for the contractors, handouts, and so on.
This practice of buying votes with political favors is inherent in popular government. It is the weakness of democracy. It is not due so much to the depravity of the politician as to the human hunger for something-for-nothing.
However, this weakness of democracy is only as dangerous as the amount of the citizens’ wealth the government has at its disposal. Before 1913 the American government was comparatively poor and political jobbery was correspondingly limited in scope. When the government acquired this power of confiscating the national wealth, the corruption was limited only by the amount that expediency would permit it to confiscate.
At this writing the confiscation amounts to one third of the production of the citizenry. That is a lot of “pork” with which to buy votes. And so, as the Sixteenth Amendment gradually achieved its fulfillment, the politician’s attention was more and more directed toward the “barrel”; so was the attention of those who are compelled to keep it filled.
The dependence of the state political machinery on the coffers of the federal government carries an obligation: to support and acquiesce in the policies and purposes of the ruling regime. If a governor asks for or accepts a school subvention, he cannot very well object to the curriculum or textbooks “recommended” by the Bureau of Education. And a Congressman who tries to become a liaison officer between his voters and the United States Treasury will probably vote for any program the regime wants.
Thus, every federal dollar spent in a state becomes an obligation on the state. The obligation is paid off with sovereignty; the state sells out its independence. It is all done without change of the law, without any modification of the Constitution, and is as imperceptible as the gradual wearing down of a proud horse by a resolute trainer. …
This centralization of power, which the Founding Fathers feared and sought to prevent by constitutional safeguards, is made possible only by income taxation. This is the atomic bomb that has virtually destroyed the Union. But, it may be pointed out, the state legislatures ratified the Sixteenth Amendment in the first place; did they not know that they were voting themselves out of business? Probably not. Most of the states were poor and envious of those in better circumstances, and all they saw in the Sixteenth Amendment was a way to “soak the rich.”
For some years after the Amendment went into effect, seven states of the Union paid in more to the federal government in income taxes than they got back in the form of grants-in-aid; the other forty-one made a “profit.” Covetousness was thus encouraged. Somehow, a Mississippian sees no immorality in forcing a Pennsylvanian to support his local economy. His pride might stop him from accepting a gratuity from his neighbor, but he suffers no such inhibition when he knows it comes from a “foreigner.”
So, it came to pass that a Congressional coalition, representing the poorer states, and held together only by their common greed, pressed for legislation that would bring them dollars mulcted mainly from the citizens of the seven rich states. That is the bald fact, though the legislation was glamorized with the “public interest” label.
According to the label, New York profits by its forced contribution to Arizona irrigation projects or Montana roads. However that might be, the immediate beneficiary of federal grants to local projects is the politician who solicits it, and the ultimate beneficiary is the federal bureaucracy. Everybody else pays.
Today, every state in the Union pays into the income-tax fund more than it gets back.
The Sixteenth Amendment gives the federal government power to levy on incomes “from any source derived.” This includes the incomes of citizens in the poorer states, and the federal government had to get around to them in time.
But the fact that every state is now a loser gives them all a common interest in the repeal of the Amendment.
They all have an economic motive for raising the banner of States’ Rights, for reestablishing their sovereignty; they would all profit by repeal of income taxation. How could they lose?
…
The fires of freedom are stoked by the will to be free. It is not the promise of bread alone that will spur a people to shed their shackles, but rather the hope that they may attain the dignity of self-respecting individuals.
Repeal of the Sixteenth Amendment would amount to secession of the forty-eight states from Washington—and restoration of the Union.
REPEAL OF the Sixteenth Amendment would not be a reform; it would be a revolution…..
The American Revolution was unique in history, not because it kicked out a foreign rulership, which had been done before, but because it made possible the establishment of a government based on a new and untried principle, namely, that the government has no power except what the governed have granted it. That was a shift in power that had never occurred before.
