The Liberty Tax: Defanging the Serpent

Any tax upon the People’s livelihoods is tyranny…

In our Constitutional Republic, there are important and specific functions that the federal government is empowered to do. There is no conceivable way for these things to be accomplished without funding, which is why Congress was empowered to collect taxes so as to create the funds necessary to pay for the functions of government. No conservative, in good conscience, could coherently argue against these established facts.

Reality, as we see what has become of the Constitution in the early and mid 20th Century, reveals the sad erosion of Constitutional restraints on the Congressional power to seize the property and livelihood of the People. The leftist argument was and remains that these changes, in particular the taxation of personal incomes and livelihood, are necessary because of the necessity of “fairness“. As have been dealt with in previous articles, this fairness doctrine is not only impossible to define, it fails to even be fair.

Even if a quantitatively equal distribution of goods and services is achieved, there is no guarantee that the distribution of goods is a qualitatively equitable distribution of goods, as many will not care for what they receive, and others will have no use for what they receive. This is why it was never the intention of the Constitution for the federal government to impart fairness, only justice. It was left to the States and the People to fill in the blanks of social equity.

The most compelling argument for this is that from 1786 until 1836, or until the last of the Founding Fathers, James Madison, succumbed to death, there was not a single penny collected in personal income tax. Not one. No direct or Capitation tax of any kind was ever passed upon the People of the United States. There can be no clearer precedent that the Constitution granted no power to the federal government to violate the rights of the People to be secure in their possessions and livelihood. The “doctrine of fairness” would be so alien and so offensive to the Founding Fathers, that James Madison clearly and forcefully spoke out against such pretenses to justify any act or power of the federal government to pay for “objects of benevolence” using “the money of their constituents”.

How far have we come in this regard that even those who consider themselves conservatives (and even I have been guilty of this when younger) should have heated and impassioned discussions on the justification of tax rates between 20% and 30% on the personal incomes of citizens of these United States of America, when our Founding Fathers went to war against the Crown of England largely because of what amounted to a three penny tax on a barrel of tea (www.ushistory.org). The precedent of the Founding Fathers is clear. The correct and proper tax rate that should be imposed on the American citizen should be 0%, so the only question for conservatives is how do we get back in line with the intent of the Framers?

“…the money of their constituents”

There are two sides to the problem. The progressive policies of the New Deal and the Great Society have imposed unconstitutional obligations upon the federal government that those who have been forced to pay into those programs have a rightful expectation to receive. Conservatives must do what is right and just for the People and honor these obligations, but conservatives also have an obligation to uphold the Constitution and the protection afforded by it to future Americans, so we cannot continue doing what is clearly unjust and in violation of clear precedent of the Framers.

The ideology of socialism and the concepts of communal ownership and economic theory were common and well known in the 18th Century. Socialism had been tried, both in the old and the new world, with absolutely dismal results. While the philosophical intentions of the ideology were unarguably well intentioned, there was no point in attempting to allow failed economic principles to infect the Constitution. This is why the Framers excluded a known failed ideology from the Constitution, and instead embraced the proven principles of capitalist market driven economics.

When James Madison emphatically blasted proposed federal spending on “objects of benevolence”, he was well acquainted with the precepts of socialism. Over two hundred years later, if James Madison could see what those who consider them conservatives condone as federal obligations, would he even spare a single word of disappointment before returning to the silence of the grave?

“The essence of Government is power; and power, lodged as it
must be in human hands, will ever be liable to abuse.”
-James Madison-

So how do we pay for the legitimate needs of government and settle the obligations of those who have come to depend on the financial support of Social Security and Medicare if we don’t tax incomes? It’s a reasonable question, and it’s one that, again, we can balance the precedence of tax policies as it existed when James Madison still vehemently stood against the ceaseless attempts of well meaning but misguided leftists of his era to impose abusive and tyrannical “abuses” of federal power upon the People and balanced with the realities of our technological culture.

A policy that is consistent with the policy as demonstrated by James Madison and the other Framers must be only on those economic activities that are tied to the operation of business, corporate, public and private sector. As our tax code stands now, 46% of the burden of government is imposed on the People (www.cbpp.org), compared to 0% for almost the entire first Century of our country’s existence. Shifting away from such a crude tax burden on the People must be counterbalanced with incomes from capital and financial instruments that are consistent with transactional and automatic excise taxes, so that the natural profit motivations of the market will result in a constant flow of tax revenue into government coffers. Finally, it must not prey upon charitable or otherwise nonprofit income of organizations that seek to serve the public interest. Ultimately, however, taxes are intended solely for funding the government, consistent with the Constitutional intent, and not necessarily on imposing artificial constructs of “economic justice”.

