The tenth commandment says "Thou shalt not covet anything that is thy neighbor’s." Yet in 1913 under T. Woodrow Wilson an income tax was passed. This occurred because modern liberalism demands, as its first principle, income redistribution. Government by its nature is assumed to better distribute wealth than the marketplace. This initial tax, at a 2% flat rate, meant that a wealthy man earning $100,000 a year would have to pay $2,000 each year to remain a citizen in good standing and able to vote. A pauper need pay nothing.
Why should a wealthy man pay more to live in a society where there is equality under the law? A) because he and his success are resented, and a resentful mob co-opts the government to punish that success and assuage their resentment. B) because of hard-left philosophy, for example, "The courts serve a social purpose" – Lenin.
Wilson and the democrats utterly failed to foresee the long-term consequences of this social engineering.
What is that wealthy man going to do, now that he’s forced to pay an exorbitant price to remain a participant in society? "He’s going to fight back." He should do so and that is what happened. He was galvanized to fight as the tax rate became "progressive" – the higher his income the higher the tax rate. With the depression, came this progressive tax policy. For a while, this progressive rate was a masterpiece of mobocracy, but it galvanized those who were peculiarly capable of fighting back.
The first counter-attack consisted of increasing deductions to adjusted gross income. More and more sweeteners were added to these deductions; and every deduction carried a 0% tax rate for the amount categorically allowed.
The flurry of deductions required higher tax rates. The higher tax rates motivated lobbying for higher deductions.
As this snowball picked up speed, the progressives "won" another ideological battle – the fight against common law. Why should judges be able to determine the verdict and decision in a case based on the meditations of an imaginary "reasonable man" and his theoretical actions? Why should a case be decided on centuries of legally similar cases instead of on the written law drafted and passed by a legislature? The ideological prayers of the left were answered in 1938 in the Erie Railroad versus Tompkins case when it came before the Supreme Court.
See http://en.wikipedia.org/wiki/Federal_common_law
The idea of eliminating common law was foolish – and ultimately impossible (since case law and precedent are inextricably involved in the concept of common law – and, logically, unacceptable, because the notion that everything that exists can be written down on paper is itself irrational. There are things that exist that can’t be fully described.
In 1943, a buffer occurred which modified the effect of the 1938 Erie Railroad case. But the long-term effect on tax law had already occurred. Tax legislation became enormously picky and overly precise, as well as difficult to apply. Precedent was being set whenever a federal court, especially a tax court, was in session. This is still true today.
Those with enough money to fight the tax laws modestly and humbly hired expert lobbyists and tax attorneys to do the fighting for them. They enlisted clever certified public accountants to prepare their returns. Their deductions grew and the tax burden lessened.
Eventually a moderate democrat was elected President who himself was the son of an astoundingly wealthy man. This president listened to the lobbyists and lowered the maximum tax rate down from the 90% it had become, which was $90,000 in taxes for someone earning $100,000 and failing to take advantage of itemized deductions. The tax rate reduction passed, and as the tax rate went down, tax receipts into the Treasury actually went up!
And that fight has been the front lines ever since John F. Kennedy was president. The complexity and trickiness of the tax code, overall, has continued to increase, however, as progressives have continued to attempt to use the tax code to mollify resentment and alter social behavior.
In 1969, the complicated tax code had become so cumbersome and full of loopholes that it was decided to deny deductible items for certain high-income taxpayers and impose a flat-rate minimum tax. This was called the "Alternative Tax." In 1982, this was brought up to date with what is known generally as the "Alternative Minimum Tax" or "AMT." Note how this technique of throwing out the progressive system and going back to a flat tax becomes a necessity once the snowball of complex taxation law without common law becomes unworkable.
But the blame for the needless complexity and arbitrariness of taxation is entirely on progressives. They still resent it when a neighbor is "allowed" to have more than they themselves have. That impulse to tear down anyone who arouses resentment is, itself, mobocratic cannibalism.