As a result of income taxation, we now have a government with far more power than George III ever exercised. It is self-sufficient, independent of the will of the people. The elections do not alter that fact; these are merely periodic changes of the guard. Whoever is elected retains the power vested in the office and, as usual, tries to augment it. The end in clear sight is the liquidation of all social power and the advent of a regime of absolutism.
This, it cannot too often be repeated, was an inevitable consequence of income taxation.
The citizen is sovereign only when he can retain and enjoy the fruits of his labor. If the government has first claim on his property he must learn to genuflect before it. When the right of property is abrogated, all the other rights of the individual are undermined, and to speak of the sovereign citizen who has no absolute right of property is to talk nonsense. It is like saying that the slave is free because he is allowed to do anything he wants to do (even vote, if you wish) except to own what he produces.
The proposal to repeal the Sixteenth Amendment is really a proposal to restore the sovereignty of the American citizen. To use a modern term, it is a counterrevolutionary proposal, in that it aims to restore to society the power that the Amendment gave to the government. ….
Unless Americans want to be free, unless they put their tradition of freedom above all else, the Sixteenth Amendment will stay in the Constitution until it wrecks both the tradition and the civilization from which it emerged.
It is customary to identify the American tradition with the Declaration of Independence. Yet the Declaration merely articulated what had grown into an American thought pattern long before it was written. It had become the American ethos. John Adams, writing in 1818, put it this way: “the Revolution was in the hearts of men”… it was effected “before the war commenced.” That is to say, when Jefferson wrote about “unalienable rights” he simply put into words what Americans instinctively felt. They opposed the British Crown because they could not do otherwise.
When we try to define “Americanism”—of which there is much loose talk these days—we find it necessary to look to our beginnings for the essential ingredient. Whatever special character this country can lay claim to, it was the habit of freedom that was acquired before the country was formally organized. And it was an acquired, not an inherited characteristic, for the American was ethnologically as heterogeneous as his forebears. His ancestry gave him nothing that the peoples of Europe did not have. He had come by freedom through trouble and toil; he meant to hold on to it.
When he got around to establishing a political establishment of his own, the American had sense enough not to put too much trust in it. He had learned—without the help of a textbook on political science—that inherent in government, any government, is the tendency to rob the individual of his freedom. Hence, while recognizing the need of government for orderly gregarious living, he was against giving any setup a free hand; it must be hamstrung. The Constitution was, for that reason, that distrust of government, heavily underlined with prohibitions and with “checks and balances.”
The Constitution was tailor made for and by Americans; it was fitted to their particular habit of thought. That point was emphasized by one of its makers, Gouverneur Morris, when he was Minister to France, during the Reign of Terror. “The French,” he wrote, “want an American Constitution without reflecting that they have not American citizens to support it.”
Missing from our original Constitution was a “check” that was all the more potent because of its omission. The straight-thinking pioneer knew full well that the power of the government is in direct ratio to its income, and he was therefore all for cutting its income to the bone; that way it could not get out of hand. About all he would allow it was what it could pick up from tariffs on imports. Grudgingly, because, as Hamilton pointed out, tariffs could not produce enough to pay the running expenses of the proposed government, he allowed it some excise taxes. More than that he would not give, and more than excise and tariff taxes did not get into the Constitution.
Certainly, no tax on incomes got into the Constitution. That was unthinkable. A people that had but recently kicked over the traces because of taxes far less onerous would hardly have countenanced an income tax. They knew their freedom.
The case for repeal rests on this tradition. If there are still enough Americans who are of the opinion that that government governs best which governs least, if there is among us a group willing to risk their fortunes, their lives, and their sacred honor for freedom, then repeal has a chance. If, on the other hand, the habits of mind acquired under income taxation have completely obliterated the American tradition, then any effort to restore citizen sovereignty is futile.
Right now, even in America, the prospect for starting such a fight is unpromising.
