"The state can only survive as long as a majority is programmed to
believe that theft isn't wrong if it's called taxation or asset
forfeiture or eminent domain, that assault and kidnapping isn't wrong if
it's called arrest, that mass murder isn't wrong if it's called war."
- Bill St. Clair
On 2/28/2011 11:20 AM, MJ wrote:
/"The income tax law introduced by the Cleveland administration (and
declared unconstitutional in 1894) was indeed attached to a low-tariff
bill. And up to the enactment of the Sixteenth Amendment, the
political fiction was maintained that an income tax was needed to
offset lower customer returns. This was pure hogwash; the state never
relinquishes one form of revenue for another, for it is inherently
incapable of restraining its lust for power. The highest tariff walls
in the history of the country sprang up after income taxation was
constitutionalized."
Taxation Is Robbery
/*The Revolution of 1913
*/Frank Chodorov
This article appeared in/ analysis /(November 1950)/.
The replacement of one ruling regime by another does not in itself
measure up to a revolution; that can be accomplished by a gang fight
or an election. A revolution is an effective change in relationship
between rulers and ruled, a shifting of the incidence of power from
society to the state, or vice versa. The American Revolution was an
effective one not because it got rid of the British crown, but because
it set up a weaker state, vis-a-vis society.
The Constitution was not necessary to the revolution. The new
relationship between rulers and ruled was summed up in the Articles of
Confederacy, and the country could have managed without another legal
document. But we cannot argue with a fact: the Constitution of 1789
charted the course of the new state-society relationship as nearly as
a political document could, and thus became the profit-and-loss
statement of the preceding rebellion. The going ethos was
individualistic; in his pursuit of happiness the early American felt
quite satisfied to go it alone, accepting restraint only insofar as
restraint was necessary for the security of property and the
maintenance of peace. He would tolerate coercion to restrain coercion,
and no more. His experience with the British crown taught him to
distrust political intervention, and his skepticism necessitated
delimitation of the powers of the proposed establishment. Otherwise,
he would have nothing to do with the Constitution.
We pervert the fact when we speak of the Constitution as a guarantee
of rights; such an idea did not occur to the framers, nor even to
those who opposed ratification. A Bill of Rights was incorporated into
the document as a concession to the prevailing skepticism; but the
Bill did not establish the prerogatives of the individual and the new
government did not guarantee them; it simply agreed to respect them.
They inhered, by common consent, in the individual as a matter of
existence or as a gift from God, and the Bill was merely a memorandum
to that effect. It was a warning signal that the authority of
government must not transgress these prerogatives. As James Madison
put it in one of his letters, the Bill of Rights was superfluous and
unnecessary, and though he did not object to its inclusion, he was
apprehensive lest a specific Bill of Rights should invite
circumvention and thus defeat the purpose. After all, government
simply has no business with rights, except to leave them inviolate.
The principal preoccupation of the framers of the Constitution was
with restraints on authority, and those who opposed it argued the
insufficiency of these restraints. Much has been said about the
“checks and balances” incorporated in the Constitution, but entirely
too little emphasis is put on the temper of the times that made these
provisions necessary. In the light of the present abdication of social
power in favor of political power, the early American attitude toward
government is most striking. True, there were some who favored a
strong centralized government, and some went so far as to advocate
monarchy; but it is doubtful whether even these envisioned a
concentration of power such as our present government wields. It was
simply unthinkable. The revolution was in the hearts of men.
Not the least of the checks put on the new government was the
limitation of its taxing powers. It was understood, of course, that
authority is always in proportion to revenue, and if the latter could
be held down, the former would take care of itself. About the only
taxing power generally conceded to the proposed federal government was
that of levying on imports; the “infant industry” argument carried
weight, particularly as it implied retribution against the recent
enemy. Hamilton argued that customs revenues would be insufficient and
begged for internal excise taxes; his argument on this point, in /The
Federalist/, is a remarkable piece of special pleading. If the
government were not permitted to tax production, he said, it would
have to ask for direct taxes. The principal direct tax, that on land
values, he peremptorily dismissed on the ground that it would do hurt
to the small holders who constituted the bulk of the population; this
appeal to mass prejudice conveniently ignored the effect of land value
taxation on the large estates in being, and on the prospects of the
land speculators who were not without influence in the Convention. The
other direct tax, that on incomes, he declared both unjust and
impractical; in an agricultural economy, where trade on a barter basis
is considerable, a levy on incomes would not yield enough to offset
the unpleasantness of collection. His plea for excise taxes prevailed.
