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U.S. Constitution Title: TAXING AWAY OUR RIGHTS TAXING AWAY OUR RIGHTS Wednesday, February 22, 2006 (And restoring them by restoring a Bill of Rights culture) By Aaron Zelman and Claire Wolfe 60;The power to tax involves the power to destroy.61; -- Chief Justice John Marshall, 1819 60;Without taxes government can do nothing.61;(1 Statement of Chinese Communist officials If you're a typical American, you pay more in taxes than you pay for your mortgage, car payment, and groceries combined. It wasn't always this way. Through most of this nation's history, government required only a tiny portion of American productivity. Now, we're asked to behave as if feeding bureaucrats is more important than feeding our own families or keeping a roof over our heads. Is it sensible to put government's priorities so high above our own? Is it logical to pay more for government than for the fundamental daily needs of life? On the contrary; it's both foolish and tyrannical. Something is very, very wrong here. It's time to understand it -- and to do something about it. Taxation is destroying many wonderful aspects of life in America. It's destroying our ability to save for our retirement, pay our children's medical bills, and get ourselves through hard times. It's also helping to destroy the First, Fourth, Fifth, and 10th Amendments to the Bill of Rights. Surprisingly, even the Second Amendment and our right to protect ourselves takes a hit from taxation. In this second article in our series on the Bill of Rights Culture, we're going to examine some of the ways the federal and state governments57; unbridled power to tax is stealing our economic well-being, shattering our families, and destroying our fundamental liberties. We'll also look at a few ways that restoring a Bill of Rights culture could shake the tax burden from our backs and make us more free and more prosperous. As you read this, keep one thing in mind: Wealth follows freedom. Unfortunately, the corollary is also true: Excess taxation saps both wealth and freedom. And that's true regardless of how many glowing claims politicians make about how your money is being spent. When "good" isn't good for us We're constantly told that the acts government performs with our taxes are for everyone's good. But this is obviously untrue. Taxation is the act of taking money by force from some people and giving it to other individuals or institutions for their own purposes. The first of those others are bureaucrats, who generally perform no useful work. After they've taken their cut, the money might go to large corporations, special interest groups, and money-wasting pork-barrel projects. Only a minority of the money ever goes to perform the functions we think of as the basics of government. Here are some examples of how your money is actually being (mis)used: $69 billion dollars currently goes each year to support a federal 60;education61; bureaucracy that doesn't educate a single person but does interfere with the running of local schools. (http://www.ed.gov/about/overview/budget/history/edhistory.pdf) The Medicare program sometimes pays eight times too much for medicines (http://www.heritage.org/Research/Budget/bg1840.cfm). (2) In 2005 alone, your representatives committed $27.3 billion dollars to nearly 14,000 pork-barrel projects. In many cases, these allocations were added secretly to conference committee reports at the last minute, without anyone (except the midnight manipulators) knowing who did it. (http://www.cagw.org/site/PageServer?pagename=reports_pigbook2005). The Monitor reports: "Federal spending on out-of-town conferences (some of which might better be described as 'junkets') has increased by nearly 70 percent over the past five years, according to Oklahoma Sen. Tom Coburn. ... A survey by the senator's staff found that federal agencies spent more than $1.4 billion since 2000 sending employees to such conferences -- many at top-notch hotels in exotic locales." (http://www.themonitor.com/SiteProcessor.cfm?Template=/GlobalTemplates/Details.cfm&StoryID=11521&Section=Opinion) At a time when it's cutting back on vehicles and body armor for its agents, the Bureau of Alcohol, Tobacco, Firearms, and Tobacco (BATFE) is at least $19 million dollars over-budget on a lavish new headquarters building. This is according to the Washington Post in a February 6, 2006 report. Before a whistleblower and the Justice Department stopped him, BATFE Director Carl Truscott also planned to spend $65,000 on a conference table and more than $100,000 on a fancy new floor and trim for his luxury office. Truscott also enjoys a full-time personal security staff that costs us taxpayers more than $1 million per year -- something no other director of the BATFE has ever needed. (http://www.contracostatimes.com/mld/cctimes/news/nation/13803114.htm or http://www.washingtonpost.com/wp-dyn/content/article/2006/02/05/AR2006020501073.html) An audit found that the Pentagon paid for 270,000 commercial airline tickets that were never used. Total cost: $100 million. These tickets were refundable, but nobody bothered to apply to get the money back. (Why should they? It wasn't their money, after all.) In 27,000 cases, the Pentagon actually paid twice for the same ticket, wasting another $8 million. Capitalism magazine points out: 60;This wasted $108 million could have purchased seven Blackhawk helicopters, 17 M-1 Abrams tanks, or a large supply of additional body armor for U.S. troops in Afghanistan and Iraq.61; But that's chump change. The U.S. Treasury Department can't account for how $25 