It has nothing at all to do with paying the government’s bills.
by Alan Stang
TOTE THAT barge, lift that bale, and make sure you pay on time. April 15th approaches and my guess is that only a relative handful of Americans knows why we have the income tax. With rare exceptions, they will exclaim that we must have the income tax to “pay the expenses of the government.” Of course the truth is exactly the opposite. The income tax has nothing to do with paying the expenses of the government.
First an obvious fact, something you already know. When was the country created? Pick a date. Many would pick July 4th, 1776, when the Continental Congress adopted the nation’s birth certificate, the Declaration of Independence. Many others would pick the date of ratification of the Constitution. Let’s arbitrarily use 1776.
Now, when did we get the income tax? Except for the temporary income tax during Lincoln’s Communist War to Destroy the Union, there was no income tax in this country until 1913, when the U.S. Supreme Court upheld its validity in Brushaber, 240 U.S. 1. Indeed, even then it did not affect more than a handful of our people.
As late as 1942, only 3% of our people paid income tax. Until that date, most people probably had heard of it, but they didn’t pay it and had never seen the form. It didn’t apply to them. Indeed, if you check the records, you will see that in 1941, when the reader may have already been alive, the federal government collected more in alcohol and tobacco taxes than it did in income tax. Remember “moonshine” and the “revenooers?”
The income tax finally did hit the people in a big way only in 1942, and then only because we were of course in the middle of the war Franklin Roosevelt had finally succeeded in tricking us into by arranging Pearl Harbor. Even so, the conspiratorial warmongers could put the tax over only by calling it the “Victory” tax, a “temporary” tax collected by withholding, which would be repealed as soon as we had won the war.
Question: Name for me a year, just one year, between 1776 and 1942, when the nation couldn’t function because we had no income tax. Can’t find one? Okay name a month, just one month, when the nation collapsed, couldn’t pay its bills, because we had no income tax. How about a week?
Indeed, remember that during all that time, we fought many wars. We won them all. Yes, we won World War II with the income tax because it was “temporary,” not yet a permanent part of our lives, but mainly because we fought that war on behalf of Stalin. With the income tax we have not outright won a war since, from Korea to Iraq.
Remember, you knew all this. I am simply reminding you of something you already knew. So, if we didn’t have an income tax, yet never collapsed, where did the federal government get the funds to pay for itself? Again, they came from alcohol and tobacco taxes.
They also came from tariffs, which made foreigners pay for the privilege of selling products here. And they came from other indirect taxes. These were enough to pay for the few powers the Constitution grants to the federal government. Did you know that one of the biggest problems in Congress before the turn of the Twentieth Century was what the newspapers called the “tariff monster?” So much tax money was pouring into the Treasury that Congress didn’t know what to do with it.
So, if we don’t need an income tax to pay for the federal government, why do we have one? In August, 1942, Meyer Jacobstein, of the Brookings Institution, testified to a Senate subcommittee that “it is necessary to mop up the excess purchasing power of the community . . . because of its effect on the price situation . . . .” There are also a couple of Ohio University economists, Richard Vedder and Lowell Gallaway, whose study showed that for every dollar of increased taxes, Congress increased spending $1.58. In other words, taxes cause spending.
Now, another question you know the answer to. When there was money (gold and silver) behind our currency, the government had to deposit in the treasury the appropriate amount of money, in grains or ounces, whenever it printed paper currency. In the same way, you must deposit the appropriate sum in your checking account before you write a check against it.
U.S. currency used to say it was “redeemable” downtown at the bank. The bank would pay the amount of money printed on the face of the bill to the “bearer on demand.” Even early Federal Reserve Notes said that. The only difference between your personal check and government currency is that your check names the person to be paid and the government currency does not. It paid the “bearer,” whoever had it in his hand when he walked into the bank.
Now here comes the question. Since there no longer is any money behind our currency; since the government no longer need find and deposit rare gold or silver into its account in order to write a check against it; and since paper and ink are relatively limitless in supply – indeed, computer entries, today’s “money,” are utterly limitless – why does the government bother to tax at all? Why the audits, the penalties, the raids and seizures, the divorces and suicides?
Why doesn’t the government just print what it needs; bigger numbers on bigger pieces of paper? Even easier, why not just boot up and click on ever bigger computer entries; then use those computer entries to pay the bills? This is what Meyer Jacobstein was talking about. The answer is that doing so would constitute hyperinflation, which would send prices to Alpha Centauri and destroy the dollar here.
That is what happened in the Weimar Republic in post-World War I Germany, where the process took two years. It is happening now in Zimbabwe. The reason it has taken so long to happen here is that the financial geniuses who run the conspiracy for world government run the unbacked printings and now the computer entries through the non-Federal non-Reserve System, which is brilliantly designed to confuse and conceal what is happening. Extra layers of obfuscation have since been added, including the CDO and other alphabetical horrors. I have explained the process many times; no need to do so again here. But it is happening and when the train stops we shall be in Weimar.
The man with the answers is Beardsley Ruml (illustrated above). Ruml was a lifelong Rockefeller factotum. Rockefeller is the family David Rockefeller boasts in his Memoirs is part of a globalist conspiracy against the United States. Ruml was chairman of the New York Fed. It was he who devised World War II “temporary” withholding. It was originally named for him: the “Ruml pay-as-you-go plan.”
In January, 1946, American Affairs published a speech by Beardsley Ruml. The title was, “Taxes for Revenue Are Obsolete.” In it, Ruml speaks of two remarkable changes: “the gaining of vast new experience in the management of central banks,” and “the elimination, for domestic purposes, of the convertibility of the currency into gold.”
Under the heading, “What Taxes Are Really For,” Ruml listed three main purposes: “as an instrument of fiscal policy to help stabilize the purchasing power of the dollar”; “to express public policy in the distribution of wealth and of income, as in the case of the progressive income tax and estate taxes”; “to express public policy in subsidizing or in penalizing various industries and economic groups.”
Redistribution of the wealth by government is communism. Subsidizing and penalizing various industries by government is fascism. You are seeing such fascism right now in the government “bailout” of certain favored companies. For instance, the government saved Goldman Sachs but flushed Lehman Brothers. What about stabilizing the purchasing power of the dollar? Ruml says this by far is the most important reason for the income tax and other federal taxes, sometimes called “the avoidance of inflation.”
Ruml explains that “federal taxation has much to do with inflation and deflation, with the prices which have to be paid for the things that are bought and sold. . . .” If people have “too much” purchasing power, prices will rise. “. . . This will mean that the dollar is worth less than it was before – that is inflation. . . .
“The dollars the government spends become purchasing power in the hands of the people who have received them. The dollars the government takes by taxes cannot be spent by the people, and, therefore, these dollars can no longer be used to acquire the things that are available for sale. . . .” So this is what Meyer Jacobstein meant by “mopping up purchasing power.”
The true purpose of the income tax, therefore, is to inhibit the inflationary effect of ravenous government spending. The income tax allows our rulers to juggle their fiscal balls in the air a bit longer, by offering a safety valve through which the inflationary pressure generated by that spending can more safely be released. The income tax does that by transferring purchasing power from the people to the government. Again, it has nothing at all to do with paying the government’s bills.