American Liberty v. Taxation: A Short History
The Greatest Threat to Liberty Is the Power to Tax and Spend
“The people of the U.S. owe their Independence and their liberty, to the wisdom of descrying in the minute tax of 3 pence on tea, the magnitude of the evil comprised in the precedent.” —James Madison (1823)
It is no small irony that in the same week we observe Patriots’ Day — the opening salvos at Lexington and Concord to establish American Liberty — working Americans also endure the April 15th deadline to forcibly surrender a growing portion of our earned income to a gravely bloated central government, which redistributes much of that income to ensure public support for its malignant growth.
Excessive and unjust taxation led to the first American Revolution, and our government today appears heedless of that history as it seizes income for purposes clearly not authorized by our Constitution. Much of that income is redistributed to Democrat constituents in return for their political allegiance that, in turn, drives more growth and redistribution. This cycle is perilous to Liberty.
This year, American Patriots had to work, on average, the first 114 days of 2015 to cover their federal, state and local tax burdens. Of course, that doesn’t include the additional days of work required to pay the hidden regulatory tax — the cost of regulations built into consumer products and services — which adds about another 30 days of labor.
To put the redistribution of your income in perspective, let’s review the history of income taxes, the control government drives from the power to tax, and the resulting contest between free enterprise and socialism.
On December 16th, 1773, “radicals” in Boston, members of a secret organization of American Patriots called Sons of Liberty, boarded three East India Company ships at Griffin’s Wharf and threw 342 chests of British East India Company tea into Boston Harbor. This iconic event, which foretold the revolution to come against oppressive taxation and tyrannical rule, is immortalized as “The Boston Tea Party.”
Resistance to the British Crown had been mounting since King George imposed the Writs of Assistance, giving British authorities power to arrest and detain colonists for any reason. He also imposed oppressive bills of attainder and authorized troops to “quarter” in the homes of his colonial subjects. Protests intensified over enactment of heavy taxes, including the 1764 Sugar Act, 1765 Stamp Act and 1767 Townshend Acts.
The growing unrest came to bloodshed in March of 1770, when British troops fired on civilians in Boston, killing five colonists. This event, the “Boston Massacre,” gave rise to the slogan, “No taxation without representation.”
But it was the 1773 Tea Act, under which the Crown collected a three-pence tax on each pound of tea imported to the colonies, that instigated many Tea Party protests and seeded the American Revolution. Indeed, as James Madison reflected in 1823, “The people of the U.S. owe their Independence and their Liberty, to the wisdom of descrying in the minute tax of 3 pence on tea, the magnitude of the evil comprised in the precedent.”
News of the Tea Party protest in Boston galvanized the colonial movement opposing onerous British parliamentary acts that were a violation of the natural, charter and constitutional rights of the British colonists.
Oppressive taxation was the catalyst for our Declaration of Independence in 1776, and the American Revolution which followed.
The first alliance between the states was the Articles of Confederation in 1781.
That alliance and enshrinement of Liberty were then more functionally codified with the full ratification of our Constitution in 1789 and the appending of Ten Articles, known collectively as The Bill of Rights, which were ratified in 1791. (I should note here, though the Bill of Rights is commonly referred to as “the first ten amendments,” it is important to distinguish articles from amendments. The former are an integral part of our Constitution, while the latter modify parts of our Constitution. The addition of the Bill of Rights was the source of hotly contested debates among our Founders. Many objected to listing the innate Rights of Man, which are “"Endowed by our Creator”, because such listing might convey that those indigenous rights are somehow subject to amendment by man.)
Our Founders were uniformly concerned about government power to lay and collect taxes, most notably direct taxation of income, and, accordingly, enumerated specific limitations on taxing and spending.
James Madison addressed the issue of unlimited spending and warned that misconstruction of “the power ‘to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States,’ amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare.”
To ensure that federal taxation would be limited to these constraints, Article I, Section 8, Clause 1, of our Constitution (the “Taxing and Spending Clause”), as duly ratified in 1789, defined “Taxes, Duties, Imposts and Excises,” but Section 8 required that such “shall be uniform throughout the United States.” This, in effect, limited the power of Congress to impose direct taxes on individuals, as further outlined in Section 9: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.”
That constitutional limitation survived until 1861, when the first income tax was imposed to defray Union costs during the War Between the States. That three-percent tax on incomes over $800 was sold as an emergency war measure. In 1894, congressional Democrats tested the Constitution again, passing a peacetime tax of two percent on income above $4,000. A year later, that tariff was overturned by the Supreme Court as not complying with the limitations set forth in Article 1.
However, the most devastating insult to economic Liberty, was dealt by the father of American socialism, Woodrow Wilson, who was elected in large part due to his mastery of classist rhetoric as outlined by Karl Marx’s Communist Manifesto in the mid-19th century. Wilson used that rhetoric to gain rapid passage of the Sixteenth Amendment in 1913, which specified, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
“From whatever source derived” indeed.
