White House Floats Idea of Dropping Income Tax (altogether)

New York Times, Business and Financial Desk, Page 14, Column 5 ^ | 2/8/2003 | EDMUND L. ANDREWS

[Bigun]

White House Floats Idea of Dropping Income Tax Overhaul By EDMUND L. ANDREWS

WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

[inquest]

Perhaps you could provide a good example of how our political affairs have been adversely affect by foreign trade?

Notwithstanding the fact that it isn't foregn trade itself that's been causing problems, but the lack of proper firewalls to prevent its undue influence, perhaps the most palpable effect it's had has been Bush's bending over backwards to please Mexico City. He routinely seeks Fox's approval of our immigration policies, he has willingly presided over the virtual amnesty of millions of illegal aliens, and he has pushed the states to allow Mexican trucks free access to our highways.

In addition, China has been gaining a foothold into our media through a deal with AOL/Time-Warner, they've accomplished an effective takeover of the Panama Canal through its Hutchison-Whampoa syndicate, and our own War on Terror is being hindered by a very unhealthy economic relationship with Saudi Arabia, the chief sponsor of our enemies. Plus, free-trade advocates like to claim that their ideas create peace between nations by uniting their interests, but they also create pretexts for going to war, as with Operation Desert Storm.

I just can't possibly see that the more we get glued to organizations like NAFTA, FTAA, and WTO, the better position we'll be in to defend our sovereignty. I mean, just look at Europe.

[ancient_geezer]

If you're referring to what Hamilton called "exorbitant duties", it's safe enough to say that economic science has advanced somewhat in 200 years such that we can determine with a reasonable degree of certainty, what tariff rates would yield the greatest revenue

That "greatest revenue" tariff rate is rather low if one assumes it is to take the place of taxes now paid under individual or corporate income taxes. The absolute amount of revenue generated is not likely to be substantially much more than is currently retrieved from tariffs now in effect.

Example, reducing taxes in the domestic corporate sector allows a decline in domestic prices, adding a tariff onto foreign imports raises those prices in a much smaller volume of goods. The consequence is people move from taxed foreign goods to domestically produced goods without the benefit of same revenues being provided to replace the original revenue flow.

It certainly wouldn't be able to maintain current levels of revenue, though I don't see why that would be a problem.

Nations are quite capable of deficits for a time, that is true. At the cost of high inflation and devaluation of the monetary system. That is the result rather than curtailing programs that you might wish for.

All they were talking about was indirect taxation vs. direct taxation, and about taxation of states vs. of individuals. Nothing about internal vs. external taxation.

You figure the situation to be better between the interests of foreign nations in compitition with our own? If so then you are indeed short sighted.

The fact remains that for about the first century or more of our history, import duties formed the backbone of federal revenue, occasionally spiced by internal excises and direct taxes as it became necessary. And it was a time of great prosperity and of true national independence.

It was also an sparcely populated low technology agrarian society with a frontier evolving into the high tech society of today. You are figuring on turning back that clock?

[ancient_geezer]

The fact remains that for about the first century or more of our history, import duties formed the backbone of federal revenue,

Just in case you missed the significance of evolving from a frontier agrarian society to the current high tech society:

That backbone of federal revenue was based on the very substantive condition that the American people were dependant on imports for manufactured articles. They had to buy foreign imports if the bought anything manufactured hence paying taxes through tariffs was unavoidable for those early economic conditions. It was not until the mid 1800's that that balance began to change, by the 20th century we manufactured more than we imported and using tariffs as a reliable source of revenues became totally untenable as people quit purchasing imports in favor of domestic manufacture.

Today the balance of imports to domestic business is

2001 imports goods & services = 1,167.2 + 215.8 = $1,183.0 billions

2001 domestic goods and services = 8,416.1billions

The extreme reverse of the conditions that existed at the beginning years of this nation.

Figuring that collections of taxes from citizens through tariffs on imports can be the backbone of federal revenues today is nothing but a pipedream.

Secondly, it is counterproductive to use tariffs for revenue collection from the viewpoint that tariffs end up embedded into the prices of goods and services and thus not perceived as a burden imposed by government. That does nothing more than perpetuate the idea of the free lunch and continued growth of government largess which is just the opposite of which we should be fostering.