Another further indicator of the complexity of tax law lies with the practitioners of the accounting profession who specialize in this area. Until about 25 years ago, many practitioners memorized certain sections of the IRS code and used that knowledge in their practice. They were called "code heads." An alternative approach was to study summaries of tax court and federal court decisions to determine if a particular situation fit with various applicable federal decisions (essentially a case law approach).
In the long run, the case law approach has eaten and devoured the code heads. The Thompson RIA Tax Coordinator 2D is the professional choice for tax accountants. It is written, paragraph by paragraph, by lawyers who teach tax law at America’s best law schools. Revisions are made every week. The publication has 45,000 paragraphs, all of which are subject to revision and amendment at any time. It is generally distributed by subscription over the Internet these days.
To resent success and seek to use the government to punish it starts the snowball rolling downhill. The result is gross and needless complexity that only an unemotional expert can understand. And it’s inefficient. And it corrupts rule of law in a manner that endangers the poor, needy or uneducated.
Of course – a legislature can maintain high tax rates and mobocratic use of the tax laws to achieve social ends. Such a nation is going to wind up borrowing from abroad to pay government bills. And what happens when their borrowing power runs out and the progressive taxes are stubbornly maintained? The poor get poorer, the young can’t get jobs, and –get this – pay attention to this – everyone, and I mean everyone, cheats on their taxes. This is the end of the bus ride of progressivism. It was covered in the October, 2010, Vanity Fair magazine in an article called "Beware of Greeks Bearing Bonds":
http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010?currentPage=allWhy should a wealthy man pay more to live in a society where there is equality under the law? A) because he and his success are resented, and a resentful mob co-opts the government to punish that success and assuage their resentment. B) because of hard-left philosophy, for example, "The courts serve a social purpose" – Lenin.
Wilson and the democrats utterly failed to foresee the long-term consequences of this social engineering.
What is that wealthy man going to do, now that he’s forced to pay an exorbitant price to remain a participant in society? "He’s going to fight back." He should do so and that is what happened. He was galvanized to fight as the tax rate became "progressive" – the higher his income the higher the tax rate. With the depression, came this progressive tax policy. For a while, this progressive rate was a masterpiece of mobocracy, but it galvanized those who were peculiarly capable of fighting back.
The first counter-attack consisted of increasing deductions to adjusted gross income. More and more sweeteners were added to these deductions; and every deduction carried a 0% tax rate for the amount categorically allowed.
The flurry of deductions required higher tax rates. The higher tax rates motivated lobbying for higher deductions.
As this snowball picked up speed, the progressives "won" another ideological battle – the fight against common law. Why should judges be able to determine the verdict and decision in a case based on the meditations of an imaginary "reasonable man" and his theoretical actions? Why should a case be decided on centuries of legally similar cases instead of on the written law drafted and passed by a legislature? The ideological prayers of the left were answered in 1938 in the Erie Railroad versus Tompkins case when it came before the Supreme Court.
See http://en.wikipedia.org/wiki/Federal_common_law
The idea of eliminating common law was foolish – and ultimately impossible (since case law and precedent are inextricably involved in the concept of common law – and, logically, unacceptable, because the notion that everything that exists can be written down on paper is itself irrational. There are things that exist that can’t be fully described.
In 1943, a buffer occurred which modified the effect of the 1938 Erie Railroad case. But the long-term effect on tax law had already occurred. Tax legislation became enormously picky and overly precise, as well as difficult to apply. Precedent was being set whenever a federal court, especially a tax court, was in session. This is still true today.
Those with enough money to fight the tax laws modestly and humbly hired expert lobbyists and tax attorneys to do the fighting for them. They enlisted clever certified public accountants to prepare their returns. Their deductions grew and the tax burden lessened.
Eventually a moderate democrat was elected President who himself was the son of an astoundingly wealthy man. This president listened to the lobbyists and lowered the maximum tax rate down from the 90% it had become, which was $90,000 in taxes for someone earning $100,000 and failing to take advantage of itemized deductions. The tax rate reduction passed, and as the tax rate went down, tax receipts into the Treasury actually went up!
