Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

American's 94 Years of Serfdom

Politics / US Politics Apr 15, 2009 - 05:59 PM GMT

By: Paul_Craig_Roberts

Politics Best Financial Markets Analysis ArticleThis April 15 is the 94th year that Americans have had to file an income tax. For most Americans, the day is a non-event. The federal and state governments have already collected the taxes due by withholding from each paycheck over the course of the calendar year. Most Americans never saw the money and have no real idea that they earned it.


Some Americans have their incomes over-withheld as a form of forced savings. They look forward to tax time as it means they will receive a refund check from the government that they can use for a summer vacation, a big screen TV, a new appliance, or a down payment on a new car.

Few Americans realize that over the last 94 years they have been enserfed and have no more rights to their own labor than medieval serfs or 19th century slaves.

The 16th Amendment to the Constitution was ratified because the income tax was only for the rich. Some states ratified the amendment because no one in the state had an income high enough to be subject to the tax.

According to the US Department of the Treasury’s history of the income tax, less than one percent of the US population was subject to the income tax. A progressive structure was applied to this less than one percent of rich Americans, with rates ranging from 1 percent to 7 percent on incomes over $500,000, a great sum of money in those days. http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml 

In the first year of the income tax, the world’s richest person, John D. Rockefeller, paid $2 million in income tax, almost 3 percent of the total income tax collected.

People were happy. They had finally gotten the rich.

And themselves as well. Exemptions were reduced and tax rates were raised in rapid succession in 1916, 1917, and 1918. Within five years the tax rates ranged from 6 percent to 77 percent, and people whose incomes were initially exempt now paid tax at more than double the initial top rate that had applied to John D. Rockefeller.

In “free” America today, despite the Kennedy, Reagan, and Bush tax rate reductions, ordinary Americans have no more claim to their own labor than a medieval serf. Most are content, however, with handing over 30 percent of their income as long as they can hope to tax the rich at 50 percent, the tax rate on 19th century slaves.

Some 19th century slaves, whose skills were worth more in towns than on plantations, were leased by their owners to businesses in towns. The businesses would remit half of the slave’s wages to the owner. Out of the remainder, slaves could save enough to purchase their freedom.

Today, we cannot purchase our freedom from the IRS. The only free Americans today are those who can work off the books or who can live on public welfare.

People who reject my analogy can test the analogy by refusing the government’s claim on their labor. They will find that the IRS can be just as ruthless as the worst feudal lord or slave owner.

For many Americans freedom is not as important as “fairness,” by which is meant a more equal distribution of income. However, a number of studies indicate that a progressive income tax doesn’t achieve the kind of leveling that some desire. Moreover, rich and poor are not static groups. Studies have discovered that there is a great deal of movement between the income quintiles. Some people rise, some people fall, and some rise again. The same people do not inhabit the same quintile year after year.

Government does not seem to be the answer. Indeed, some of the largest incomes result from collusion with government, such as the Clinton/Bush financial deregulation that produced the world’s first annual incomes of $1 billion.

The desire to tax the rich has caused a concentration of less accountable power in the United States as national and global corporations took over from local businesses. The estate tax, created in 1916, has forced family businesses, media, and farms into large corporate conglomerates. The corporate media, animal, chicken, and egg farming, with its inhumane conditions, antibiotics, and waste concentrations that pollute the environment, and large scale chemical fertilizer farming that pollutes rivers and oceans are, in part, unintended consequences of taxation aimed at the rich.

Today the income tax serves our interest less than ever before. The collapse of socialism and the rise of the high speed Internet has opened vast under-utilized foreign work forces to first world corporations. The consequent loss of jobs and careers by Americans cannot be rectified through the corporate income tax.

Ralph Gomory, coauthor with William Baumol of the most important work in trade theory ever published, Global Trade and Conflicting National Interests (MIT Press, 2000), has suggested that jobs would flow back to America instead of continuing to leave if the corporate income tax were replaced by taxing corporations on the basis of whether the value added to their products occurs at home or abroad.

The ecological economist Herman Daly has suggested that the tax base be moved off of income and on to the use of increasingly scarce natural capital. Non-renewable resources are being depleted, and the over-use of nature’s waste absorption services is resulting in pollution and environmental destruction.

Taxing the use of natural capital would conserve it and lead to its more rational use.

These promising tax ideas directly address the most pressing economic and environmental problems of our time, but they cannot be considered because people are still absorbed in class warfare.

A mainstay of class war is the propaganda that “the rich don’t pay taxes.” This myth lives on despite the annual release of IRS data that proves the contrary. In 2006, the most recent year for which data is available, Americans whose tax returns placed them in the top 1 percent earned 22.1 percent of adjusted gross income and paid 39.9 percent of all federal individual income taxes. http://www.taxfoundation.org/news/show/250.html

The top 5 percent, defined as rich by President Obama, paid 60.1 percent of all federal individual income taxes. The top 10 percent paid 71 percent.

Those Americans whose earnings placed them in the bottom half of the income distribution paid less than 3 percent of the individual income tax collected.

The immunity of many Americans to facts is impressive. Just as many Americans continue to believe that Saddam Hussein had weapons of mass destruction and hid them in Syria, Russia, or Iran, many Americans will continue to believe that “the rich don’t pay taxes.”

    Paul Craig Roberts [ email him ] was Assistant Secretary of the Treasury during President Reagan's first term.  He was Associate Editor of the Wall Street Journal .  He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand. He is the author of Supply-Side Revolution : An Insider's Account of Policymaking in Washington ; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy , and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice . Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.

    © 2009 Copyright Paul Craig Roberts - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules