Income Taxes, The Vampire of Civilization - Part 1
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Income Taxes, The Vampire of Civilization
The Bite
Introduction
The man with the dagger... gave a maniacal laugh and flayed another strip of flesh, then bent langorously to lick the raw wound with an obscene, blood-stained tongue.1
“There is, you understand, an ecstasy, a surge of – I don’t know what. A ‘kick’... in the drinking of the life as it pours from the veins of another. It is not only the taste of blood... We are as much creatures of the psychic as the physical. We perceive things differently from human perceptions. We can taste – feel – the texture of the minds of others, and at no time more intensely than when the human mind is crying out in death. That is what we drink, as well as the blood – the psychic force, which answers to and feeds our own psychic abilities to control the minds of others.” (Emphasis mine)2
The IRS auditor stares at you with eyes narrowing to a tiny bead, licks his fingers to turn the page of your check register, and quietly asks, "Hmmm, vhat do ve haf here? It looks like you forgot to report this deposit on your tax return. Hmmm...? Perhaps ve should look at the prior year's return, also." You turn beet red and swear to yourself that if you get out of this alive you'll put a stake through your own heart. There's just no way you want to go through another audit. The IRS has already sucked dry all of your bank accounts and cash savings. Next thing you know, they'll be wanting blood!!!
Does the above seem familiar? Has it happened to you or some one you know? Do you absolutely hate April 15th (or August 15th or October 15th if you are a procrastinator)? Has the IRS already gotten your "blood"? (Are they really in competition with the Red Cross?) Do you feel as if there is no point in trying to get ahead because if you do the IRS will drag you back and slam you in a coffin? Do you have to work nights just to get a little extra nourishment after working all day to feed the Master Vampire?
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You are not alone. There are over 100 million personal tax returns filed each year.4 The Department of Treasury states, "Last year (1994) total tax collections exceeded $1.1 trillion and the IRS processed almost 2 billion documents, including more than 200 million tax returns." (Includes personal and business returns.)5 In 1977, according to Robert Hall and Alvin Rabushka, Senior Fellows of the Hoover Institution of Stanford University, taxpayers spent over 613 million hours filling out their tax forms.6 C.A.T.S. (Citizens for an Alternative tax System), in a promotional flyer, estimates that the current (1994) time spent on tax preparation is 5.4 to 6 billion hours per year. In 17 years the time spent on tax preparation has increased by a factor of nine, and this in an era of speedy personal computers that do most of the work. James L. Payne, Director of Lytton Research and Analysis in Idaho, estimates, "That [5.4 to 6 billion hours] translates into 2,900,000 workers - the work force of Indiana - working all year long."7 In other words, the average time to prepare 200 million tax returns in 1994 was 27 - 30 hours per return8. That's a lot of time and aggravation. It's about time for a change. It's time to get rid of the vampire (income tax) and his minions (IRS) and replace him with a nice house pet (national sales tax).
Governments appear to be a necessary evil in this complex and expanding world. To operate they must have funds and these funds must come from somewhere or someone. This has been a situation all through history. In fact, tax lawyer, Charles Adams believes that taxes have shaped the course of history.
The hypothesis that taxes are a prime mover of history has considerably more merit than many of the other theories of history... There have been great and powerful men who have moved civilization, but most of the time no heroes can be found... Leaders like Moses don't show up very often... Taxes, however, are ever present, often making a strong impact on our lives - for good or evil. The prosperity as well as the decline of nations has always had a tax factor, and this we will see time and again throughout history."9
He goes on to say, "Human rights have suffered even more than nations - whatever the tax man wants, the tax man gets.."10 And so, the tax man has generally gotten what he has wanted all through time. (Usually Dracula got what he wanted when he wanted it, too.)
This activity of the tax man taking what he wants at his will, of course, has created some disagreement along the way. The collection of taxes and the administration of such collections has been a sore spot in most civilizations and could be said to have been a major contributing factor to the downfall of many of the great societies. Adams cites many examples of the such downfalls in his book, For Good and Evil, The Impact of Taxes on the Course of Civilization, the most notable perhaps being the Egyptian, Greek and Roman civilizations. I will discuss these in more detail later, but let us take a look at a more recent empire, Great Britain. Steven Hayes, lawyer and President of C.A.T.S. states:
As reported in THE WAY THE WORLD WORKS by Jude Wanniski, in 1815, England had an enormous debt. It had spent 20 years fighting the Napoleonic Wars. Parliament ignored the dire warnings of the economic experts and eliminated the income tax which had been initiated to raise revenue for the wars. What followed was a 60-year bull market that has been called the Industrial Revolution. England's prosperous and unprecedented bull market ended shortly after the income tax was reinstituted in the 1870's.11
ENGLAND GOT RID OF THE INCOME TAX AND BECAME THE GREATEST NATION ON EARTH!!! England put the income tax back into effect and look at it now. It's a nice place to visit but... The United States was once considered the apple of Mother Earth's eye but there have been rumors that we all ought to learn Japanese if we want to speak to the natives (what with the Japanese buying up American property and businesses). The U.S. adopted the income tax system in 1913. Since then there have been two world wars and a couple other "lesser" (a matter of opinion, of course) wars that helped us overlook the bite on our necks each pay period but now that bite is reaching our jugular and it hurts!
