All Terrain Thinking

A Compendium of things I think are Important

Consequences In Life, Often Unanticipated

 

3. TAXES

"The power to tax involves the power to destroy." - Chief Justice John Marshall

The word "code," has as one of its definitions, "A system of arbitrarily chosen words, used for secrecy." Various codes are used during wartime, allowing messages to be transmitted between allies, while maintaining secrecy from the enemy. Do "codes" deliberately keep understanding and meaning from citizens who vainly attempt to wade through the maze of indecipherable, convoluted, non-sensical rules perpetrated by the IRS? As a result of these "codes," interpretation of them has become a real growth industry in America. Huge armies of tax experts must be hired, and there are multitudinous and diverse opinions as to the meaning of the tax codes, not only among the experts hired, but within the 106,000 employees of the IRS itself, who on average, give wrong answers to over 30% of the queries; 8.5 million of them in 1993 alone. Each year, the IRS sends out 5 million erroneous correction notices, and half of the 30 million tax penalty notices they send out each year are wrong. IRS managers pressure their underlings to seize taxpayer's property so they can win "merit pay" bonuses. Agents in a San Francisco IRS office even posted a notice on the bulletin board that said, "Seizure fever. Catch it." In 1996, tax compliance with IRS rules cost Americans over $157 billion, according to Arthur P. Hall of the Tax Foundation, and this isn’t what we pay, but the costs of basically figuring it out, filling out the forms, going through appeals, and the rest of the hocus-pocus. Then there is the Philadelphia chemical firm that was penalized nearly $47,000 because the IRS determined their tax payment of $4,448,112.88 was 10¢ short! Americans spend 155 million hours each year filling out tax forms, says Thomas Shatz, president of Citizens Against Government Waste. NBC News on August 5, 1997, upped Arthur Hall by quite a bit by reporting that, "In 1996, Americans spent $230 billion to prepare their tax returns." No matter how it is reported or figured, it is simply an unspeakable outrage.

"Power tends to corrupt, and absolute power corrupts absolutely." - Old saying that obviously applies to the IRS.

In the mid 1980's there was a huge scandal in the Philadelphia IRS office. Employees shredded and flushed thousands of tax returns down various toilets in the offices, and in other ways destroyed checks, forms, and returns, to avoid work. Millions of dollars were fined and seized from innocent taxpayers, who had paid, and had done nothing wrong, but whose checks and forms had been flushed away or destroyed. I have the many headlined newspaper stories from the Philadelphia Inquirer in my files regarding this outrage. In September of 1997, the U.S. Senate held hearings about the IRS. Employees testified behind a screen, in hoods, and with their voices disguised. They told of hideous abuses, outrageous conduct, and of the absolute unfairness of the IRS...their place of employment. Other taxpayers testified of having their homes and businesses seized illegally, and leaving them often bankrupt and without recourse. The hearings were absolutely revolting.

In 1997, Money Magazine sent out detailed information to 45 professional tax preparers for a fictional "Baker" family. Of the 45, no two came up with the same results. They charged the "Bakers" from $300 to $4,950 for preparing the returns, and the amount the "Bakers" owed varied from $36,322 to $94,438! It is indeed an indecipherable "code."

The Income tax was begun in 1913 as an Amendment to the Constitution, legally ratified by far fewer than the required 36 states. Is it legal? A bit of theft from the extremely rich, which politicians even then had decided, 'didn’t need it.' That was the idea, and like all government plans to steal, transfer, and subsidize, it has become a monumental horror. The consequences of the unconstitutiona1 16^th Amendment are a nightmare of gigantic proportions.

Today, some corporations spend more on tax preparation than on any other single expense, including raw materials or labor. H&R Block fills out more than 12 million tax returns each year, most for typical wage earners who cannot fathom the absurdities of IRS forms. Conceptually, taxes are levied to pay government bills. The consequence of this, is that government can grow forever, because it can raise taxes as much as it pleases...to expand itself. What it can't raise by taxation, it obtains by borrowing and debasing the currency, assuring its constant growth and intrusion into our daily lives.