So what would be the Liberty solution to taxation? It would look a lot like this…

  1. Abolish all taxes on W-2 income, regardless of wherever derived. Any tax upon the People’s livelihoods is tyranny, but if congress shall no longer impose taxes on wages, salaries, tips, or any gratuity, this will open a large hole on the federal revenue structure that will have to be closed through excise taxes on business operations and expenses (see below). From a practical standpoint, it is impossible to consistently enforce a tax code on literally over one hundred million people, so this will more efficiently direct federal enforcement on a smaller population of businesses.
  2. Abolish all taxes on inheritances or properties or estates. If it is unjust for Congress to seize the incomes and livelihoods of the People when they are living, it is no less unjust to seize the incomes and livelihoods of the People when they are dead.
  3. Tax only net profits (revenue less all expenses) of business operations, consistent with the Generally Accepted Accounting Principles. When people no longer have to give their earnings to the government, that money will reappear on the balance sheets of businesses across the United States. Once a tax code is brought in line with accounting principles that companies depend upon to make sound financial decisions, the reporting of incomes to stakeholders of the business will match that which is reported to the tax collectors, which would eliminate legal tax avoidance accounting practices.
  4. Tax the purchase or the sale (not both) of real estate for business use, capital manufacturing equipment, financial instruments (including when they are issued as compensation), and goods that could be considered luxury or investment goods (such as jewelry, artwork, planes, automobiles, vans, trucks and boats). These excise and sales taxes replace the revenues lost from the abolished direct taxes on the People. When tax codes are made congruent with the motivations of businesses, revenues will come naturally and justly from business operations. Many of these transactions have formerly been excluded as “expenses” in accounting of business operations. These excise taxes is insured to be a new tax revenue stream.
  5. In order to cover prior New Deal and Great Society obligations (that must be phased out), congress shall impose a payroll tax on employers sufficient to fund those obligations until an equitable private sector solution can be initiated. This is an imperfect solution to an imperfect betrayal of the intent and precedent that the Framers clearly set for the purpose and role of the federal government. It is the responsibility of all in government to unburden the People of federal expense, so that they have the means to save for their own future. We, as conservatives, must push to reeducate the principles of frugality and saving for the people. The fundamental principle of personal responsibility must once again become the cornerstone of Americanism.

Coupled with the Currency Wage Policy, this is how we reestablish the culture of Liberty to these United States of America.

Liberty is For The Win!


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Constitution Day: Lost and Found

Unrestrained government ultimately benefits only those with political power

So Constitution Day came and went last week, but how many Americans were even aware of it? There was no fanfare, no grand speeches, no parades. It was a quiet day, more or less ignored by Americans, but it was this day, more so than even Independence Day, that really marks the birth of our nation. Where the Declaration of Independence described the why for the nation, the Constitution and the Bill of Rights established the how. It is the framework of government of our society, enshrining the values of the Revolutionary War, and ultimately what defined the United States.

When the the framers of the Constitution of the United States set out to establish a new government after the Confederation had failed, they intended to establish a government that would lead to a stable Republic. To those ends, they focused on three critical things:

  1. establish the structure and limits of the federal government, because society without government is chaos, and government without limits is tyranny.
  2.  define the three parties to the United States: the federal government, the States, and the People, because a government does not exist without the People, and the States are the natural homes and allegiances of the people.
  3.  and acknowledge and protect the inherent rights of the People and of the States, because the rights of the States and the People naturally exist, and the abridging of those rights is tyranny.

These three philosophical pillars of the American federalist experiment are absolutely necessary to the Constitution. Remove any one, and the Constitution falls apart. Unfortunately, a sound case can be made that these pillars no longer stand. Americans of all stripes should be concerned, because unrestrained government ultimately benefits only those with political power.

Chipping Away at the Edges

For many Americans, the erosion of the Constitution remains invisible. Like a tree rotting on the inside, the leaves remain green, and the limbs appear strong. There are just a few bare branches at the top of the tree. It’s those limbs that are fed by the core, and that’s not a sign of a healthy tree. When looking at our government, there are plenty of dead branches.

The primary function of the Constitution is to define the form and limits of the government. The Republic can’t survive without these limits. And in the opinion of many in government, these limitations on government no longer exist. For example, when pressed on the roles and powers of government, Former US Representative Pete Stark (Democrat), California 13th District, famously replied, “The Federal Government can do most anything in this country.” Does that sound like a limited government?

From 2009 to 2013, under the leadership of then Senate Leader Harry Reid, the United States Senate failed to pass even a single federal budget (thehill.com), despite it being the primary function and duty of the Congress. No other branch has the power to pass a budget. This failure led to a series of budgetary crises and makes clear the Democratic leadership of the Senate did not take seriously the duty of Congress to control the costs of government.

