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Posts Tagged ‘income tax’

How War Created Taxation – Antiwar.com Original

Posted by M. C. on June 12, 2019

…the question of politics being the continuation of war by other means.

https://original.antiwar.com/luke_henderson/2019/06/11/how-war-created-taxation/

“Liberty tends inevitably to lead to the just equivalence of services, to bring greater and greater equality, to raise all men up to the same, constantly rising standard of living, […] it is not property that we should blame for the sad spectacle of grievous inequality that the world once again offers us, but the opposite principle, plunder, which has unleashed on our planet wars, slavery, serfdom, feudalism, […] and the absurd demand of everyone to live and develop at the expense of everyone else.”

19th-century French politician Frederic Bastiat declared this statement in his fifth letter of what is now called Property and Plunder to demonstrate that taxation and attempts to force economic equality would ultimately do more harm than good. This last letter also calls forth an important question: is taxation the creation of a warring state?

In antiquity, according to Bastiat, war developed from a nation that would instead of creating their own wealth, would wait for other nations to acquire their own property and then proceed to conquer them. After many victories where the citizens would be slaughtered and their property confiscated, these warring nations came to a realization that “putting the vanquished to the sword amounted to destroying a treasure” because they lost any potential wealth the conquered would create. They resorted to slavery to “put plunder on a permanent footing,” and truly acquire all property and services one would acquire.

Though there were actual slaves, the main method of continuing plunder was to enact tolls and taxes for protection from the ruling nation. This set a precedent that can still be seen today of taxation being the primary means of funding and maintaining war. These ruling nations and monarchies, however, ran into the problem of civil unrest because of the clear division between conqueror and conquered and birthed what has become modern politics.

In the collection of lectures titled Society Must Be Defended, postmodernist philosopher Michel Foucault ponders the question of politics being the continuation of war by other means. Among the many ideas discussed, Foucault shows how history and knowledge were narratives created in order to support war, and were the precondition of politics.

He notes how history was used as a tool by nobility to convince the royalty of the magnificence of his victories and where all discourse “explains contemporary events in the terms of contemporary events, power in terms of power, and the letter of the law of the will of the king and vice versa.” At the same time, the idea of equality was being used as a tool to cause unrest between a nation’s citizens and its aristocracy.

“In other words, a device typical of all despotism […] was used to convince inferiors that a little more equality would do them more good than much greater freedom for all,” states Foucault. It was these factors that contributed to politics becoming the in-between of war. Whereas before the dominated had no say in the conquests of their domineers, now they had a slight say in the activities of the State.

To justify war, the elected bodies had to resort to new means to encourage war and, simultaneously, taxation which Foucault describes as a “race war.” The race war is the “us vs. them” narrative between the noble warring group and the savage enemy and is used to justify the murders and other atrocities the State will commit in the name of war. Everything that Bastiat and Foucault describe is evident if one looks at the history of wars in the United States.

Desperate to defeat the Confederacy, President Abraham Lincoln enacted a 3% income tax to fund more troops. However, enforcement failed and the government had to pay off its massive debt through printing $150 million. Its legacy was not forgotten though and many congressmen of the time felt that an income tax was an inevitable future for the country.

Congress passed the nation’s first permanent income tax in 1913 and since then has continually used war as a way to steadily increase the rate. During World War One, the United States raised the highest tax bracket from 15% to 67% and did not drop to pre-war levels after it ended. World War Two was even worse with any income over $2.5 million (in today’s dollars) being taxed a 92%, and only going to 70% at it’s lowest for nearly 30 years.

During those 30 years, the US went to war in Vietnam, Korea, and intervened in many other nations to fight the enemy of communism. This was the greatest demonstration of Foucault’s race wars, as it allowed the continuation of high taxes and shows the use of politics to continue wartime status from decades prior.

It cannot be denied that war and taxation are inextricably linked. Unfortunately, history, Bastiat, and Foucault seem to show that the only true way to eliminate excessive taxation and government overreach is to halt its hunger for conquest. The task is immense, but if taxation’s origins and the State’s methods of justification can be recognized, the task can commence.

Be seeing you

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The Income Tax is Destroying the World Economy | Armstrong Economics

Posted by M. C. on May 18, 2019

https://www.armstrongeconomics.com/world-news/taxes/how-the-income-is-destroying-the-world-economy/

by Martin Armstrong

The first income tax was created in 1861 during the Civil War as a mechanism to finance the war effort. In addition, Congress passed the Internal Revenue Act in 1862, which created the Bureau of Internal Revenue, an eventual predecessor to the IRS. The Bureau of Internal Revenue placed excise taxes on everything from tobacco to jewelry. However, the income tax did not last and was not renewed in 1872. In the Springer v. United States 102 US 586 (1881), the Supreme Court upheld the income tax.

Justice Swayne wrote the opinion of the court. The central and controlling question in the case was whether the tax which was levied on the income, gains, and profits was Constitutional since it forbid any direct taxation. The court played games with the words to uphold the government. It wrote: “Our conclusions are that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty.” A Capitation tax is an assessment levied by the government upon a person at a fixed rate regardless of the property, business, or other circumstances. The reasoning used was clearly overruled later which necessitated amending the Constitution in 1913.