billion of your money was spent. Overall, the federal government alone -- not counting state and local spending -- currently devours more than $22,000 per household per year. (Previous three items all from: http://www.capmag.com/article.asp?ID=4250) With all this loot being handed out so freely, the number of new lobbying firms registering for the first time to pressure Congress on budget and appropriations issues tripled between 1998 and 2005, from 388 to 1,293. (http://www.boston.com/news/nation/washington/articles/2006/01/29/congressional_pet_projects_boom____in_secret/) Even if the ultimate action is 60;good61; (as defined by someone other than the person who originally earned the money), much is wasted and abused. And increasingly, more and more tax dollars go toward lavish lifestyles and privileges for the bureaucratic elite -- exactly as in the old, corrupt Soviet Union, where the Communist Party nomenklatura enjoyed limousines, country houses, bodyguards, vacations, and fine foods the masses couldn't afford -- but were compelled to pay for. As we stand today, we, the people whose labor produces the funds, have little or no say in how it is spent. This is why, if it's necessary to have taxes at all, it's best to keep them local, where any benefit of their spending, and control over that spending, is more likely to go to the communities and individuals where the money originated. But all too often, as we know by now, even 60;good61; actions by government have bad consequences. Even if the stated purpose of tax spending is noble (60;national security,61; 60;racial equality,61; or 60;no child left behind61;), the result of the spending is often malign. Government grows endlessly and demands more and more of our earnings. Special interests build tax-funded fiefdoms. And quite often the result is the opposite of the stated purpose. For example: Depression-era welfare programs to aid widows with children have ballooned into a permanent welfare state. Despite all the recent "welfare reforms," millions continue to grow up in lifetime dependency, sapped of all sense of personal responsibility. With government providing guaranteed income, housing, health care, and food to mothers, fathers have become redundant; so children grow up in fatherless homes while record numbers of unmotivated young men end up in jail. The so-called 60;No Child Left Behind61; program was sold in the name of improving education. No one mentioned until much later that it also automatically put every government-schooled child on military recruiting lists. The federal income tax was passed on the promise that only the rich would ever be taxed. Next time you look at your pay stub, tell us how rich you feel. In 1965, the Medicaid program was created supposedly to bring poor people into the medical mainstream. Within three years it was being investigated for vast fraud and cost overruns. Today, this joint federal-state program takes up as much as 25 percent of some state budgets. It has grown a staggering 54 percent in the last five years alone. Several states are on the verge of bankruptcy from trying to administer a program that is clearly out of control. Yet is all this money buying better services? On the contrary; it's buying red tape. Patients are unhappy with the bureaucracy they must endure. The bureaucratic hassles and low pay are driving doctors out of the program in droves. And again, this is your hard-earned money being blown. (http://www.washtimes.com/commentary/20060128-091431-1449r.htm) But no matter how bad things get, the taxes and the dangerous programs can't be gotten rid of because bureaucrats and special interests fight tooth-and-nail to keep their pork. (And because government operates on inertia; once a tax-spending program exists for a year or two, even those legislators who most bitterly opposed it tend to consider it sacred and repeatedly vote for increases in its scope and power.) But the misuse of your money is only part of the picture. The trouble starts even earlier 51; when your money is confiscated. Taxation = violation Let us look now at how the very act of federal taxation 51; in particular the income tax 51; is destroying the Bill of Rights. Even before you consider the dangerous ways in which 60;government money61; (actually your money) is spent, the very act of taking that money destroys our freedoms. The Bill of Rights (the first 10 amendments to the U.S. Constitution) was intended to serve as a 60;no trespassing61; sign for government. But what happens when the income tax enters our lives? The Bill of Rights is trampled underfoot. FIRST AMENDMENT. The Internal Revenue Service doesn't like it when taxpayers talk back. So if you write a note in the margin of your 1040 form that says, 60;Paid under protest61; or 60;Down with the income tax61; you can expect to be fined $500 51; simply for speaking your mind. To punish you for making a political statement clearly violates your freedom of speech. And yet the people you vote to represent you won't do anything to stop the abuse. SECOND AMENDMENT. Few people consider that taxes also damage the right to bear arms. But it's true. Every firearm manufactured in the U.S. is subject to a 10 percent federal excise tax. A rich man can buy a million-dollar diamond without paying any such tax; but a working may who wants to protect his children pays the hidden fee -- if he can afford to buy the firearm at all. If you want to own a sound suppressor (considered essential hearing protection in some parts of the world), you must pay a $200 tax. The same is true if you want to own fully automatic military-style firearms or a short-barreled shotgun.