The IRS has become a social tool, the true "Elixir of Life" for the social manipulators and denizens of D.C. It does far more than collect taxes. It wastes incredible amounts of money. In early 1997, the IRS reluctantly admitted it had wasted over $4 billion and 11 years, installing a new computer system that didn't work, so it continues on with its 30-year-old system. According to the General Accounting Office, (GAO) the IRS has no idea of how it spent 64% of its budget in 1992, ($4.3 billion) and none of the agency's financial statements from 1992 to 1996 can be verified by GAO auditors. The IRS is a device used by the socialists to equalize everyone, redistribute income and wealth, harass the successful, penalize the producers, and in some cases make some of them give it all up and leave the country for less stressful climes, taking their fortune with them. There is proposed legislation right now, to seize the assets before they have an opportunity to leave. How Marxist can a land become without openly declaring allegiance? Taxes have become the financial cost of achievement, and the chief channel of wealth redistribution, a modern day Inquisition. It's unjust for one segment of society to be forced to support the other, and I'll guarantee you the Founders never intended it to be that way.

"When we see achievers being milked like cows it is a clear sign that proletarian theft have infected the body politic oriented values." - Ayn Rand, from her novel "Atlas Shrugged."

The politicos such as the corrupt Clintons and their accomplices in the Congress rob you by raising taxes, and when running for office say they will lower them. A robber steals your money and then leaves you alone. Government steals your money, and then tells you how wonderful it all is!

When I was a teen, beginning work in the early fifties, Uncle Sam took less than 3% in income taxes, and 1% out of the first $3,000 in wages, or $30 for Social Security, making less than $100 total a year for the average beginning worker. According to an article in The New Republic on December 2, 1991, in 1948, a married couple with median income and two children, paid only 2% in state, federal, and Social Security taxes. In 1999, Social Security was 15.3%, plus 2.9% for Medicare, out of the first $62,700 in wages, or $11,411.40, and then perhaps 30% in federal taxes. That is about an even 50%, plus hundreds of hidden taxes on every phone call you make, over 40 cents on each gallon of gas you buy, luxury and excise taxes, and hundreds more at the federal level alone. There are taxes on the electricity, gas, and telephone you use in your home and office, plus taxes on payroll, personal property, pensions, severance, social security, corporation, stock transfer, tobacco, tonnage, transportation, utilities, accumulated earnings, ad valorem, alcoholic beverages, amusements, apparel, business, capital gains, consumption, corporate income, dividends, employment, estate, excise, franchises, fuel, furnishings, gas, sales, gift, gross receipts, health care, holding company, income, inheritance, land, license, life insurance, luxuries, motor oil, motor vehicle, occupation, operators license, and the list of taxes can go on and on. Sales taxes at the local level are usually 4 to 8 times higher than when I was a youth, and property taxes, especially in the east, can be a couple of hundred dollars a month for a small, rather ordinary home. The 1916 income tax law contained a bit over 11,000 words. The 1996 version had over 7 million words; ten times the number of words as has the Bible. In 1928, the income tax rate was 1.5% on any income over $4,000, which is the equivalent of $100,000 today. It has all happened so gradually that we haven’t noticed it. The old frog in water story applies: If you place a frog in a pot of cold water, and very gradually raise the heat to a boil, he won’t notice the difference...a painless execution. If total taxes had gone from 10% to the current 75% all at once, we would have mutinied. Yes, I said 75%. Think about it. Everything we buy has some or all of the above-mentioned taxes glued on to its price. Ajax Widgets are made in a factory somewhere, employing people whose wages are taxed. That factory pays fuel taxes, property taxes, and a jillion other taxes, which go into the price of widgets. Food, manufactured goods, and imported goods all have the makers' taxes included in their price. The loaf of bread bought in a grocery store or bakery, has property taxes for the farmer, bakery, garage for the delivery trucks, oil refinery, truck factory, tire factory, and the factories for everything in the truck, plus the factories that produced the farmer's fertilizer, built his tractor, grew the trees that built his buildings, made the bakery equipment, and it can be seen that the long line of property taxes alone are built into that single loaf of bread, and every single thing we purchase. This only examines the property taxes, and not the other taxes built in to everything we buy and use. Remember every single worker in that exhaustive chain, from the mine through manufacture and sale, have those close to 50% in wage taxes built in also. 75% might be too low if all costs from the taxes on telephones, fuel, income, property, and wages paid by farmers, manufacturers, distributors, wholesalers, retailers, and transporters, plus the direct taxes you yourself pay, and then the hidden costs of the bureaucracy are added. Bureaucrats cost us a fortune with their fatuous rules and regulations, and that has to be figured as a tax. Regulations alone are estimated to cost the citizenry over $600 billion every year, or $2,500 for every man, woman and child in America. Yes, 75% taxation at all levels...at least...and probably more.