Moreover, the Revenue Act of 1862 created a federal estate and gift tax system. Following the end of the Civil War, those taxes were rolled back but the War Revenue Act of 1898 created another death tax to raise revenue for the Spanish-American War.

An 1894 statute was ruled unconstitutional in the case of Pollock v. Farmers’ Loan and Trust Company 157 U.S. 429 (1895) delivered by Chief Justice Fuller. He wrote for the court: ” Whether the void provisions as to rents and income from real estate invalidated the whole act? 2, whether, as to the income from personal property as such, the act is unconstitutional as laying direct taxes? 3, Whether any part of the tax, if not considered as a direct tax, is invalid for want of uniformity on either of the grounds suggested? — the justices who heard the argument are equally divided, and, therefore no opinion is expressed.”

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Income Theft

Posted by M. C. on April 15, 2019

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Guess who ends up paying those taxes meant only for the rich… | The Daily Bell

Posted by M. C. on April 15, 2019

https://www.thedailybell.com/all-articles/news-analysis/guess-who-ends-up-paying-those-taxes-meant-only-for-the-rich/

By Joe Jarvis

Imagine starting a small business in the USA in 1875.

Imagine working for yourself, or building a company from scratch. With no corporate taxes, and no income taxes, you kept the full rewards of your risk and labor.

It’s not surprising that in about 100 years the United States went from non-existent, to having the largest economy in the world.

Unparalleled economic freedom helped create the industrial revolution which spurred legendary economic growth from 1870 through the turn of the century.

For most of the 19th century, the main source of tax revenue for the federal government was tariffs—taxes on imported goods.

But in 1913, everything changed.

Around the world, communist and socialist philosophies were spreading. Marx was a hero. The Bolsheviks would come to power in Russia in just a few years. And America was caught up in the same craze.

There were all these rich people in America now, and the politicians wanted them to pay their fair share

In 1913, the 16th Amendment was added to Constitution, which allowed Congress to replace tariffs with an income tax as the main source of US federal revenue.

The first income tax code was just four pages long. And the top tax rate was 7% on income over $500,000—worth around $12 million today.

Plus, in today’s money, anyone earning under $76,000 per—most people—paid no income taxes at all. That’s how nice the tax code was…

But it didn’t take long for things to change. Tax rates went up, the exemption fell, and debts from the Great War mounted.

By 1918 the top earners handed over 77% of their income.

The top tax rate made it all the way to 94% by 1944 to pay for World War Two.

(Two years earlier, President Roosevelt proposed a 100% tax rate to fund the war, arguing “no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year.” – about $300k in today’s dollars.)

At the same time, the exemption fell to $500 (from $3,000) and the lowest tax rate spiked to 23% (a 23x increase) – meaning you coughed up 23% of your income over $7,000 in today’s dollars.

In just a few decades, the income tax went from barely skimming from the richest of the rich, to confiscating a quarter of the poorest people’s income…

They start off only targeting the rich. But inevitably, rates go up, and everyone pays.

The Alternative Minimum Tax is another great example. The AMT originally targeted 155 people who were making over what today would be $1.1 million per year, but weren’t paying any federal income taxes because of loopholes and deductions.

But the tax was never adjusted for inflation.

But by 2017, five million taxpayers were paying extra taxes because of the AMT, and more than half of them made less than $200,000 per year.

Same story with self-employment taxes…

Today, people who are self-employed pay double the payroll taxes as typical workers. The government forces them to cover both the employee and employer contributions to Social Security and Medicare…

Do you think if the people from 1913 could see America now, would they still vote for the income tax?

Probably not if they saw which people ended up with the burden…

Be seeing you

tax crime

 

 

 

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The Real History of the American Income Tax | AIER

Posted by M. C. on February 19, 2019

https://www.aier.org/article/real-history-american-income-tax

By Phillip W. Magness

The 70 percent income tax scheme of Rep. Alexandria Ocasio-Cortez and the closely related wealth tax proposal of Sen. Elizabeth Warren would take federal taxation into historically unprecedented territory. You would not know that though from listening to the academic supporters of this newly fashionable cause of progressive taxation.

To advocates of these policies such as economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, they simply seek to restore an allegedly lost progressive legacy of high income taxation from the early and middle twentieth century.

Piketty made this argument in the Boston Globe earlier this week, suggesting that the Ocasio-Cortez and Warren proposals simply correct a “historical amnesia” in place since 1980 when a succession of Republican presidents allegedly “turned their backs” on the true origins of income taxation.

Part of Piketty’s narrative rests on misleading statistics. He points to the high statutory tax rates of the mid-20th century, averaging 81 percent on the top income bracket between 1930 and 1980. Yet as we’ve discussed before, nobody actually paid those rates or anywhere close to them. The effective tax rate — that is, the portion of total income earnings that individuals actually pay to the government — was much lower in this same period. Using the early 1960s as a benchmark, it hovered just over 40 percent for $1 million earners despite an average statutory rate, absent deductions, of nearly twice that and a top marginal rate in excess of 90 percent.