And there the matter of federal taxation rested until, as a war
measure, the Lincoln administration put through a tax on incomes. The
constitutionality of this measure was questioned, and the matter might
have been brought to adjudication if the tax had not been dropped, in
1872. Again the constitutionality of income taxation engaged the legal
talents of Congress during the latter part of the nineteenth century.
The argument was tortuous; yet there can be no question about the
intent of the framers of the Constitution. Putting aside the written
evidence, it is inconceivable that these leaders of a rebellion that
was sparked by resentment over taxation far less oppressive would have
countenanced a levy on incomes. That was not what the Americans fought
for.
*NO MONEY, NO POWER
*The federal government rubbed along on what it could get out of
customs duties and excise taxes until the enactment of the Sixteenth
Amendment in 1913. It was a relatively weak government. It did not
transgress the rights of the people because it could not. The balance
of power was with society, as envisioned by the revolutionists, and
the profits of their struggle endured in the immunities enjoyed by the
citizenry: the immunities of property, person, and mind.
In respect to the right of property, the people were protected from
encroachment by the strict limits put on the federal power of
taxation. And because it therefore lacked the wherewithal, the
government could not engage in ventures tending to invade the
immunities of person and of mind. Thus, Lincoln's attempt at military
conscription was unsuccessful because he did not have an army to
ferret out reluctant draftees; when World War I rolled around, that
lack had been overcome, thanks to the Sixteenth Amendment, and now
encroachment is so effective that even peacetime conscription presents
no difficulty; the person of every American may be impounded.
As for the immunity of mind, that was undermined by the subtle process
of subvention, when the funds became available. With public and
private educational institutions beholden to the state for their
existence, it was inevitable that the doctrine of benevolent statism
should have insinuated itself into textbook and classroom; and as
employment in the burgeoning bureaucracy presented opportunities, both
as to emoluments and self-glorification, the minds of educators and
educated became receptive to the idealization of the state. The
doctrine of natural rights was gradually washed out of political
science and social philosophy, and in its place we have the doctrine
of permissive rights. In all the disciplines dealing with human
relations, including, of course, the law, the primacy of the mass,
rather than the individual, has achieved axiomatic position. It is a
new American ethos, induced by state beneficence. Even the
tax-exemption privilege granted eleemosynary institutions is not
without its influence; because of it, as well as permissible
deductions from income, contributions to school and church became more
liberal before limits were put upon contributions; so that, perhaps
unconsciously, even the teachers of Christianity have come around to
minimizing the dignity of the individual and the glorification of
directed behavior. Though it cannot be said that this inclination
toward collectivism was deliberately planned, the state has not failed
to use the funds at its command to propagandize itself into public favor.
Thus, the immunities written into the compact of 1789 have been
eradicated by the proceeds of the Sixteenth Amendment. This one
measure effected a change in the relationship between society and its
ruling regime as thoroughly as if it had been done by invasion and
conquest. The revolution of 1913 undid the profits of the revolution
of 1789.
Our adjustment to the new relationship blinds us to the fact; perhaps
an exercise in speculation will help to clarify it. Let us imagine an
impossible bargain entered into between the American colonials and
George III: in exchange for the removal of all their disabilities and
indignities he had put upon them, as enumerated in the Declaration,
they offered him the power to tax their incomes. Assuming that he
understood the propositionwhich is as unlikely as their making it,
since income taxation was only vaguely apprehended in those dayshe
would most assuredly have accepted it. Why not? A prior lien on all
their production would have been an attractive price for the gewgaws
of liberty they wanted. There would have been no revolution. The
dominance of the British crown would have been assured, and the
immunities of property, person, and mind enjoyed by Americans between
1789 and 1913 would never have been known. The American attitude
toward the state would always have been what it is now; that is, one
of dependence and subservience.
