Sunday, February 7, 2010

Many Greedy Hands

As was true of Lincoln's war, the two world wars were utterly devastating to the U.S. Constitution and rule of law in America. In all times and places, wars have been excellent diversionary tactics for tyrants and corrupt politicians.

Colluding with mercantilists just before WWI, Congress took two actions that had an atomic impact on the American people: passing the manifestly illegal Federal Reserve Act, and defrauding Taxpayers about what the 16th Amendment accomplished.Congress has milked the Taxpayer population to transfer a trillion dollars (ostensibly in "interest") to those counterfeiters’ accounts each year.

To roll World War II into a cash cow, Congress hired mercenary Walt Disney in 1943, to produce this IRS propaganda cartoon:

In the film, the "citizen's conscience" (narrator) rails at Donald Duck (the citizen doofus) and attempts to talk the viewer into making his quarterly, voluntary “victory tax” as a moral duty. Note the wicked transposition of morals: saving your money makes you a's the moral equivalent of prostitutes and booze! But making your "fair share" payment to your dear, kind old "Uncle Sam"? That's virtuous living! That's an American!

Those who assert Tom Brokaw's "Greatest Generation" was smarter than the average 18-year-old today, need to have their heads examined. As you watch the film, you'll be flabbergasted that adults could have been swayed by such bald, Soviet-style propaganda. Actually, not very many were.

The tax industry and financial industry are two sides of a counterfeit coin, milking the productive people of America. The propaganda continues to roll off CPA's desks, Turbo Tax websites, your mortgage broker's blog, and financial authors who are just credible enough to fool most Taxpayers.

The poster girl for this tactic is Wall Street author Amity Shlaes, a member of the Council on Foreign Relations and one of several extremely clever tax disinformation peddlers in the financial sector. Shlaes published a book in which for 250+ pages, she moans and flails her arms against "the system" while planting legal and historical disinformation.

I want to comment on one excerpt from Ms. Shlaes book, The Greedy Hand: How Taxes drive Americans crazy and what to do about it -- but don't buy the book expecting to learn what to do about it. Shlaes offers nothing but the usual gripes about loopholes...then suggesting some of her own. Nothing about the Congress' fraud at all!

I reproduce the excerpt because the author does accurately portray Beardsley Ruml's part in the scam:

“The father of the modern American state was a pipe-puffing executive at R. H. Macy & Co. named Beardsley Ruml. Ruml, the department store’s treasurer, also served as chairman of the board of directors of the Federal Reserve Bank of New York and advisor to President Franklin Roosevelt during World War II…

“In 1942, not long after Pearl Harbor, lawmakers raised income taxes radically, with rates that aimed to capture twice as much revenue as in the previous year. They also imposed the income tax on tens of millions of Americans who had never been acquainted with the levy before. The change was so dramatic that the chroniclers of that period have coined a phrase to describe it. They say that the “class tax” became a “mass tax.”

[Shlaes misrepresents the facts here. Congress did NOT at that point levy a wider tax; they merely began misrepresenting the law as they expanded their original "soak the rich" plan. That original plan was the camel's nose in the tent, so that the average working man would entertain the idea of an income tax after the Supreme Court had shot down the Revenue Act of 1894.

As former Rep. Phil Hart explains in his masterful history of the period, called Constitutional Income: Do You Have Any? -- first Congress represented the income tax as just for the rich. Some people swallowed it. Then, using the "war effort" as cover, they went for the wallets of average Americans. If the tax had suddenly become universal as Shlaes paints it, it would have been an unconstitutional taxation scheme, for which the US Supreme Court had slapped Congress' hand after the Revenue Act of 1894. It was still illegal to tax everyone.

As I explain in the Tax Honesty Primer above, the principles and standing rulings on American tax law hold that Congress must specifically stipulate which activities trigger a legal duty for tax. The income tax is an excise on privileged activities, not a direct ('head') tax, as the US Supreme Court rulings quoted above, make clear. But war diverted the citizens' minds as war always does. In the same way that WWI diverted the people from considering what had been done to them and our Constitution in 1913 -- with Congress criminally granting a counterfeiting concession to a cartel of private banks.]

“The new rates were law. But Americans were ill-prepared to face a new and giant tax bill…” [Yes, the new rates were law. But the Tax Code still had to specify which subjects (activites or domicile classes) were taxable. A rate does not establish a legal duty on someone; the law must specify the subject of the tax — the activity to be taxed or the domicile class. Indeed, the Tax Code does stipulate -- lists very specifically many privileged activites relating to alcohol, tobacco, firearms, merchant shipping, government contracting, etc. But Shlaes, appearing so indignant about 'pipe-puffing executives', continues to give them cover for fraud:]

“A Gallup poll from the period showed that only some 5 million of the 34 million people who were subject to the tax for the first time were saving to make their payment. In those days, March 15, not April 15, was the nation’s annual tax deadline... ["34 million people...were subject to the tax" is a demonstrable LIE; the key propaganda point Shlaes makes in her book. The scammers imposed a quarterly, not an annual, payment 'deadline'; but since almost nobody owed a tax according to the law, most people didn't pay up. The law did NOT make 34 million Americans suddenly "subject to the tax".]