But Piketty’s history is faulty on another count. According to his telling, income taxation itself was the original answer to spiraling inequality in the late 19th century:

Between 1880 and 1910, while the concentration of industrial and financial wealth was gaining momentum in the United States and the country was threatening to become almost as unequal as old Europe, a powerful political movement in favor of an improved distribution in wealth was developing. This led to the creation of a federal tax on income in 1913 and on inheritances in 1916.

Even Piketty’s basic historical narrative, however, does not hold up to scrutiny.

The Forgotten Origins of the Federal Income Tax Read the rest of this entry »

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Elizabeth Warren releases 10 years of tax returns

Posted by M. C. on January 6, 2019

10 years of income tax returns! They have to be nuts! What if Killary runs and audit her returns and the Clinton Foundation. The IRS would have to learn Arabic and Hebrew to read her receipts.

Liz is probably safe. They don’t make much on the reservation.

I wonder how much time she spends auditing, or caring about, the Bureau of Indian Affairs.

https://www.washingtonexaminer.com/news/elizabeth-warren-releases-10-years-of-tax-returns

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Guess What These Four Fastest Growing States Have in Common… | The Daily Bell

Posted by M. C. on December 30, 2018

https://www.thedailybell.com/all-articles/news-analysis/guess-what-these-four-fastest-growing-states-have-in-common/

By Joe Jarvis

Keep the federal government shut down and let the states set policy.

“Non-essential” government workers… well then what the hell are they doing there?

Every penny of federal spending should be only the most absolutely crucial, necessary cent to keep the country’s most basic functions going…

I know, I know, I feel stupid just saying it. It would truly be better if everything was left up to markets–the people. I long for the day when no sector of the economy is violently monopolized, and funded via protection racket–security and courts included.

The whole thing is a farce, the system built to serve the elite. It’s disgusting that our tax dollars pay for a single politicians’, bureaucrats’, lobbyists’, or corporate cronies’ hors-d’oeuvres, let alone their salaries, kickbacks, bailouts…

At least at the state level, we can get out easily when the government gets too ridiculous. And that’s what people are doing. Read the rest of this entry »

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5 Ways a Wealth Tax Is At Least as Bad as an Income Tax | Mises Wire

Posted by M. C. on December 2, 2018

https://mises.org/wire/5-ways-wealth-tax-least-bad-income-tax

There has been an increasing push for wealth taxes as of late. Supporters for new and larger wealth taxes contend that as the population ages, there won’t be enough wage earners to fund the public purse. In other words, there will be less wage-based income to tax as time goes on. But there will still be plenty of pensioners to pay for. As The Guardian noted back in March, new revenue sources will be needed “as the number of people over 65 grows by almost a third, while the working age population is expected to only increase by about 2%.”

Thus, The Guardian concludes: “the time has come to make the case for greater wealth taxes, given our emerging economic realities, demographic shifts and growing levels of inequality.”

But taking a further look into the issue, and applying some common sense logic, it becomes clear a wealth tax brings with it a host of problems.  Many of these problems are reminiscent of the problems we already encounter with a wealth tax. But some are new:

One: The Audits

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The state of New Jersey just signed its own death warrant | The Daily Bell

Posted by M. C. on July 7, 2018

https://www.thedailybell.com/all-articles/news-analysis/the-state-of-new-jersey-just-signed-its-own-death-warrant/

By Simon Black

Via Sovereignman.com

You would think New Jersey would have learned its lesson…

Two years ago, New Jersey’s richest resident – hedge fund billionaire David Tepper – decided to move himself and his business to Miami Beach.

Tepper, who personally earned more than $6 billion from 2012-2015, was tired of paying New Jersey’s top income-tax rate of 8.97% for the 20 years he lived there, in addition to the country’s highest property taxes, the estate tax and inheritance tax.

By moving to Florida, a state with ZERO income tax, Tepper stood to save hundreds of millions of dollars each year. And, as an added bonus, he’d be living in the Sunshine State.

Anyone with some common sense would have at least acknowledged the possibility that a guy like Tepper would consider moving to save a few hundred million bucks. Read the rest of this entry »

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Taxation Is Theft

Posted by M. C. on April 19, 2017

https://www.lewrockwell.com/2017/04/tyler-durden/taxation-is-theft-2/

But it gets worse, as Andrew Napolitano writes via The Mises Institute; with a tax code that exceeds 72,000 pages in length and consumes more than six billion person hours per year to determine taxpayers’ taxable income, with an IRS that has become a feared law unto itself, and with a government that continues to extract more wealth from every taxpaying American every year, is it any wonder that April 15th is a day of dread in America?

Here’s an example you’ve heard before. You’re sitting at home at night, and there’s a knock at the door. You open the door, and a guy with a gun pointed at you says: “Give me your money. I want to give it away to the less fortunate.” You think he’s dangerous and crazy, so you call the police. Then you find out he is the police, there to collect your taxes.

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