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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. ~ Sixteenth Amendment
Popular
suffrage is in itself no guarantee of freedom. People can vote
themselves into slavery. ~ Frank Chodorov
After reading Frank Chodorov’s wonderful book The
Income Tax: Root of all Evil, I have gained a better
understanding as to why America has devolved from a republic to a social
democracy (i.e., a nanny state). After all, a nanny state cannot grow
unless it is constantly fed the fruit of our labor – mostly in the
form of personal income taxes. As the state grows, one’s sense
of self-ownership is destroyed, liberty is traded for
"security," the human spirit diminishes, rates of time
preference increase, and the citizenry increasingly thinks and behaves
like dependent children. Quite frankly, the evils of the income tax have
manifested themselves into the absurd collective belief that everyone
can live at the expense of everyone else (as if we have an ownership
stake in one another – collectivized slavery). Such an absurd mindset,
unfortunately, results in bizarre human behavior. To regain our senses,
our humanity, and our self-ownership, it is imperative that we repeal
the Sixteenth Amendment.
Let’s
delve a little deeper as to how life in these United States has become
so absurd and surreal. No, I’m not seeing melting clocks dangling from
tree limbs. What I do see, wherever I go, are people who have become
disembodied. For instance, many people who are obese claim no
responsibility for their own bodies. Those who lost money when the
NASDAQ bubble burst, aren’t responsible for their own losses – so
join a class-action lawsuit against the big brokerage firms.
Individuals, approaching retirement age, express angst about Social
Security’s problems because they didn’t bother to save up and build
a nest egg of their own. When having conversations, I have found that
people (regardless of age) display their "enlightenment" by
having adopted politically-correct speech code. To me, this is the sort
of person who has taken about as much personal responsibility for mental
development as a ventriloquist’s dummy. Metaphorically speaking, it is
as if Americans have become nothing more than characters in a video
game. Someone else is pushing the buttons, manipulating the joystick and
thus feeding "us" too many calories, causing us to make
foolish investments, preventing us from saving, and feeding idiotic/PC
words into "our" mouths. Something pernicious has driven
Americans to eschew personal responsibility, to abdicate the right to
self-ownership, and to lead such hollow, disembodied, and surreal lives
(lives which seem to be made bearable by impulsive consumption and
mindless entertainment). As mentioned above, the culprit about which I
speak is the social-democratic nanny state as fed by income taxes.
Under
nanny statism, America has become a society dominated by a
high-time-preference populace. What is meant by high time preference is
that a person prefers present satisfaction over future satisfaction. For
example, let’s say that two people are interested in purchasing a
$5,000 high-definition TV. A person with a high rate of time preference
would prefer "present satisfaction" and purchase the TV using
a credit card and pay off the debt over time. A person with a low rate
of time preference would save the money over time and purchase the TV
once enough money had been saved. Hence, a person who has a high rate of
time preference is present oriented while a person with a low rate of
time preference is future oriented and typically has a better personal
financial condition.
An
easy way to support the assertion, that high time preference is a
dominant characteristic of American society today, is to look at the
$50+ trillion of unfunded federal liabilities being passed on to future
generations. In other words, let’s party today (via intergenerational,
nanny-statist wealth redistribution) and let the kids and grandkids
suffer the financial hangover. To shackle future generations, with such
monstrous debt and liabilities, is tantamount to selling them into tax
slavery. In my mind, this defines a populace with a high rate of time
preference – which is consuming instead of producing capital.
Of course, this means that decivilization is well under way.
In
Hans-Hermann Hoppe’s fabulous book Democracy:
The God That Failed, Dr. Hoppe describes what happens to
a populace living under nanny statism. He describes how the decivilizing
nature of social democracy
…has
led to permanently rising taxes, debts, and public employment. It has
led to the destruction of the gold standard, unparalleled paper-money
inflation, and increased protectionism and migration controls. Even
the most fundamental private law provisions have been perverted by an
unabating flood of legislation and regulation. Simultaneously, as
regards civil society, the institutions of marriage and family have
been increasingly weakened, the number of children has declined, and
the rates of divorce, illegitimacy, single parenthood, singledom, and
abortion have increased…In comparison to the nineteenth century, the
cognitive prowess of the political and intellectual elites and the
quality of public education have declined. And the rates of crime,
structural unemployment, welfare dependency, parasitism, negligence,
recklessness, incivility, pyschopathy, and hedonism have increased.