(3) Furthermore, anybody who wants to develop or build these firearms must also pay yet another tax, a special occupational tax, to the federal government. This severely discourages innovation in firearm design. Today, because of taxes and abusive regulation imposed on the U.S. firearms industry, nearly all new technical innovations in small arms come not from U.S. designers, but from Europe. FOURTH AMENDMENT. The Fourth Amendment says, in part, 60;The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated ...61; But what is it when you're forced (without warrant or subpoena) to expose all your financial dealings, to produce your private papers at audits, and to have your bank account and other possessions seized without due process? And once again the people you vote to represent you do little to stop the abuse. FIFTH AMENDMENT. The income tax violates at least two portions of the Fifth Amendment. One is this: 60;nor shall any person ... be deprived of life, liberty, or property, without due process of law.61; Yet what is it when the IRS unilaterally fines you $500 simply for writing an opinion on your tax form? The IRS acts as judge and jury. (Some would point out that when you're forced to pay income taxes under implied threat of imprisonment and financial ruin, you're also being deprived of property without due process. The Supreme Court disagrees with this interpretation, but we think the justices are being unjust. They are far more concerned with their rich pensions and their status as Washington insiders to care what happens to you or your rights.) Another part of the Fifth Amendment says: 60;nor shall any person ... be compelled in any criminal case to be a witness against himself.61; Yet the IRS requires you to report all your private financial doings 51; even those that might be against the law. If you're a murderer, you can't be forced to self-incriminate. But if you're a peaceable taxpayer who makes a mistake or simply tries to keep what you've earned, the IRS can force you to be a witness against yourself. And the people you vote to represent you won't do anything to stop the abuse. TENTH AMENDMENT. Here's the entire text of the Tenth Amendment: 60;The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.61; In other words, you have rights, but the federal government has only those limited powers that are specifically delegated to it in the Constitution. Yet in every way, this simple principle has been turned on its head. Our relationship to tax-collection bureaucracies and the entire federal government presumes that they hold the upper hand. They can snoop into our doings. They can seize our money. They can use our money for whatever purposes they want 51; including thousands of purposes not specified in the Constitution. And they can ruin our lives if we fail to cooperate. And the people you vote to represent you won't do anything to stop the abuse. And that's still not all! Even if you don't care about constitutional principles or if you consider them a lost cause, you can surely feel the outrage of having more than 40 percent of your income taken from you and used to support bureaucrats, special interest groups, and pork-barrel projects. (http://www.lewrockwell.com/dilorenzo/dilorenzo68.html) That 40+ percent figure approximates everything you pay in direct state and local taxes, including Social Security. Even if you use more conservative figures that don't include all the potential taxes you pay, your total tax burden is so high that you work the first 3-1/2+ months out of every year just to cover your taxes! (http://www.taxfoundation.org/taxfreedomday/) Think about that. For 3-1/2 months every year, you're putting fuel in your car for a commute, buying work clothes, paying for day care services, purchasing cafeteria lunches, forking over parking fees, and drudging for eight hours a day -- solely to keep government in its accustomed lifestyle. But that's still not all. These figures don't take into account the way all the goods and services you buy become more expensive because of the taxes their producers pay or the cost of the regulations that govern them. For instance, if you go to a doctor and the doctor has to pay 40 percent of her income in various taxes, then you pay 40 percent more for her services than you would otherwise. If you buy a product, you also indirectly pay all the taxes that the manufacturer, the raw-material supplier, the transporter, and the retail store have had to pay to produce that product and get it to you. After all, what does it cost to maintain even a single bureaucrat? To pay his salary? His pension? His vacations? His sick days? His health, life, and disability benefits? His travel perks? How much does his office in that big government building cost? How much does it all cost you? Now multiply that by millions of government employees. Add in the amount that private businesses have to pay simply to cope with the millions of pages of federal regulations. Add in the cost of all the equipment, enforcement personnel, lobbying, congressional perks, and pork-barrel projects that make up what we know of as government today. Here's a little something to think about. According to The Tax Foundation: The full cost of a tax system is more than the amount of tax paid. It also includes the cost of tax planning and paperwork. Economists call these "tax compliance" costs, and the IRS estimates Americans spend 6.6 billion hours per year filling out tax forms52;including 1.6 billion hours on the 1040 form alone. In 2002 Americans spent roughly $194 billion dollars