And that fight has been the front lines ever since John F. Kennedy was president. The complexity and trickiness of the tax code, overall, has continued to increase, however, as progressives have continued to attempt to use the tax code to mollify resentment and alter social behavior.
In 1969, the complicated tax code had become so cumbersome and full of loopholes that it was decided to deny deductible items for certain high-income taxpayers and impose a flat-rate minimum tax. This was called the "Alternative Tax." In 1982, this was brought up to date with what is known generally as the "Alternative Minimum Tax" or "AMT." Note how this technique of throwing out the progressive system and going back to a flat tax becomes a necessity once the snowball of complex taxation law without common law becomes unworkable.
But the blame for the needless complexity and arbitrariness of taxation is entirely on progressives. They still resent it when a neighbor is "allowed" to have more than they themselves have. That impulse to tear down anyone who arouses resentment is, itself, mobocratic cannibalism.
Another further indicator of the complexity of tax law lies with the practitioners of the accounting profession who specialize in this area. Until about 25 years ago, many practitioners memorized certain sections of the IRS code and used that knowledge in their practice. They were called "code heads." An alternative approach was to study summaries of tax court and federal court decisions to determine if a particular situation fit with various applicable federal decisions (essentially a case law approach).
In the long run, the case law approach has eaten and devoured the code heads. The Thompson RIA Tax Coordinator 2D is the professional choice for tax accountants. It is written, paragraph by paragraph, by lawyers who teach tax law at America’s best law schools. Revisions are made every week. The publication has 45,000 paragraphs, all of which are subject to revision and amendment at any time. It is generally distributed by subscription over the Internet these days.
To resent success and seek to use the government to punish it starts the snowball rolling downhill. The result is gross and needless complexity that only an unemotional expert can understand. And it’s inefficient. And it corrupts rule of law in a manner that endangers the poor, needy or uneducated.
Of course – a legislature can maintain high tax rates and mobocratic use of the tax laws to achieve social ends. Such a nation is going to wind up borrowing from abroad to pay government bills. And what happens when their borrowing power runs out and the progressive taxes are stubbornly maintained? The poor get poorer, the young can’t get jobs, and –get this – pay attention to this – everyone, and I mean everyone, cheats on their taxes. This is the end of the bus ride of progressivism. It was covered in the October, 2010, Vanity Fair magazine in an article called "Beware of Greeks Bearing Bonds":
AFTERWORD
The blog author has mastered tax research. I’ve never been contradicted or proven wrong on any of the extensive tax research I have looked into or offered an opinion about – and there were directors and a CFO who picked fights with me. On the other hand, as an active participant in a state CPA society, there were accounting directors and CFOs who contacted me before important meetings to consult with me to make sure their conclusions about taxation were sound and above dispute. Those consultations remain among the proudest moments of my professional life. They could count on me, they could bet their reputations on the quality of my advice. Because I had no emotions and no ideological snap judgments. I went to the Tax Coordinator with an unbiased mind and got the best fit with case law. And when I gave my opinion, I always asked if they wanted backup research for their file on the tax issue (a courtesy which was normally accepted).
FINAL NOTE
There's something creepily wrong about using a government agency to assuage one's personal resentment. That's what happens with progressive taxation. It raises a fierce and ugly question: how much integrity does the tax collector have? In the United States, the answer is "not much." Washington, D.C., is my hometown. I was a CPA there for many years. The Internal Revenue Service was regarded as the bottom of the professional barrel, the employer of last resort. It became virtually a laughing stock in the 1990s when it blew $8 billion on computer programming trying to modernize its system, get tax records recorded electronically, and use programming to identify returns that were irregular and deserving of audit.
The Internal Revenue Service was established in 1913 and always suspected of favoring certain classes of taxpayer and leaning on other classes. Some of this rumored favoritism became factual under President Franklin Roosevelt. More became true under Richard Nixon. And today? With the community organizer who is president right now? The IRS is going to reduce resentment by implementing tax law? Really? Read on:
http://online.wsj.com/article/SB10001424127887323336104578501522735423256.html?mod=djemalertNEWS
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