I
would add to this list a rising propensity for Americans to become
obese. It stands to reason that an individual, with a high rate of
time preference, fails to correlate poor eating and exercise habits with
future health risks. Such a person is not willing to invest the time
necessary to learn how to cook healthy meals nor to take the time needed
to exercise and burn off excess calories. In fact, the University of
Munich’s Department of Economics has published a discussion paper
titled Obesity
and the Rate of Time Preference: Is there a Connection? It makes
for interesting reading. I would add that no matter how much the nanny
state implores for its subjects to lead healthier lifestyles, the exact
opposite will occur. After all, nanny statism leads to nonself-ownership
which often results in one’s own physical neglect and thus higher
incidences of obesity. Indeed, I assert that there is a connection between
obesity and a high rate of time preference.
Dr.
Hoppe (as quoted above) has hit on something quite important, and that
is taxes. It is the income tax (which feeds America’s obese
nanny state) that leads to high rates of time preference. Murray
Rothbard explains the connection, between high rates of time preference
and income taxes, in his magnum opus Man,
Economy, and State. To wit:
There
is another, unheralded reason why an income tax will particularly
penalize saving and investment as against consumption. It might be
thought that since the income tax confiscates a certain portion of a
man’s income and leaves him free to allocate the rest between
consumption and investment, and since time preference schedules remain
given, the proportion of consumption to saving will remain unchanged.
But this ignores the fact that the taxpayer’s real income and the
real value of his monetary assets have been lowered by paying the tax.
We have seen…that, given a man’s time-preference schedule, the
lower the level of his real monetary assets, the higher his
time-preference rate will be, and therefore the higher the proportion
of his consumption to investment.
What
magnificent analysis by Dr. Rothbard. It is axiomatic that income
taxes result in higher rates of time preference. Moreover, he
completely discredits those advocates of income tax reform who want to
change Uncle Sam’s tax code because it currently favors consumption
over savings. Income taxes will always negatively impact savings (a
future-oriented endeavor) and thus favor consumption. To be sure, one
could even state that income taxes contribute to America’s obesity
problem – another unforeseen consequence of the Sixteenth Amendment.
For
a free and productive society to reemerge, the Sixteenth Amendment must
be repealed – thereby abolishing the income tax. If we do not, then
high-time-preference Americans will foolishly continue to consume
capital and will leave the nation impoverished. Naturally, there will be
naysayers claiming that we will descend into chaos as centralized
government is benevolent and uses its power to give our lives, and hence
society, structure. This is patently untrue as, for many decades,
American citizens managed to save, to build productive capital, and to
increase standards of living without having to pay an income tax. Such a
society can arise again, under capitalism, in which liberty is the
mother of spontaneous, productive, and peaceful order.
Regrettably,
by looking at the United States’ massive trade deficit, it is crystal
clear that we have become a nation dominated by consumers, not
producers. To a large extent, Americans have lost interest in
production-related jobs. So can we count on our tax-bloated nanny state
to cure our country’s production-deficit disorder? Of course not. In The
Income Tax: Root of all Evil, Frank Chodorov argues, as follows,
that continuing to feed income taxes to our federal Leviathan is the
road to decivilization and ultimate ruin:
When
faced with this circumstance, does the State abdicate? It does not.
The general lack of interest in production threatens its own
existence, but it still cannot divest itself of its inner urge for
power. It turns to the use of force to stimulate the production from
which it derives taxes. It confiscates and tries to run the entire
economy by rules, regulations, controls, and compulsion; the nation
becomes a slave-labor camp. But the output of an economy that rests on
force rather than on self-interest is meager. More important than lack
of production is the slave psychology that such an environment
induces. Men lose their capacity for self-improvement along with their
sense of individual dignity. Thus civilization disintegrates and
becomes an historical or archaeological curio. The State, of course,
collapses with the civilization.
Sadly enough, we
mindlessly continue to waddle down the path of decivilization thinking
the state will always be there to protect us – undeniably, liberty and
self-ownership have been exchanged for "security." Ah, now it
is clearer as to the nature of our collective disembodiment. Americans
have become little more than characters in a surreal Hansel and
Gretel video game. Americans seek the security of the gingerbread
house, get fattened up by what appears to be a kindly nanny, and then
end up being sold into slavery by what turns out to be an evil witch. It
is amazing how destructive the income tax is. So what shall we be;
chattel or free? We must choose soon.
© 2005 Eric Englund
Editorial Archives
Eric
Englund has
an MBA from Boise State University and lives in the state of Oregon. He
is the publisher of The
Hyperinflation Survival Guide by Dr. Gerald Swanson. You are
invited to visit his website.
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