on tax compliance. That amounts to 20 cents of compliance cost for every dollar collected by the tax system. (http://www.taxfoundation.org/research/topic/96.html) The bottom line is that when your money is taken from you to meet somebody else's goals, your goal of supporting your family, working reasonable hours, having nice possessions, enjoying financial security, and pursuing your own financial and lifestyle interests recedes further and further with each passing year. That's sadly true even if the goals are noble. But it's even more tragic when your family's well-being is sacrificed merely for bureaucracy, power 51; and more bureaucracy and more power every year. Then, to add insult to injury, these bureaucrats 51; theoretically your servants 51; treat you arrogantly and act as though they have all the rights and you merely have the 60;right61; to obey. That's the way it works. Bureaucracy breeds bureaucracy. Power breeds more power. Gratify one special interest and ten more line up with their hands out 51; grasping for your money. Some people argue that the income tax (to choose the most visible and painful of the many forms of taxation) is illegal because it wasn't properly ratified or because it violates other portions of the Constitution. We won't address that question. But we should all ask ourselves this: Is all this taxation, especially federal taxation, logical? Is it practical? Does it make the slightest bit of sense to have taxes so high and so unjust that they destroy Americans' freedoms, distort the entire national economy, destroy family budgets, and force us all to support bureaucrats and government contractors in better style than we can support ourselves? In a Bill of Rights culture, it would all be different. Wealth follows freedom In a Bill of Rights culture, the income tax and the Internal Revenue Service would be gone 51; vanished. So would many other taxes and tax-fed bureaucracies. Not replaced by something equally bureaucratic like a value-added tax, a national sales tax, or a so-called flat tax. Not 60;reformed.61; 60;Reform61; is a merely a political game in which Congress makes itself look good while actually making government bigger and laws more confusing. Gone. There would be no need to replace the federal income tax and its enforcers because the Ninth and Tenth Amendments, as well as the body of the Constitution would limit the federal government to a very few, very specific, necessary functions. Think about how it would feel to have 25 or 40 or maybe even 60 percent more money than you have today. Think about giving your children a better education, taking a longer vacation, investing in your own future, pursuing a new hobby, being able to afford health insurance, spending more time with your partner, building an addition on your house, having the gun collection of your dreams, or taking a hunting trip to an exotic location. Think not only about getting a bigger paycheck, but about never again having to go through the April 15 nightmare. Think about being able to keep your private business private. Think about making financial decisions based on what's most sensible for you and your family 51; not what's tax deductible or 60;allowed61; by arrogant bureaucrats. But this is only the beginning. You not only have more money to spend; but your money goes further. Everything costs less because the people you buy from also don't have to pay a huge percentage of their earnings to government. Once we have a Bill of Rights culture, America once again becomes competitive in the world economy. Once again, Americans have good jobs 51; jobs that pay enough that enable parents to spend more time with their children instead of scrambling just to stay ahead of the bill collector. Freed from the shackles of taxation, businesses also have more money to be innovative, to hire more people at living wages, and to produce new products 51; which you now have more money to buy. Even if you've never heard of the Bill of Rights, you're also more free because the federal government doesn't have as much money to spend on foolish, wasteful projects. Government is forced to be lean and cost effective. It still performs such essential functions as national defense. But it just doesn't have the cash to spent $108 million on unused airline tickets or $27.3 billion on secretive pork-barrel projects. As the federal government functions today, it must keep demanding more and more of our money to fulfill its political promises. No amount of 60;reform61; will make it better. You can vote the tax tyrants out and send new people to Congress for the rest of your life and nothing will change. During the 19th Century 51; a time of prosperity and growth 51; government spending (local, state, and federal) seldom exceeded 10 percent of national income. In 1900 government spending took just 5.7 percent of all national income. 