What makes the income tax system especially unappealing is that the incentive to do better is robbed from us. Diogenes (not the ancient Greek cynic but an IRS agent writing under a pseudonym) says he audited a successful novelist with a "great future" ahead of him as a writer. However, when Diogenes went to see him, the author had decided not to write anymore because " his tax situation made idleness mandatory." 12 (Emphasis mine.) In other words, he felt as if any additional work resulting in additional income would only or mostly go to paying taxes on the additional income. ( See Part 3 for an example.)
Jack Valenti, president and CEO of the Motion Picture Association of America, writing with Jack Trotter, a Houston investor and CPA, says;
Why is an income tax unfair? Sin taxes punish drinking and smoking. Are we surprised to see income taxes punish earning and saving? How do we react to such punishment? We (individual and corporate taxpayers) spend more finding ways to reduce income than the IRS collects in revenue!13
The income tax is unfair and it punishes us for being successful! The vampire attacks any living blood-filled human being and drinks the blood irregardless of the consequences of the effects created on its victims.
Paul Craig Roberts, John M.Olin Fellow of the Institute for Political Economy and Distinguished Fellow of the Cato Institute in Washington, D.C., insists, "the current U.S. tax system is the worst imaginable. Even its supporters concede that its purpose is to appease envy by penalizing success..."14 (Emphasis mine.) I have a client (I prepare tax returns for people) who is a well-known artist. I love his work; it is very aesthetic and interesting. When he came to me a couple of years ago, he said he was not painting as much as he used to as he didn't like paying the IRS all that money. I talked to him a bit and got him to see that this method of dealing with the IRS was not going to help him or his family or his career and that he should just produce as much as he could and pay them their blood money and go out and make more. He did that and is now even more successful than before. (I won't take full credit for saving his life; I'm sure there were other factors involved.)
I once had a client who was single, made about $20 per hour and had lots of opportunity for overtime which would have paid him $30 per hour. Of that extra $10 per hour, seven of it would have gone to taxes. That is not much of an incentive to do more work, is it?
Of course, you might ask, "Why should we do more work?" Well, believe it or not, most people feel happier when they are producing something. Noted author and philosopher, L. Ron Hubbard says, "Production is the basis of morale".15 Now that's a fairly simple statement. What does it mean? Well, it could mean that when you are doing something that will yield a product you generally feel better, happier and are more awake. When you find yourself sitting around at home or even on the job, time drags and you look for things to do or you fall asleep (like when you are watching TV for hours on end). If you can't find anything productive to do, you may find yourself getting into trouble (gee, do you think we might have an answer to juvenile delinquency?) or looking for ways to cheat on your income taxes.
Do people really cheat on their tax returns? Is the pope Catholic? Do bears... well, you get the point.
There is an underground economy that never sees the inside of an IRS office. This underground is composed of criminals - drug dealers, thieves, prostitutes, gamblers, etc. and millions of normal folk like you and me - doctors, lawyers, bakers, Indian Chiefs. Hall and Rabushka tell us, "tax evasion - noncompliance with the tax code - has reached staggering proportions. IRS estimates that tax evasion in 1973 cost the United States Treasury $29.3 billion, a figure that tripled to $87.2 billion by 1981."16 The fact is that people cheat on their income tax forms. They don't report all of their income and/or they claim too many deductions. There are even newsletters (i.e., Tax Hotline) that advise how to cheat "legally". Diogenes' book, The April Game, has many examples of good people cheating on their tax returns. He even tells you how to cheat and get away with it!17 According to the World Book Dictionary18, the definition of crime is "an act that is against the law." It is against the law to cheat on an income tax return. But people do it anyway; they produce less, their morale drops, and the nation goes to pot. It's another vicious circle. The government needs money to help the people; the government taxes the people to get the funds; the people produce, cheat on their taxes, their morale drops, they produce less; the governemnt raises the taxes; the people cheat, produce less, morale drops... Hello! Fall of the United States coming right up.
Fortunately, some wise people have recognized this and are proposing solutions to the income tax debacle. There are currently several proposals to change the tax system being considered by Congress, some of which will even abolish the IRS and put a stake right through the vampire's heart.