The National Taxpayer's Union says taxes have gone up 175,000% in the last 83 years.

"Thou shall not steal." - Exodus 20:15. - King James Version

Taxes are theft, defined as obtaining someone else's property through force. Almost anyone is willing to be hurt, stolen from, or taxed a little; in order to do a great good. A good such as administering justice, catching and punishing crooks, or protecting our shores, but finally a point is reached when we won't do it, revolt, or at a minimum cheat on our tax return. We may still harbor a love of what taxes should do, but deeply resent what they are doing, such as redistributing income, being used as a tool of the pigheaded politicians' ideas of social justice, or other incongruous schemes. Upon realizing what tax money is being used for, most will do everything in their power to avoid what has become a pestilence.

During the 1996 presidential primaries, some candidates on the Republican side urged a so-called "flat tax," generally in the 17-20% range, with from a $36,000-$40,000 exemption for a family of four. We have come so far that 17%, plus 18.2% FICA and Medicare, a total of 35.2%, seems reasonable. Even if there were a 17% flat tax, with exemptions of $13,000 for a single adult, no one will escape the FICA, Medicare, Medicaid, luxury, transport taxes plus dozens of others that are hidden, but paid. Even with a 17% "flat" tax, the total rate will remain close to 75%, counting all taxes on everything we buy, use, grow, or make. It is simply outrageous.

The consequences of taxes being levied on everything and everyone, are that the average single wage earning family is rare, and has almost become extinct. We have become a virtual feudal society, with the boss man being the federal government. Mom has to work, as does dad, just to survive. So many taxes are hidden and obscure, that most families actually believe both parents are working to "make ends meet," rather than what is actually going on, which is to pay the taxes. Taxes consume a family's entire second income and more, if all the hidden taxes are included. Politicians perhaps never intended to cause marital breakups and both parents having to work...just to survive...but they have. The consequences of the current tax system, are that poverty is widespread, people can't seem to "get ahead," home ownership is impossible for many, marriages fail due to stress, and of course delinquency is widespread among those kids who do not come home to a mother, but may be classed as a "latchkey kid," or having to go to a daycare center, which will never be the same as a mother's care and upbringing. While no one in 1913, in their wildest dreams, could have envisioned what has happened to the size of government and the abuse poured on us by the IRS, the consequences are there for all to witness.

"The hardest thing in the world to understand is the income tax." - Albert Einstein. As an example of this, take the last sentence of section 509A of the "code." "For purposes of paragraph 3, an organization described in paragraph 2 shall be deemed to include an organization in section 501C-4, 5, or 6, which would be described in paragraph 2 if it were an organization described in section 501C-3." Understand this gibberish?

It all got started rather quietly, as Frank Chodorov notes in his book, "The Income Tax: Root of All Evil." "At first it was the incomes of corporations and the rich, then the incomes of well provided widows and well paid workers, and finally the incomes of housemaids and the tips of waitresses." Even former IRS Commissioner Fred Goldberg, says the IRS, "... has become a symbol of the most intrusive, oppressive and non-democratic institution in a democratic society."

