A Century Of Tax

What do you mean, I asked? What privacy? I just sent in my Federal Income Tax return for 2007 and I reckon that the government already knows everything about me. For 2007 Uncle Fed knows how much I earned in wages, in interest and dividends, and in the proceeds of any stock and mutual fund transactions.

Unless I was interested in “paying for a woman to go away” or indulging in a little innocent revolutionary activity in the suicide-bombing line, what else would the government want to know about me that it doesn’t already know?

I’ll tell you what, I told him. If we want to get serious about privacy, let’s start with abolishing income taxes. Personal income taxes require, by their nature, that the government knows everything about its citizens’ financial affairs. When liberals are ready to abolish the income tax then we will know that they are getting serious about privacy.

Everybody complains about taxes but nobody does anything about them. For instance, take a look at taxes over the last century. Yes, you can go to usgovernmentrevenue.com and click up a chart that tells the whole dismal story.

The chart shows the innocence of the United States a century ago when good old J. Pierpont Morgan was solving the 1907 banking meltdown. In those days bankers were as foolish as they are now. F. Augustus Heinze and his brother thought they would use the money from their bank to finance a nice little corner in copper shares. They nearly brought down the whole financial system when their brilliant little plan went south.

Look at the government revenue in terms of GDP.

Federal revenue at 2.4 percent of GDP? Talk about living in Arcadia!

Unfortunately in the aftermath of the Panic of 1907 (now a book by Robert F. Bruner and Sean D. Carr) so brilliantly solved by J.P. Morgan, wise heads decided that this sort of thing must never happen again. The United States needed the security of a formal central bank. The idea of the “Money Trust” solving a financial crisis in J.P. Morgan’s high-ceilinged library with the help of Morgan’s exotic African American librarian Belle da Costa Greene was clearly repugnant to all rationally-minded people.

So the United States got an income tax and a Federal Reserve System just in time to finance World War I. Federal government revenue went to 8.4 percent of GDP, mostly on the strength of the new personal and corporate income taxes.

When the next financial crisis appeared in 1929 the United States had a fully functional central bank in place, ready to fall asleep at the switch. Maybe if the first Governor of the New York Fed, Benjamin Strong, Jr., had not died in 1928 all would have been fine. Strong was one of the rising young men who assisted J.P. Morgan in the 1907 crisis.

Look at what happened on the revenue front when the nation collapsed into depression in 1929-1933. Government revenues went up! Federal revenues went up from 4.14 percent of GDP in 1929 to 5.78 in 1933. But state and local revenues went through the roof from 8.83 percent of GDP in 1929 to 13.36 percent in 1933. The chart tells the story:

That is what you call raw talent: Raising taxes in a depression. No wonder the folks on the Great Plains revolted when they had to sell their farms to pay their property taxes. See for yourself. Create the chart at usgovernmentrevenue.com and look at the numbers.

Let’s return to the first chart. Do you notice something rather surprising? Federal revenue has been pretty constant ever since the 1950s at about 17 to 18 percent of GDP, except for the last year of the Clinton administration when it reached nearly 21 percent.

The real growth in taxation in the last half-century has been at the state and local level. State and local receipts have doubled from about 8 percent of GDP in the mid 1950s to a peak of 17 percent in 2000 and 2005.

Here we are all getting riled about about our federal income taxes when it turns out that federal taxes aren’t the problem. It’s the state and local taxes that are killing us.

Just what are we getting in return for all these government taxes and revenue? It’s a good question to ask your liberal friend some time. For answers you can’t do better than usgovernmentspending.com. If we could reduce the size of government, maybe we could help our liberal friends get the privacy they want.

Christopher Chantrill blogs at americanmanifestobook.blogspot.com.

Buy his Road to the Middle Class.

print view

To comment on this article at American Thinker click here.

To email the author, click here.

TAGS

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Hugo on Genius

“Tear down theory, poetic systems... No more rules, no more models... Genius conjures up rather than learns... ” —Victor Hugo
César Graña, Bohemian versus Bourgeois

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Postmodernism

A writer who says that there are no truths, or that all truth is ’merely relative’, is asking you not to believe him. So don’t.
Roger Scruton, Modern Philosophy

Faith and Politics

As far as the Catholic Church is concerned, the principal focus of her interventions in the public arena is the protection and promotion of the dignity of the person, and she is thereby consciously drawing particular attention to principles which are not negotiable... [1.] protection of life in all its stages, from the first moment of conception until natural death; [2.] recognition and promotion of the natural structure of the family... [3.] the protection of the right of parents to educate their children.
Pope Benedict XVI, Speech to European Peoples Party, 2006

China and Christianity

At first, we thought [the power of the West] was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion: Christianity.
David Aikman, Jesus in Beijing

Religion, Property, and Family

But the only religions that have survived are those which support property and the family. Thus the outlook for communism, which is both anti-property and anti-family, (and also anti-religion), is not promising.
F.A. Hayek, The Fatal Conceit

Conservatism

Conservatism is the philosophy of society. Its ethic is fraternity and its characteristic is authority — the non-coercive social persuasion which operates in a family or a community. It says ‘we should...’.
Danny Kruger, On Fraternity

US Life in 1842

Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism

Society and State

For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008

Home

American Manifesto

Chapters

Chappies

roadtothemiddleclass

presented by Christopher Chantrill

Follow @chrischantrill • Contact