It requires no great imagination to draw up a bill of particulars
against the present American state comparable to the indictment of the
British crown in the Declaration, and one could well argue that there
is more cause for revolt today than there was in 1776. The will,
however, is absent.
*POLITICAL PERVERSITY
*Among the casualties of the revolution of 1913 is the doctrine of
federalism. It is a casualty of major importance. From 1789 until the
Civil War, the tradition of coequal authority between local and
federal governments held firm, and even after that war (which settled
only the question of secession), the states maintained their autonomy
by virtue of their economic independence. The country was a Union, not
a nation; it was only when the federal government obtained power over
the citizens' property that our constitutional structure was mutated.
The events leading up to it are well worth reviewing.
It all began when the passion for leveling was let loose by a too
literal interpretation of the doctrine of equality. The revolt against
feudal absolutism was sparked by the truth that “all men are created
equal,” and envy was quick to turn this truth into a license for
spoliation; the early American was no freer of covetousness than any
other man. Recognizing this, the Founding Fathers sought to prevent
the use of the powers of government for a program of confiscation;
that, indeed, was the primary purpose of the checks and balances.
However, during periods of economic distress, these safeguards of
property rights regularly became the target of demagoguery; “hard
times” were invariably blamed on the cupidity of the few. After the
depression of 1873 the passion for leveling was whipped into a froth
and there was a general demand for reforms, most of them aiming to
break down the immunity of property safeguarded by the Constitution.
One of the reforms called for during the latter part of the nineteenth
century had a substratum of economic sense. It was a demand for tariff
reductions. The South (which had tried secession as a means of
righting the injustice of the protectionist system) was now joined
with the West in this demand. Its position was sound. The prices the
South obtained for its raw products were set in the competitive
markets of the world, while the prices it paid for manufactured goods
were loaded with tariffs. The consequent disaffection found expression
in the Granger-Populist movement.
This was grist for the mills of the Democratic party, idle and
gathering dust for many years. The party was historically committed to
free trade, even though its integrity had been more than tarnished by
protectionism, and Grover Cleveland, its candidate in the campaign of
1892, grabbed at the ready-made issue presented by the agricultural
malcontents. His sagacity went further. Contending that the loss of
tariff revenues would go hard with the federal treasury, he proposed
to make up the deficiency with an income tax. This was a direct appeal
to the passion for leveling, for in those days it was taken for
granted that an income tax would be levied on the wealthy only. Thus,
a measure of justice was packaged with an appeal to envy into a
successful campaign platform.
The income tax law introduced by the Cleveland administration (and
declared unconstitutional in 1894) was indeed attached to a low-tariff
bill. And up to the enactment of the Sixteenth Amendment, the
political fiction was maintained that an income tax was needed to
offset lower customer returns. This was pure hogwash; the state never
relinquishes one form of revenue for another, for it is inherently
incapable of restraining its lust for power. The highest tariff walls
in the history of the country sprang up after income taxation was
constitutionalized.
Ironically enough, the hope of those who favor free trade, or even
lower tariffs, was forever done away with by the income tax. The state
now has no economic interest in importations, no reason for
encouraging them. Before the Sixteenth Amendment, nearly half of all
the revenues of the federal treasury came from customs duties; today
that source provides less than two percent, Where it not for the large
revenues from income taxation, the state would be compelled by its own
needs to pursue a tariff-for-revenue-only policy, rather than a
protectionist policy. The current program of economic isolation
including quotas, so-called quarantine restrictions, and the
devaluation of our money in respect to foreign moneyswould simply be
impossible. Foreign trade would be as important to the treasury as it
is to the general economy.
A tariff-for-revenue policy, furthermore, would have made impossible
the current urgency for a managed economy, for no state can go in for
that sort of thing if the country's borders are open to the goods of
other nations. Fixed or regulated prices cannot stand up against
foreign competition, and an arbitrary scale of wages is likewise
undermined. A hermetically sealed economy is the prerequisite of a
managed economy. Our venture into socialism known as the New Deal
would never have been undertaken if the barriers to foreign trade had
not first been set up, and such barriers could not have been erected
if the fiscal affairs of the government were dependent on tariffs; the
income tax obviated that dependency.
