HOW OUR TAXATION SYSTEM SCREWED EVERYTHING UP

[4/16/17]  On April 15, 1865, President Lincoln died. He was shot the night before in Ford’s Theater.

On April 15, 1912, the Titanic sank. It struck an iceberg the night before. Among the 1,514 lives lost were millionaires John Jacob Astor IV, Benjamin Guggenheim and Isa Strauss, all of whom were vocal opponents of the Federal Reserve Act.

In 1954, April 15 became the deadline for filing income tax returns.

Originally, Article I, Section 9 of the U.S. Constitution prohibited a direct federal income tax on American citizens: “No capitation or other direct tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken.”

The federal government’s revenue was derived from excise taxes on specific items like salt, tea, tobacco, etc., and tariff taxes on imports. Prior to the Civil War, most tariff taxes were collected at Southern ports, like Charleston, South Carolina. Tariffs made foreign goods more expensive, motivating people to buy domestically produced goods, made mostly in Northern factories. The South had few factories, as its economy was based on agricultural crops, mostly cotton and rice, which unfortunately relied heavily on slave labor. Thus, the tariff taxes that helped the North, hurt the South.

During the Civil War, Republican President Abraham Lincoln passed an emergency “Revenue” income tax to help fund the Union. It was repealed in 1873.

The first non-emergency “peacetime” income tax was attempted in 1894, but the Supreme Court declared it unconstitutional in Pollock v Farmers’ Loan.

Justice Stephen J. Field concurred: “The income tax law under consideration … is class legislation. Whenever a distinction is made in the burdens a law imposes or in the benefits it confers on any citizens by reason of their birth, or wealth, or religion, it is class legislation, and leads inevitably to oppression and abuses. …”

Justice Field continued: “It is the same in essential character as that of the English income statute of 1691, which taxed Protestants at a certain rate, Catholics, as a class, at double the rate of Protestants, and Jews at another and separate rate.”

Industrialists helped bring about the greatest rise in the standard of living for the average person, with more goods at cheaper prices, than ever before in world history. Industrialists then began to create monopolies, influence political parties and plot to gain control of the banking system.

Republican President Theodore Roosevelt attempted to limit their power with an inheritance tax. Republican President William Taft yielded to mounting public pressure to tax these rich industrialists by placing a two percent tax on corporate profits, as only the wealthiest owned corporate stock.

With World War I threatening, Democrat President Woodrow Wilson naively thought that if tariff taxes between countries were eliminated there would be world peace. Wilson proposed replacing the lost tariff revenue with an income tax on the wealthy. This was passed in 1913 with the 16th Amendment.

Originally, the income tax was a one percent tax on the top one percent richest people. It was a type of “soak-the-rich” tax only intended for industrialists such as Rockefeller, Carnegie, Vanderbilt, Fisk, Flagler, Gould, Harriman, Mellon, J.P. Morgan and Schwab. Industrialists strategically avoided paying the income tax by transferring their assets into tax-exempt charitable and educational foundations, such as the Rockefeller Foundation and Carnegie Foundation.

This tax-exempt category had previously been for churches, which historically were the providers of social welfare through their: hospitals, medical clinics, orphanages, schools, soup kitchens, where they cared for orphans, widows, maimed soldiers, prisoners, unwed mothers, widows, shut-ins, homeless, juvenile delinquents and immigrants.

Churches also provided a significant social service by instilling morals and virtues into the nation’s population. This helped reduce crime, child abuse, broken homes, derelicts, and other social ills, which, since the relinquishing of these responsibility to government, have become an immense financial burden on taxpayers, being, in many cases, the largest items on State budgets.

In 1942, with World War II, Democrat President Franklin Roosevelt increased and expanded the federal income tax with “the greatest tax bill in American history,” even instituting paycheck withholding.

John F. Kennedy stated April 20, 1961: “In meeting the demands of war finance, the individual income tax moved from a selective tax imposed on the wealthy to the means by which the great majority of our citizens participate in paying.”

Beardsley Ruml, chairman of Macy’s Department Store, became director of the New York Federal Reserve Bank where he promoted the idea of withholding taxes from people’s paychecks.


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