Speaking of the rich, who can forget the pathetic case of Leona Helmsley, who, along with her now deceased husband, paid $53.7 million in income taxes on adjusted gross income of $103.6 million (52%) during the years of 1983-85. The IRS insisted that they under reported their income by $2.6 million to avoid taxes of $1.7 million. The Helmsleys have no children to leave their vast wealth to, and will leave it all to charity. Their accountants' disputed invoices proved that if a mistake had been made; it was no fault of the Helmsleys. Leona was whisked off to jail, and was refused a request for a retrial, even though there is conclusive evidence the federal prosecutors framed her. The government refused to obey the law of full disclosure, failing to show the incriminating evidence against its key witness, and even refused to give her an audit before hauling her into court.

"I want to be sure he is a ruthless son of a bitch, that he will do what he's told, that every income tax-return I want to see I see, that he will go after our enemies and not go after our friends." - Richard Nixon, when enunciating his standards for a new Commissioner of Internal Revenue - May 13, 1971

The consequences of the current tax system are obvious. Citizens despise the IRS, rightfully transfer that hatred to the rest of government, and are frightened to death of Uncle Sam, who is supposed to be kind and treat all equally. In the last decade, there have been more than 2,000 changes in the tax code, 1500 lines in 1996 alone. Not surprisingly, the budget of the IRS has doubled, and its employment has increased by 20% during that time.

Let me borrow from Britain's Financial Times, which offers these definitions:

Socialism: You have two cows, and you give one to your neighbor.

Fascism: You have two cows, the government takes both and sells you milk.

Nazism: You have two cows, the government takes both of them and shoots you.

Bureaucracy: You have two cows, the government takes both of them, shoots one, milks the other and pours the milk down the drain.

Capitalism: You have two cows, you sell one of them and buy a bull.

The Internal Revenue "service" of today, must bring to mind one of the most grim empires in history: Adolph Hitler's Nazis. One of his goons, SS Captain Josef Kramer, commonly known as the "Beast of Belsen," made a statement in 1943 after he had personally stripped and gassed eighty Jewish women at the Natzweiler camp. "I had no feeling in carrying out these things because I had received an order to kill the eighty inmates in the way I already told you. That, by the way, was the way I was trained." I will not horrify you by retelling the thousands of grotesque stories laid at the front door of the IRS, who trains their employees to act in a similar manner. All powerful IRS goons have seized the bank accounts, businesses, homes, farms, and the personal property of tens of thousands of citizens since that lunacy was established in 1913...by the illegally ratified 16^th Amendment to the Constitution. They have done it to this writer without cause, and luckily I had an attorney who sued and prevailed handsomely. Most have not been so fortunate. The IRS operates in the exact reverse of a long held American tradition that one is "innocent until proven guilty."

I had an employee named Cheryl work for me at one time. She had applied for a position with the IRS, and was overjoyed at finally being called. The security of federal employment seemed "just the ticket" for her. Within a few weeks she had resigned. She told me how they trained her to lie and give callers statements like, "the refund check is in the mail," etc., when none of it was true. She couldn't stand the job, even with its security. She quit cold, and came back to work for me, a much wiser gal for her brief experience. The IRS has the largest job turnover rate and job sickness rate, especially for psychological reasons, of any branch of government. Even long time employees eventually can’t stand it. An IRS gal audited me in 1986, who shortly thereafter departed from "the service." I asked her why, and she said that the pressure and dubious honesty of the IRS unhinged her. She resumed her CPA business in a distant city.

The comparison between the IRS and either of the two Inquisitions, Spanish or Medieval, is unavoidable. The Spanish Inquisition was far more severe under Ferdnand and Isabella. Maybe that’s why Columbus wanted to discover a "New World!" The Inquisitors, (their official title) had the job of ferreting out fake converts, sinners, and heretics, with the power of death, burning, or the more common "judicial torture." Inquisitors were eager to receive admissions of guilt to make the system run smoother. Accusers were never permitted to be questioned or confronted by the accused, and you were guilty until you could prove yourself innocent. Being acquitted was increasingly difficult as time went on, and absolute power over the victim's future lay in the hands of the Inquisitor. Need I say more about the comparison with the IRS?

