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Taxes in America

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Tags Taxes and Spending

04/01/2000Charles Adams

The Free Market 18, no. 4 (April 2000)



The good news that tax audits and property seizures are down obscures a more important point: by slow degrees, step by step, the tax man in America has gained total control over everyone's economic life. An almost perfect system of espionage over every facet of the fiscal system has slowly evolved until there is absolutely nothing about the citizens' economic affairs that the government doesn't have under its powers of surveillance. The tax man continues to take away liberties, as Congress and the Executive, with the blessing of a majority of the Supreme Court justices, pluck out the sentries posted to protect the peoples' rights, and turn the people into tax slaves, Diocletian style.

Each fact that follows is pervasive in today's economic life but was non-existent in 1970. All banking records are photographed for Big Brother to see. All stock and securities transactions, real estate transactions, and interest and dividends are reported to the tax man. All part- time work, even babysitters and teenage garden helpers, are reported. All barter transactions and gambling winnings of significance are reported. All foreign accounts, holdings, and trusts are reported.

US citizens living abroad are reported to the IRS by the US Customs, on returning home. Passport applicants abroad are reported. Travelers checks and cash over $10,000 are reported on leaving or entering the US. Any moderately large cash deposits or withdrawals from bank accounts are reported. There are a multitude of fiscal penalties for failing to comply with a myriad of petty tax rules, however innocent or inadvertent.

There are surveillance and penalties on tax preparers when preparing an inaccurate return. Tax shelters must be reported. There are long prison terms for tax offenders far in excess of what violent criminals receive.

The above list of enslaving intrusions and punishments is by no means exhaustive. There are a myriad of other spying devises and punitive measures for tax enforcement. Special units prey on lawyers to keep them off-balance. A small town lawyer in California was sent to jail when he sent in a proper tax return without a check. Rather than send the matter to the powerful collection division, the IRS simply threw him in jail under a rare, almost unknown provision of the tax code. He complained, I'm a nobody. Wrong! He was a lawyer and other lawyers will get the message. There are special training sessions to teach agents how to entice people to report on their family and friends, exactly as Stalin's NKVD did in the 1930s.

The points referred to above did not happen at once; Congress took three decades to tear down the fences and dupe the sentries that stood guard over our fiscal liberties. Unlike other civilized nations that fine tax offenders as the primary punishment, our government takes delight in Roman-style cruelty.

Compare the 30-year prison sentence handed down by a Kansas City federal judge, Dean Whipple, against a woman, no less, named Trula Walker, with a 30-day house confinement given to Sophia Loren by an Italian judge for a similar size tax offense. Sentences of 25 years are not uncommon as an Oregon high-school coach was to learn.

Compare also our psychopathic punishments with those routinely given to violent criminals, who, if they are caught at all, have their choice of escape hatches. It is obviously more important to our government to enforce tax slavery with an iron fist, than to protect citizens from violence.

Besides the espionage against taxpayers and the savage punishments' the core of all tax slavery- there is the matter of being part free and part slave. Leo Tolstoy, the great Russian writer and humanitarian of the nineteenth century, gave us a modern definition of slavery in 1891: The essence of all slavery consists in taking the produce of another's labor by force. It is immaterial whether this force be founded on ownership of the slave or ownership of the money that he must get to live on.

Hence, the question is, how much of your money is owned by the tax man? To what extent are you a tax slave by the numbers? Tax slavery has been growing in each decade throughout this century, meaning tax freedom day has been slipping away. Tax Freedom Day in 1902 was January 31, the day average Americans stopped working to pay taxes and started working for themselves and their families. By 1978, it was April 30. The tax-cutting 1980s pushed the day to May 2. In 1998 it was May 10.

In the ancient world, chattel slavery was tolerated with little complaint. It wasn't too bad, or so it seemed if we look at the words of the philosophers and leaders of that time. That's our current attitude with regard to our tax slavery. It is not too bad, and as much as we hate to admit it, our Founders were a bunch of rabble-rousers when it came to taxation.

We tolerate what they would have given their lives to prevent. They read Montesquieu and believed him more than any other writer, and in his great work, The Spirit of Laws, he wrote about tax slavery, and they wanted none of it. British taxes qualified, as a - badge of slavery. In protest against British stamp taxes, they formed an underground organization called - The Sons of Liberty - to resist British taxes. They paraded through the streets of New York, Boston, and Philadelphia, singing anti-tax songs.

