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The Chodorov Principle

Income Tax by Frank Chodorov

Tags U.S. HistoryMonetary TheoryOther Schools of ThoughtPolitical Theory

02/17/2001William Stepp

During the 1950s, at the height of the McCarthy scare, conservative Republicans complained about the fact that alleged communists were ensconced in government jobs. The libertarian journalist Frank Chodorov (1887-1966) made the sensible reply that there was no need to go after these politically unpopular toilers. Instead, the way to get the communists out of the government was to get rid of the government jobs.

In this insight he was surely right, but why stop with government jobs? Frank Chodorov’s method of ridding the government of alleged undesirables can be generalized in what I call the Chodorov Principle: For every social problem A caused by government program X, problem A can be solved by abolishing program X. The principle can be applied at all levels of government—federal, state and municipal. The possibilities are intriguing and should appeal to partisans of all political persuasions.

For instance, both fiscal conservatives concerned about waste and fraud in the IRS and the Pentagon, and judicial strict constructionists opposed to overreaching Federal (and State) courts will find use for the Chodorov Principle. The former can invoke it by calling for the abolition of the IRS and the Pentagon; the latter can give it voice by advocating that the Federal and State courts be privatized. Good government goo-goos up in arms about rich candidates buying political elections can repeat his call for an end to political elections.

Free market libertarians disgruntled with monopoly snail mail delivery can propose the abolition of the Post Office, as Chodorov did in his pamphlet The Myth of the Post Office. Antiwar radicals opposed to the American Crusader State’s bid to impose its corrupt and murderous hegemony on foreign states and peoples can raise their Chodorovian banners both against entangling American political and military alliances, and for an America first and last defense policy.

More common ground will be found across political lines in Chodorov’s admonition "Don’t buy bonds!" Keeping resources away from the State is yet another application of his idea, and a way to reduce the number of social problems that arise from government intervention. Reduce the number of government programs and – poof! –watch the reduction in social problems that ineluctably accompany such programs. So, for libertarians, starving Leviathan is job one. Frank Chodorov wrote a book, The Income Tax--Root of all Evil, and a pamphlet, Taxation Is Robbery, in which he demonstrated the income tax’s mortal threat to civil society. 

Warren Buffett, CEO of Berkshire Hathaway, recently gave a speech in which he stated that lower income tax groups pay a higher percentage of their income in taxes than do higher income groups. What he didn’t say was that Frank Chodorov would have solved that problem by abolishing both the payroll and the individual income taxes. In fact, the application of the Chodorov Principle to all taxes simultaneously solves the liberal complaint about regressive taxes and the conservative one about progressive taxes.

In an answer to a question about the national debt, Buffett compared the corporate income tax to an annual dividend of $2.2 billion paid to "Uncle Sam," which grows with the increase in earnings of corporate America. He estimated Uncle’s "ownership" of Berkshire to be worth about $75 billion. Here we have a portion of what the Marxoids refer to, mutatis mutandis, as the "unearned increment." How to solve this problem? Chodorov’s answer would have been to abolish the corporate income tax.

What about the conservative lament about the capital gains tax not being indexed for inflation? Chodorov would have deep-sixed the capital gains tax. Ditto for the estate tax, a Progressive Era relic and caste warfare instrument that forces many family businesses to be sold on onerous terms, and that dissipates the economy’s accumulated capital structure created through years of saving and investment. 

According to Investor’s Business Daily, a recent Treasury Department study of the Earned Income Tax Credit showed that one-quarter of all EITC payments made in 1997 were fraudulent. To eliminate that matter, Chodorov would have consigned the EITC to the dustbin of history. His solution to the income tax payment disparity among income classes—the abolition of the income and payroll taxes—would have put more money into the hands of EITC recipients (their own money), thus obviating the alleged need for the EITC.

During the eight years the Clinton clique was in power, social security disability expenditures and fraud zoomed to record levels. Chodorov would have killed that program and pointed the way toward private disability insurance plans, covering both individual employees and employee groups.

As for the social security retirement program, with its compulsory participation and concomitant lack of consumer choice, high administrative costs, submarket returns, and patently political purpose, Chodorov’s elegant consideration would have been "Abolish the Social Security system!" In its place, he would have advocated the myriad of private retirement alternatives available, with their richer menu of choices, lower costs, higher potential returns, and absence of (or at least lesser) political involvement.

There are many forums to find applications of the Chodorov Principle. My own personal favorite is the New York Times; hardly a day passes without it covering at least one government program-scam, often in perplexed wonder or indignant horror. The metro section of today’s edition (Feb. 13) has a story about the spotty compliance of New York City hospitals with a 1985 law that requires them to report "adverse events" experienced by patients.

Although these lapses have caused no decline in the quality of service, local government officials are complaining that "administrative problems with the reporting system" are preventing them from helping hospitals find the cause of these events. Full compliance supposedly helps them improve their systems. Of course, their "systems" are all about the pelf and power wielded by politicians and bureaucrats, and ultimately about coercion of the unfortunate patients who find themselves gripped in the web of New York’s medical-therapeutic state. We need not tarry over the Chodorov Principle in this case, which gives the answer you already know.

In the 1950s and ‘60s, the term "xerox it," from the copier firm Xerox, came to mean to photocopy a document. Similarly, during the 1970s and ‘80s, the words "to FedEx something," after the company Federal Express, came to be synonymous with an urgent delivery. In the pioneering spirit of these concerns, I have a modest proposal to make. Is it asking too much for libertarians and other opponents of government spending programs, regardless of whether they are riddled with waste and fraud, to commit Frank Chodorov’s surname to the lexicon? The next time you decry a government spending program and call for its elimination, just say "Chodorov it." Reposing in libertarian heaven, Frank will be proud.



William Stepp

William J. Stepp is a New York writer who is active in anarcho-capitalist intellectual circles in New York.