The taxes we pay are levied by governments at all levels, the most wasteful and oppressive being at the federal level. Other than attempting to cheat a bit, we have no choice, but are comparable to a caged beast, with no place to go; resembling a victim of the Inquisition. If we don't pay the theft and extortion, we go to jail, have our home, bank account, and assets seized and sold at auction. American citizens, in short, are hog tied, and have all the juices of life squeezed out of us at the hands of the tax mandarin.

Before mentioning a solution, consider the absurdity of today's income tax. Taxing income encourages hiding it, and discourages saving. Taxes on spending rather than income, makes far more sense. Rich people have more money, and spend more than do the poor, so they would pay a higher tax...automatically graduated. How better to collect an automatically graduated tax than to collect it on spending. With a tax on spending, called an excise tax, there would be no income tax forms, no IRS, and taxes would be paid at each purchase, not deducted out of the paycheck. The retailers would collect, not the hated IRS. No individual tax forms would be needed, and the so-called "underground economy" would be taxed, because that money is spent. Billions of dollars in income taxes are never collected because of missing completely the "underground economy." But that is not a solution, only an observation. There should be no federal taxes.

Another observation on the tax situation seems appropriate at this time, and that is the matter of "equality." For decades now, cantankerous baby-kissers have attempted to legislate "equality" in everything. Everything that is, except income taxes! How does a graduated tax satisfy "equality?" A "graduated" tax was one of Karl Marx’s 10 points to destroy the capitalistic world, and it has succeeded pretty nicely. If everyone is supposed to be equal, treated equally, equal under the law and every other nonsensical area, why are not our income tax rates "equal" for one and all? How is it fair or "equal" for one person to pay nothing, and another to pay 40% or more? To be fair and "equal," all should pay the same rate, with none exempt or gouged.

SOLUTIONS

90% of the federal government is operating without the authority of the Constitution, but rather as a sanctimonious article of faith, or perhaps a grueling habit, so long has the persiflage been gushing forth from the scum-buckets inside the beltway. 90% of the federal government is functioning in direct opposition to, and without permission of...the Constitution. In order to reduce the tax load, it is necessary to reduce the size and load of government by 90%, which would eliminate the IRS, and begin an American recovery. I will admit that these words are so contrary to common opinion, that it may make the casual reader go into shock, but that's the way the Founders planned for the federal government to operate...at about a tenth of what it now does. Examples: The Constitution does not authorize any subsidy of anything for any reason, nor wealth re-distribution in any form. It does not authorize minimum wages, regulations, executive orders, federal bureaucracies, and for that matter, even a "Presidential Cabinet." With an out of control government, there are out of control expenses to support it.

The federal government needs to sell most of its property to private bidders, use the money to pay off the national debt, repeal the illegally ratified 16^th Amendment, and eliminate all federal taxes. The small amount needed to run such a limited government can be raised by tariffs, as the Constitution calls for, and which will be covered in Chapter 19. With no national debt, there would be no interest to pay, and government would not borrow from the citizenry, thereby freeing hundreds of billions of dollars for private investment in productive enterprise, far too much of which now goes into treasury bonds and loans to government. With there being no more federal lands, the states could put them on their tax rolls, adding to their incomes. With no federal regulations and mandates getting in everyone's way, state and local taxes would be reduced, as would fares on transportation, the cost of autos and every other consumer good. With the federal government literally "out of business," which it has no Constitutional authorization to be in anyway, and having sold all enterprises it now owns, the private sector payroll, business, gross, activity, etc. would increase by hundreds of percentage points, generating profits, and not consuming wealth.

For a further idea on taxes and how to stop the governmental behemoth, see the 26^th chapter on "What Can You Do?"

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