In November 2014, when President Obama signed an executive order that countermanded immigration law, in clear violation of the Constitution (www.politifact.com), there can be no illusion at all that President Obama believes in a Constitutionally limited Executive branch. Together with the disregard of Constitutional limits and duties within the House and the Senate, those within our federal government obviously have little, if any, regard for the Constitution.

As to the States and the People, the 17th Amendment passed in 1913 at the height of the progressive movement in the United States eliminated the representation of States in Congress by changing how Senators were selected. From being chosen by the State Legislatures, Senators became elected by a direct popular election. While this seemed to have increased the influence of democracy, the Senate was supposed to provide the States themselves a direct hand in the legislative process, particularly when it came to foreign negotiations and dealing with out of control presidents who were impeached.

Without representation in Congress, the States are forced to seek redress of encroachment of their powers and liberties in the Supreme Court, a branch of government which is appointed by members of the executive branch. The Senate now favors the power of political parties and the lobbies that fund them, instead of representing the political necessities of the States. Further, one of the most important, if rarely utilized, functions of the US Congress is the creation and proposing of Amendments to the Constitution. Without a voice in the Congress, where is the power of the States to protect their 9th and 10th Amendment rights?

Finally, the inherent Natural Rights, of the People have been seriously eroded. In the Constitution, as it was originally crafted, one of the core protections of the rights of property of the individual in the United States. This was done through Article I, Section 9, Clause 4, which protected American citizens from taxation without the Congress performing an apportionment of costs to all individuals, as we were, at that time, a nation of equals. This required Congress to (1) know the overall cost of a given budget and (2) keep the budget consistent with the ability of the American People to pay. Congress could not, under the original wording, pass discriminatory direct and often punitive taxes on a certain groups, which was a lesson from the Revolutionary War.

The 4th and 9th Amendments in the Bill of Rights were specifically to ensure that the people would be “secure in their persons, houses, papers, and effects, against unreasonable searches and seizures“. For example, the federal government could not seize a person’s income, property, or wealth because “it was unfair of them to have more than someone else“. Even expenses on moral goods, such as welfare spending, were clearly understood to be beyond the Constitution. James Madison, the Father of the Constitution, famously said “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.

It was this understanding of the Constitution, by the very men who crafted it that determined the political and economic policy of the United States. From 1788 to 1861, there were no taxes imposed on the personal incomes of individuals of any kind. Even the income tax passed in 1861, passed in the midst of the Civil War to cover budget short falls due to military expenses, was short lived, facing fierce resistance, and was repealed in 1862 when another tax was passed with a specific expiration date of 1866.

For 101 of the 106 years between 1788 and 1894, there were no income taxes of any kind imposed on the people. In 1894, the progressives in control of Congress and the office of President (Grover Cleveland) passed the Wilson-Gorman Tariff, which imposed the first peace time income tax on private citizens of 2% on only the very rich. This was quickly challenged and overturned as unconstitutional by the Supreme Court in 1895. And that’s began the fight from the progressive leftists to change the Constitution in dire ways.

Power Corrupts

First, the 16th Amendment removed the limit on the power of Congress to lay taxes upon the people. The private incomes of the people, for the first time in America’s history, was treated like business incomes, and the taxes could be imposed without any regard to how much was actually needed nor how many people were being taken from. And, most importantly, constituents could potentially impose taxes and duties on other constituents against their consent, instead of the imposition of taxation on all people in proportion to the need of government and the number of individuals.

Second, the 17th Amendment, of course, eliminated the influence of States in Congress, and thus disenfranchised one of the major constituents of the Constitution from representation and thus political control of the federal government. Curiously enough, this resulted in the States being placed in the very same position that they had been in the 18th Century, and the very reason for which the Revolutionary War was fought.

Freed from these restraints, the federal government has grown from less than 5% of GDP in the beginning of the 20th Century to around 20% of GDP today (www.usgovernmentspending.com). The accumulated federal debt was less than 20% of the GDP at the turn of the 20th Century, and is over 100% of GDP today (www.usgovernmentspending.com). Looking at the chart of federal debt, we see debt immediately balloon after the 16th and 17th Amendments, continuing to grow unabated for the next century. This is a direct result of Congress no longer having to carefully weigh the expense of government against the ability of the American people to pay.

How does our nation find itself back to Constitutional sanity? That is the subject for another essay.

Liberty is For The Win!


We just checked, and it turns out that fighting for Liberty isn’t free, because it requires time and energy to research, prepare, and propagate this message for you. Please drop just a dollar a month into the proverbial tip jar and become a Patriot Patron. Of course, don’t forget to like, subscribe, and share. Keep this fight for Liberty going! – @LibertyIsFTW