“The Treasury nervously launched a huge public relations campaign to remind Americans of their new duties. A Treasury Department poster exhorted citizens: “You are one of 50,000,000 Americans who must fill out an income tax form by March 15. DO IT NOW!” For wartime theatergoers, Disney had prepared an animated short film featuring citizen Donald Duck laboring over his tax return beside a bottle of aspirin. Donald claimed exemptions and dependent credits for Huey, Dewey, and Louie… As March 15, 1943 neared, though, it became clear that many citizens still were not filing returns… [Yes, because the law did not actually require it. The Congress was pulling a national fraud of almost unimaginable proportions. But the very puerile, brazen prpaganda quality of the cartoon suggests that, indeed, many Americans' heads did begin to soften...]

“Enter Ruml, man of [criminal] ideas. At Macy’s, he had observed that customers didn’t like big bills. They preferred making payments bit by bit, in the installment plan, even if they had to pay for the pleasure with interest....So Ruml devised a plan, which he unfolded to his colleagues at the Federal Reserve and to anyone in Washington who would listen. The government would get business to do its work, collecting taxes for it. Employers would retain a percentage of taxes from workers every week–say, 20 percent–and forward it directly to Washington’s war chest.

“This would hide the size of the new taxes from the worker. No longer would the worker ever have to look his tax bill square in the eye. Workers need never even see the money they were forgoing. Withholding as we know it today was born.

“This was more than change, it was transformation. Government would put its hand into the taxpayer’s pocket and grab its share of tax–without asking.

“Ruml hadn’t invented withholding. His genius was to make its introduction palatable by adding a powerful sweetener: the federal government would offer a tax amnesty for the previous year, allowing confused and indebted citizens to start on new footing. It was the most ambitious bait-and-switch plan in America’s history.

“Ruml advertised his project as a humane effort to smooth life in the disruption of the war. He noted it was a way to help taxpayers out of the habit of carrying income tax debt, debt that he characterized as ‘a pernicious fungus permeating the structure of things.’

"The move was also patriotic. At Macy’s, executives had found that a ‘young man in the comptroller’s office who was making $75 or $100 [a week was] called into the navy at a salary of $2,600 and we had to get together and take care of his income tax for him.’ The young man, Ruml saw, would face a tax bill for a higher income at a time when he was earning less money in the service of his country. This Ruml deemed ‘an impossible situation.’ [Yes, old Beardsley was truly concerned. Listen to every crook in Congress and hear the same dear concern. What national treasures, these people.]

“Ruml had several reasons for wagering that his project would work. One was that Americans, smarting from the Japanese assault, were now willing to sacrifice more than at any other point in memory. The second was that the federal government would be able to administer withholding–six successful years of Social Security showed that the government, for the first time ever, was able to handle such a mass program of revenue collection.

“The third was packaging. He called his program not ‘collection at source’ or ‘withholding,’ two technical terms for what he was doing. Instead he chose a zippier name: ‘pay as you go’… “The policy thinkers of the day embraced the Ruml arrangement. This was an era in which John Maynard Keynes dominated the world of economics. The Keynesians placed enormous faith in government. The one thing they liked about the war was that it demonstrated to the world all the miracles that Big Government could work. The Ruml plan would give them the wherewithal to have their projects even, they sensed, after the war ended.

“Keynesianism also said high taxes were crucial to controlling inflation. The Keynesians saw withholding as the right tool for getting those necessary high taxes.... [No, actually the Federal Reserve members knew that high taxes were necessary to funnel to them, for the 'privilege' of printing America's money. Supposedly. In truth, most 'money' today is nothing but a computer cipher recording a DEBT, as you saw in the article above, entitled Crooks in Their Own Words. But of course Amity Shlaes is not about to peck the Wall St. hand that feeds her.]

"Conservatives played their part in the drama. Among withholding’s backers was the man who was later to become the world’s leading free-market economist, Milton Friedman. Decades after the war, Friedman called for the abolition of the withholding system. In his memoirs he wrote that ‘we concentrated single-mindedly on promoting the war effort. We gave next to no consideration to any longer-run consequences. It never occurred to me at the time that I was helping to develop machinery that would make possible a government that I would come to criticize severely as too large, too instrusive, too destructive of freedom. Yet, that was precisely what I was doing.’ With an almost audible sigh, Friedman added: ‘There is an important lesson here. It is far easier to introduce a government program than to get rid of it.’.”

* * *

For the truth and accurate investigative journalism about the income tax and the corrupt mechanations in Congress of that day, forget Shlaes' book; read Rep. Phil Hart's book.

Ms. Shlaes certainly puts on a good show for the uninitated, appearing to be disgusted at the income tax while actually covering up the real story: for us estimated 67 million non-filers, the war is over...we won. April 15th is just another day on the calendar for us. Congress is busted, and the mercenary Mr. Disney can't cover their tracks now; he's dead.

“Everyone has to pay income taxes!” is the mantra of those who've defrauded Taxpayers for 97 years. Watch that 1943 propaganda cartoon as often as you must, to remember how corrupt the U.S. Congress has been since the launching of their 1913 Federal Reserve heist.

So many Americans have died, all to cover the tracks of multi-millionaire criminals. WWI was the cover Congress needed to institute the Fed scam; WWII was their cover for making their IRS scam into every citizen's "duty". Or as the bumper sticker says, "Income Tax Withholding: A Temporary Wartime Measure Since 1943".

Donald Duck, you're off the hook. Amity Shlaes, you're a cartoon.