*THE UNION IS DISSOLVED
*Protectionism breeds protectionism. The relief expected by the
agricultural communities did not follow on the Sixteenth Amendment;
their difficulties were rather increased. The further entrenchment of
protectionism gave rise to the argument that if the manufacturers are
to be protected from foreign competition, why not the farmers? Thus
came “parity” prices and the whole program of taxing consumers in
favor of agriculturists. Naturally, the disequilibriumin the economy
was felt by other groups, who in turn clamored for relief through
special privilege for themselves. Government by pressure groups is
inherent in democracy, but it is held within limits by the amount of
munificence the government can dispense. The income tax extended these
limits to nearly the full productive capacity of the country. The
power of confiscation this law conferred on the government led
inevitably to the taxing of Peter to quiet Paul, and back again,
meanwhile gathering to the political machinery the luxury of unlimited
coercion over both.
All of this naturally turned the attention of the citizen from home
government to the national establishment; their loyalty followed their
property. But, the final disintegration of the Union was effected by
the rise of another pressure group, that of the home politicians. From
the very beginning of the Union, congressmen were in the business of
purchasing political preferment with whatever special privileges and
grants they could wangle from the central authority; “pork barrel”
legislation did not begin with the Sixteenth Amendment. But with the
enlargement of the barrel, their preoccupation with it overshadowed
any interest they have had in principles of government or in national
affairs as such. Before income taxation, the best the government could
offer the local politician in the way of bribery were land grants,
franchises, a few posts in the limited bureaucracy and “rivers and
harbors” bills. The price was not high enough to buy up the integrity
of the people's representatives completely; a truly patriotic
congressman was not a rarity.
The ink was hardly dry on the Sixteenth Amendment before the
heretofore picayune grant-in-aid program began to blossom; in 1914
came the Smith-Lever Act establishing the Agricultural Extension
Service with, in those days, the rather considerable initial
appropriation of $480,000; this was followed in rapid order by others;
it would take a book of proportions merely to list the legislation
passed since 1913 to favor political ambitions. It is a truism to say
that the congressman is now only a liaison officer between his
constituents and the Treasury Department. In fairness, one should not
point to this consequence of the Sixteenth Amendment as evidence of
the moral decline of die politician; it is rather proof of a dwindling
social integrity. That the politician unashamedly boasts of the
prosperity his “influence” has brought to his community, by way of
airfields, bridges, dams, and smokestacks, only reflects the general
attitude. And the general attitude, visibly expressed in the endless
safari to Washington in behalf of “worthy” causes, is in turn the
result of the transfer of economic power from society to the state.
The swag principle of government is favored by the natural
distribution of population and the resultant concentration of wealth
in the more populous areas. There is no way out of it; some sections
of the country offer greater productive opportunities than others, and
there the aggregate of wealth must be greater. As a result of this
economic phenomenon, seven states in the Union yield more to the
income tax fund than they get out of it, and forty-one show a net
profit. Covetousness is encouraged. Somehow, a Mississippian does not
see any immorality in forcing a Pennsylvanian to support his local
economy. His pride might prevent him from accepting a gratuity from a
neighbor, but he suffers no such inhibition when it comes to a
“foreigner.” Thus, it has come to pass that the more numerous “poor”
states have constituted themselves a congressional bloc (organized
only by their common cupidity), intent on getting all they can from
the seven opulent states. That is the bald fact; the justification for
it is the doctrine of “national interest.”
But, the /quid pro quo/, whether a Nebraska governor gets a new road
or post office for his state, or the senator from Arizona brings home
a chunk of patronage, is the abdication of local social power in favor
of the greater monopolization of coercion by the central
establishment. The price of favors is sovereignty. Just as the citizen
was turned into a subject by the confiscation of his property, so does
the local politician transfer his allegiance from his community to the
source of munificence. A Calhoun, struggling to keep inviolate the
customs of his state, has no place in our /mores;/ the people would
not elect him. Nor could a governor of Rhode Island hold office today
if he presumed to defy, as did several of his predecessors, the
authority of Washington. State lines are practically obliterated, the
states reduced to parish status, their politicians nationalized. The
independent home government emerging from the revolution of 1789 has
been destroyed by the revolution of 1913. The Union is dissolved.
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