60;Tax freedom day61; -- the day by which average Americans had earned enough to pay their entire year's taxes 51; was January 20. (http://www.cascadepolicy.org/pdf/fiscal/2002_11.pdf) It took just days, not months, for workers to pay their tax burden. And the economy and the American culture were healthy. Today, we're very sad to state, even Russia has a far lower tax burden than the 60;free61; United States of America. Russian residents pay just 13 percent in income taxes and just 9 percent on dividend income. (http://www.worldwide-tax.com/russia/russia_tax.asp) The top individual income tax rate in bustling Hong Kong is 20 percent. In prosperous Singapore, it's 21 percent. In the United States, it's 35 percent 51; and that doesn't include the many state, local and non-income taxes we pay. (http://www.worldwide-tax.com/index.asp#partthree) If we want both freedom and prosperity, we must begin the process of winning freedom back. Prosperity will follow. But we must begin now because our situation is dire. Whether you call it fascism or socialism or the most colossal corruption and waste ever perpetrated by any government on earth, we are in trouble. The solution to big, bloated, abusive government is to restore a Bill of Rights culture to America. That will take time. It will take education 51; one person at a time. That sounds daunting. But think of it as a snowball rolling downhill. Share this article with a few people. Encourage them to share it. Discuss its ideas. Build 60;Bill of Rights awareness.61; Teaching your children. Tell your spouses, your neighbors, and your friends what the Bill of Rights says and means. (You'll find plenty of help at http://www.jpfo.org/.) Once people understand what they've lost 51; and understand the brighter future they could have with a vastly smaller government 51; there will be no stopping the momentum. Will it be easy? Not at first. But the beauty is that it's something that We the People can do on our own. We don't have to beg to congresspeople to dismantle their own power 51; which they'll never voluntarily do. We don't have to wait for them to stop lying. Or stop spending. Why look to the problem in hopes of a solution? Once enough people decide they'll settle for nothing less than a Bill of Rights culture, then Congress and bureaucrats will have to scramble to get out of our way. And we will once again be able to keep the paychecks we work so hard to earn. ------ (1) Minimising China Taxes - Looking Ahead to 2006 http://www.pwchk.com/home/eng/minimize_chinataxes.html (2) It's also worth noting that while the federal tax code weighs in at a monstrous 17,000 pages, the code of Medicare regulations is a gargantuan 132,000 pages long, according to Congressman Ron Paul. (http://www.lewrockwell.com/orig/paul3.html) (3) The 1934 National Firearms Act put a $200 tax on suppressors, machine guns, short-barreled shotguns and various other items -- an example of Justice Marshall's dictum that "the power to tax involves the power to destroy." At the time these taxes were imposed, in 1934, $200 was an enormous sum, more than most workers made in a month. The tax was usually far larger than the cost of the items it was imposed on. The obvious intent was to get people to stop buying some "Second Amendment tools" without actually banning them. Today, $200 is more affordable, but the rarity of machine guns and the extreme complexity of getting government permission to buy them has driven their cost sky high (commonly between $3,000 and $12,000). So this "back-door ban" via taxation has successfully infringed on the Second Amendment. A Double Standard: The IRS and You The IRS requires you and me to keep extensive records on nearly everything we do. But when Shelley Davis was hired to be the first (and as it turned out, last) historian of the IRS, she quickly discovered that the agency applied an entirely different standard to itself. Davis told Congress: At the IRS National Headquarters, there seemed little connection between the work of employees and actual tax collection what I presumed to be the mission of the IRS. Rather than possessing any basic curiosity about the past, the IRS employees I encountered exhibited a wariness, a suspicion assuming that anyone looking for records must have some definite agenda. An agenda presumed to be negative. This reluctance to think about the past translated into routine day-to-day operations, meaning that all documents were tossed, shredded, whatever, when a program was completed or shut down, as in the case of many IRS computer projects. No records. No paper trail. No history. As time went on, I realized that this not only made my job as historian virtually impossible, but that it guaranteed that the IRS could never be held accountable for its actions. When Davis reported this problem to her superiors they -- in typical IRS style -- began in investigation. Not of the problem, but of Davis. She eventually resigned in outrage over her treatment. Her full account of IRS secrecy, hostility, "enemies lists," and abuse of its "customers" makes fascinating reading. (http://gos.sbc.edu/d/sdavis.html) More recently, another voice from within the IRS itself has cried out in protest at government treatment of taxpayers. Nina Olson, head of the IRS Taxpayer Advocacy Service, reports that each year the IRS delays thousands of refunds -- mostly to the working poor. Sometimes the bureaucrats hold back this money for years on the supposition that the people committed some crime or in some way "cheated" on their taxes. But the individuals may not even be told they're being investigated. They just have to wait ... and wait ... and wait ... to get their own money back. And hope that they don't get hit with arbitrary penalties, additional taxes, and interest. Olson says: As taxpayers become confused and make mistakes, or deliberately 'push the envelope,' the IRS understandably responds with increased enforcement actions. The exploitation of 'loopholes' leads to calls for new legislation to crack down on abuses, which in turn makes the tax law more complex. Thus begins an endless cycle - complexity drives inadvertent error and fraud, which drive increased enforcement or new legislation, which drives additional complexity. In short, complexity begets more complexity.
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