The British repealed the stamp tax act and the Bostonians erected a monument to commemorate the repeal. Patrick Henry recorded the monument in his writings, on which there was the Goddess of Liberty, with the wings of an angel. On the monument were the words: it was better to die than be a slave.

Nine years later Patrick Henry picked up the same theme in his famous speech in the Virginia convention in 1775. Every school child knows the words, Give me liberty or give me death!Our school children should also learn the rest of the speech: There is no retreat, but in submission and slavery. Our chains are forged. Their clanking may be heard on the Plains of Boston! The war is inevitable - and let it come!! I repeat sir, let it come!...Is life so dear or peace so sweet, as to be purchased at the price of chains and slavery?

The imagery is powerful. Slaves were manacled with chains forged by blacksmiths; as the slave moved about, the  clanking of the chains could be heard. Tax slavery could not have been depicted by the Founders in more powerful words.

Fear of tax slavery did not die with the Revolution, but lived on among our progenitors, until the twentieth century. Within 20 years after the Revolution, there were three significant tax revolts even with representation, in which a lot of people died fighting domestic taxes they didn t like. The Jeffersonian revolution in 1800 was against Federalist taxes, which were repealed and did not return until the Civil War era. Southerners raised the tax slave issue in their acts of secession in 1861. After the Civil War, fear of tax slavery emerged again when there was a movement to introduce an income tax in peacetime. An income tax was a war measure, so it was believed, and had no place in a free society during peacetime.

The Atlantic magazine also attacked tax slavery, and with this and other major periodicals attacking income taxation as a slave tax, it is no wonder the movement died. And when the income tax finally was enacted in a Populist era (1894), it was thrown out by the Supreme Court as unconstitutional.

When the twentieth century began, fear of tax slavery all but disappeared, and we have heard hardly a word on the subject. Big government and big wars demand big taxes. Big taxes will inevitably lead to tax slavery as we buck an iron law of history that when taxes are excessive people will rebel in one form or another, a theme emphasized by Montesquieu and so vividly demonstrated by our Founders. Often, throughout history when governments crack down on angry taxpayers, it has been more like putting gasoline on a smoldering fire, and has often burned down the very society it was supposed to protect.

Diocletian "saved" the Roman Empire by tax enslavement, and isn't our Congress in the same pickle? In both societies there developed a strong inclination to evade and avoid taxation, and tax slavery apparently was the only option for the government, a kind of tax martial law against an unruly society.

Our supposedly freedom-loving leaders don't think of freedom the way our Founders did. Freedom today has nothing to do with taxes' that's a  no free zone, like the no fly zone over Iraq. If taxpayers won't comply then their freedoms will have to go. Thus there is no remorse by Congress in transforming our tax system from an honor system to a tax spy system and slave system, Diocletian style.

Going back to the pre-1970 days, what would happen if your bank account wasn't photographed? If income from banks, stocks, and bonds was not reported? If part-time income wasn't reported? If real estate wasn't reported? If cash wasn't reported? If Americans living overseas weren't hounded by the IRS? If babysitter income wasn' t reported? Housekeepers? Gambling? If fines were used instead of psychopathic punishments?

Would the system work as it did for the first 50 years? Apparently not, so our Congress and Treasury seem to think. Thus we have two options: First, maintain the income tax slave system, adding additional muscle from time to time as needed; or, tear down the income tax system altogether. For the present, we pass on to our children in the twenty-first century the first option.


Charles Adams is the author of For Good and Evil: The Impact of Taxes on the Course of Civilization, Second Edition (Lanham, Maryland: Madison Books, 1999), from which this essay was adapted.


Charles Adams

Charles Adams (1930-2013) was an attorney and specialist in international taxation. He wrote extensively on taxes and their impact on civilization, for outlets including the New York TimesWashington Post, and Wall Street Journal. He was also an adjunct scholar at the Mises Institute and the Cato Institute. Among other books he was the author of For Good and Evil: The Impact of Taxes on the Course of Civilization​.

Cite This Article

Adams, Charles. "Taxes in America." The Free Market 18, no. 4 (April 2000).