Not that the goal is unattainable, but that interest in freedom is at so low an ebb. The great enthusiasm of the times is “security”; everybody seems bent on catching this evasive will o’ the wisp, oblivious of the fact that it is beyond reach because it does not exist. There is no such thing as “security”; it is a mirage sprouting out of deep-rooted human yearning for something-for-nothing. Government, which lives and thrives on power, fosters belief in the “golden calf,” so that it can surreptitiously rob the self-mesmerized worshipers of their wealth and their dignity.
It requires no great acumen to realize that what trickles out of the government’s cornucopia must be replaced by labor. But reflection is foreclosed by the madness that has come over us. The national passion is for handouts, no matter what the cost. Freedom, which puts a premium on self-reliance, is in short demand. Why put up a fight for it?
There is historic support for such resignation. Every civilization on record has followed the same pattern. In the beginning, the civilization rose and flourished in the sunshine of freedom. And, in the beginning, the civilization was poor. Always some kind of government attached itself to society, but because of the general lack of goods, the government remained quiescent and even rendered service in the maintenance of order.
But the human urge is always away from poverty, and that urge, while it improves his circumstances and widens his horizon, also is man’s downfall. As soon as a general abundance appears, the passion for power is enflamed, and the political establishment changes its character; it gradually shifts its position from a protective to a predatory institution. It levies taxes. And the more the general economy improves the larger its levies, always, of course, in the “general interest.” So it was in the time of the Caesars, so it is now.
The general welfare is not improved by the increasing load of taxation. On the contrary, the upward climb of civilization is retarded in exact proportion to the levies, and when they reach the point of discouraging production, the parabola of civilization turns downward.
Returning to first principles, the object of productive effort is consumption; men work to satisfy their desires, and for no other reason. They don’t want work, they want satisfactions. Their aversion to labor is such that they are constantly inventing labor-saving devices. And the more labor they save the more labor they invest in the gratification of new desires, of which the human mind seems to have an inexhaustible fund.
Contrariwise, when the results of their efforts are taken from them, when the prospect of possession and enjoyment is diminished, they lose interest in producing. Why work when there is nothing in it? And this disinterest in production arises whether the insecurity of ownership is caused by regular visits from marauders or tax collectors. The name or the uniform of the absconder makes no difference to the one deprived of his property; he sees no point in trying to improve his circumstances, in widening his horizon; his point of interest is mere existence. That is civilization in decline.
When faced with this circumstance, does the State abdicate? It does not.
When faced with this circumstance, does the State abdicate? It does not. The general lack of interest in production threatens its own existence, but it still cannot divest itself of its inner urge for power. It turns to the use of force to stimulate the production from which it derives taxes. It confiscates and tries to run the entire economy by rules, regulations, controls, and compulsion; the nation becomes a slave-labor camp.
But the output of an economy that rests on force rather than on self-interest is meager. More important than lack of production is the slave psychology that such an environment induces. Men lose their capacity for self- improvement along with their sense of individual dignity. Thus civilization disintegrates and becomes an historical or archaeological curio. The State, of course, collapses with the civilization.
The present low estate of freedom in this country must be laid to lack of the proper leadership—to men who know what freedom is and who do not equate it with their own “standard of living.” Whether or not leadership could have averted, or can still stop, the trend toward socialism, may be open to question; that a glorious fight for freedom might yet enliven the American scene is not. Whether a fight for freedom will be crowned with success, is less important than the fight itself, for if nothing comes of it, the improvement in the spirit of the fighters will be a gain, and they cannot help but keep alive the values that will make America a better climate for their offspring to live in.
There is no accounting for the emergence of these superior men, these “sports of nature,” who sporadically shape the course of mankind. They come, as it were, from nowhere, and nobody has yet conclusively explained their advent. But, they come. When in her own time and her own pleasure Nature deems America ready for and worthy of them, she will give us the men who will make the good fight. It seems reasonable to assume that their first objective will be— Repeal of the Sixteenth Amendment.