However, before we stake the monster, the question has been posed, "Is there anyone who wants to keep the IRS?" The answer is that there are very few who do. In addition to looking on the internet and in the library I asked an executive with the IRS and a local (Los Angeles) CPA. The IRS person (who I shall not name at this time due to obvious reasons) said she and everyone in her office agreed that the IRS needed to be abolished and that she'd be the first to sign a petition to get rid of the Internal Revenue Service, even though she would need to find a new job. She did not know of anyone who wanted to keep the IRS and she works there! The CPA, Roland W. Fink (who also wants to abolish the IRS and so work himself out of tax preparation income), of the accountancy firm, Greenberg & Jackson, said he only knew of one person who wanted to keep the IRS. He had read a letter to the editor in the L.A. Times a few months ago from a Brad Sherman, Member of the California State Board of Equalization (the agency that collects sales tax for the State of California) in which Mr. Sherman stated that he "believe(d) that the federal government should tax based on ability to pay - and that a higher rate of tax should be imposed on those with the highest rate of income. Only an income tax provides a mechanism for progressive taxation."19 A progressive tax is one in which the rate increases as the income increases, the concept being to tax the higher incomes more than the lower, thereby somewhat equalizing the distribution of income. The progressive income tax system was and is promoted to the general public as the solution to (assumed) inequities in the ability and opportunity for people to make income. There are a few problems with this idea of a progressive tax, however. First of all, this is very much like the communist idea of "from each according to his ability to pay, to each according to his need". This concept didn't work in Russia and it does not work here.
Secondly, with all the loopholes and deductions that the upper income class can take on their returns the major burden of supporting the country goes to the middle and lower income class. This is typified in the following table. The data is taken from actual tax returns prepared by me for the tax year 1994. I averaged ranges of over $100,000.00 Adjusted Gross Income, $40,000.00 to $100,000.00 AGI and under $40,000.00 AGI. There were 23 returns in the over $100,000.00 range, 72 in the $40,000.00 to $100,000.00 range and 83 in the under $40,000.00 range. As can be seen, even though the percentage of tax paid by the over $100,000.00 range is only slightly higher than the other two categories, the percentage of “spendable” money is higher than the other two. As the deductions for the over $100,000.00 range more often include mortgage interest than the other two categories, this means that the lower two must pay rent out of their “spendable” money so the actual “spendable” money for the lower two categories could be assumed to be much lower than shown. State taxes are not included in these computations.
Adjusted Gross Income
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Deductions
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Total Tax including Social Security, Medicare and/or Self-Employment Tax
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Percent of Total Tax over Income
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“Spendable” Money (AGI less Deductions and Taxes
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Percent of “Spendable” Money over AGI
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151,891.00
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46,886.96
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29,349.10
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20.52%
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75,654.94
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49.81%
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61,824.90
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22,439.01
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12,611.70
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20.39%
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26,774.19
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43.31%
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20,993.74
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7,198.65
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4,066.61
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19.37%
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9,728.48
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46.34%
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Obviously, the current income tax system is not working as planned. It needs to be done away with and replaced. Is it going to happen? And how will it occur?
James Flanigan, in the L.A. Times, tells us that, "Sometime in the next year or so, the whole structure of your taxes will change."20 The talk in Washington is about taxes - flat taxes, consumption taxes, and national sales taxes. Different variations are a value-added tax in which a company is taxed on the difference between what it sells and what it buys, the unlimited savings allowance tax (USA tax) which would make savings non-taxable, flat tax rates of a set percentage on everyone's income (no or little deductions), and the national sales tax which is similar to the state sales tax that people are so familiar with.21
The Republicans claim a "contract with America" and part of that contract is a restructuring of the tax system. In an article in the Los Angeles Times, Rep. Bill Archer (R-Tex.) states, "We have a responsibility now to roll up our sleeves... and deliver."22 Furthermore, Archer said, "... a longer-term goal is the 'complete replacement ' of the current system of income taxation in favor of a 'national consumption tax,' or sales tax, that could serve as an 'engine to drive job creation... and economic activity.'"23 Columnist Patrick Buchanan has been writing for years about the need to change the tax system. He is in favor of a national sales tax.24 He cites many benefits from such a tax system, as does Colorado Representative to the U.S. House of Representatives, Dan Schaefer. Rep. Schaefer says that a national sales tax would be cheaper to administer, investment capital would grow, and exports would skyrocket.25
Will the national sales tax be our Van Helsing26? Will it save us from the blood-sucking IRS and drive the stake into its heart, behead it and bury it forever? Or will the IRS and the income tax only seem to vanish, only to reappear late at night when we least expect it? We must hang onto our garlic and crosses of the Constitution and help our Van Helsing to defeat the dreaded beast.
Copyright © 1995, 2000 by Tom Hill - All rights reserved.
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