The top tax rate levied under the new amendment was seven percent on incomes above $500,000, but today, almost every individual with an income of $25,000 or more (less than $1,000 in 1914 dollars) is taxed. If Wilson had attempted to impose his tax on incomes of $1,000, a second American Revolution may well have commenced. But like most assaults on Liberty, the income tax levy has avoided insurrection by incremental imposition on ever-broader income groups over the past century.
James Madison’s warning was prescient: “There are more instances of the abridgment of the freedom of the People by gradual and silent encroachments of those in power than by violent and sudden usurpations.”
The Sixteenth Amendment has been used to enact unequal and discriminatory taxation of targeted groups of income classes — “progressive” taxation as it is known. The resulting classism is the bulwark of all socialist movements. The “class warfare” agenda opened the floodgates for populist executives and legislators to enact taxes for expenditures not expressly authorized by our Constitution, and thus, the end of constitutionally limited government and the empowerment of the rule of men.
The most reckless of the 20th century’s class warfare provocateurs was Franklin D. Roosevelt, who was, ironically, an aristocrat. At the onset of the Great Depression, he instituted a plethora of policies that further challenged constitutional limits on our government, the cost of which now threatens our nation’s economic solvency.
FDR’s economic and social solutions were shaped by his upbringing as an “inheritance welfare liberal” (those raised dependent on inheritance rather than self-reliance). He used the Great Depression as cover to redefine and expand the role of the central government via countless extra-constitutional decrees, and he expanded Wilson’s program for redistribution of wealth in order to fund those extra-constitutional efforts.
Roosevelt proclaimed, “Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.”
If that language sounds somehow familiar, it is because his unconstitutional “American principle” is essentially a paraphrase of Karl Marx’s communist maxim, “From each according to his abilities, to each according to his needs.”
Roosevelt’s “principles” had no basis in Rule of Law or the principles of free enterprise. Consequently, his New Deal policies and programs set the standard for government expansion funded by wealth redistribution under what is the central government’s most powerful weapon: The U.S. Tax Code.
As Chief Justice John Marshall wrote in McCulloch v. Maryland (1819): “An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.”
But a century later under Wilson, government began to nibble around the edges. Today, it gobbles wholesale.
The net effect of this expansion was and remains an abject violation of our Constitution’s Article Ten (the Tenth Amendment), which affirms: “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.” The resulting corruption of constitutional Rule of Law has propagated a perilous assault on Liberty.
The ability to impose direct taxes to support a welfare state was anathema to our Founders and the Essential Liberty they fought so hard to secure for their posterity.
Of government welfare programs, the Congressional Record notes that James Madison “acknowledged, for his own part, that he could not undertake to lay his finger on that article in the Federal Constitution which granted a right of Congress of expending, on objects of benevolence, the money of their constituents.”
Neither Article 1, Section 8, of our Constitution, nor its Sixteenth Amendment, gave Congress the authority to collect taxes for bailing out financial institutions, or subsidizing industries such as manufacturing and health care, or funding education and welfare, or issuing tens of thousands of earmarks for special interest “pork” projects. Nor is Congress authorized to institute countless conditions for the redistribution of wealth in its more than 75,000 pages and four million words of tax code alone, or to impose millions of regulations on everything from carbon emissions to toilet water volume.
Madison’s wisdom notwithstanding, at the dawn of the 21st century, more than 70 percent of the federal budget would be allocated for “objects of benevolence” for which there is no original constitutional authority.
By 2010, taxes on the top 50 percent of income earners totaled almost 97 percent of government revenue, while some 40 percent of Americans bore virtually none of the cost of government. Much more ominous is the fact that almost 35 percent of Americans are now utterly dependent upon government largess. Thus, they are predisposed to vote for the redistribution of others’ incomes rather than work for their own. Indeed, in the words of socialist playwright George Bernard Shaw, “A government which robs Peter to pay Paul can always depend on the support of Paul.”
Despite its massive and unauthorized confiscation of our wealth, the federal government can’t seem to get enough. When George W. Bush took office in January 2001, our national debt was $5.8 trillion. Under Barack Hussein Obama, that has debt ballooned to almost $20 trillion. What is most unconscionable, however, is that we are obligating future generations for the repayment.
Of such debt, Jefferson concluded, “The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”
This year, working Americans will pay almost $5 TRILLION in taxes to federal and state governments. But the federal government still runs a regular deficit, and the national debt per taxpayer amounts to $155,000. To put that in perspective, if the average family budgeted like the government, they would spend more than $60,000 on income of $52,000, even though they are already almost $310,000 in debt. There is not a government revenue problem. There is a government spending problem.
Under siege of such oppressive taxation and debt accumulation, can the Republic survive? Can Liberty endure?
In answer to that question, Benjamin Franklin said, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
This tax and debt burden most assuredly will, in the end, break the back of free enterprise and replace it with the statist policies of Democratic Socialism. The only way to sustain Liberty and prosperity, and thwart the “fundamental transformation” of our nation into economic decline, rests on the ability of conservatives to offer articulate rebuttal to the Left’s “tax fairness” rhetoric.
And not a minute too soon…
Pro Deo et Constitutione – Libertas aut Mors
Semper Vigilans Fortis Paratus et Fidelis