[graycamel]

Great idea but the French would veto it :)

[graycamel]

thanx for the el linkos

[inquest]

Nations are quite capable of deficits for a time, that is true. At the cost of high inflation and devaluation of the monetary system. That is the result rather than curtailing programs that you might wish for.

Pure hypothetical. One could also speculate that such sustained devaluation would be politically untenable, and then they'd have to cut many programs. In any case, that's no argument against cutting taxes, or against restricting government's ability to levy them.

Today the balance of imports to domestic business is

2001 imports goods & services = 1,167.2 + 215.8 = $1,183.0 billions

2001 domestic goods and services = 8,416.1billions

So what you're telling me is that under tariffs alone, federal revenues will drop to approximately 10% of what they curently are?

Figuring that collections of taxes from citizens through tariffs on imports can be the backbone of federal revenues today is nothing but a pipedream.

Secondly, it is counterproductive to use tariffs for revenue collection from the viewpoint that tariffs end up embedded into the prices of goods and services and thus not perceived as a burden imposed by government. That does nothing more than perpetuate the idea of the free lunch and continued growth of government largess which is just the opposite of which we should be fostering.

You realize that those two objections contradict each other? One the one hand, you're saying that tariff revenues would never be enough for a "modern" government, and on the other, you're suggesting that they would result in excessive taxation.

[ancient_geezer]

Pure hypothetical.

You had better take another look at history my friend. Specifically Decline of the Roman Empire, Pre-Nazi Germany 1900's, United States after the Civil War, etc:

Before the Income Tax page 1

by G. Edward Griffin This report is adapted from two earlier articles by G. Edward Griffin appearing in the April 13, 1987 and February 29, 1988 issues of THE NEW AMERICAN.

• "It is a sobering thought that the federal government could operate - even at its current level of spending - without collecting any taxes whatsoever. All it has to do is create new money through the Federal Reserve System, a process called monetizing the debt. As a matter of fact, much of the money it now spends is obtained that way. The politicians who authorize that process know that this is not true debt, because no one in Washington really expects to repay it. It is merely a means of raising money to run the government without increasing taxes. Actually, the inflation that results from monetizing debt is just as much a tax as any other, but, because it is hidden and so few Americans understand how it works, it is far easier to collect than a tax that is out in the open. "

 

Before the Income Tax Page 3

• "With the outbreak of war between the northern and southern states, there was urgent need on both sides for massive armies and equally massive funding. In the South, almost the entire amount was raised by fiat money - paper bills with no backing in gold or anything of tangible value. In the North, however, Congress struggled to raise revenue in accordance with the Constitution. War was exactly the kind of "exigency" foreseen by the Founding Fathers when they established the principle of apportionment. So on August 5, 1861, Congress enacted the nation's fourth direct-tax revenue bill for the stated amount of $20 million. It was similar to the previous bills except that this time slaves were no longer taxed as property - only land, "improvements," and dwellings. The big departure, however, was that it also contained a provision to tax incomes. Congress did not like the idea of having to get taxes on a piecemeal basis. It wanted a continual flow of income without having to justify its specific purpose and without stated amounts. It looked for a way to bypass the apportionment process.
  
  But how? All direct taxes had to be apportioned. That is what the Constitution mandated. The solution was easy: Since an excise tax is an indirect tax and does not have to be apportioned, they simply redefined the income tax as an excise tax.
  
  The "excise" tax was a flat three percent of all income over $800 a year. Considering that the per capita income at that time was only about $150, that was a substantial exemption. Putting aside the merits or demerits of an income tax in general, we are dealing here with the concept of exemptions from that tax. This is, once again, the feudal tradition of noblesse oblige, but under a slightly different form. It is directly contrary to the concept of taxation with representation. If some are exempt from the tax, for whatever reason, and if they continue to have representation, then those who do pay it are denied an increment of consent and representation which is in direct proportion to the exemption.
  
  Inflation Tax
  
  In retrospect, the war-emergency income tax proved to be a relatively unimportant source of revenue. By far the greater part came from government debt and fiat money, which, incidentally, also was contrary to clear provisions of the Constitution. The Lincoln Administration raised a total of about $2.7 billion in bonds and "greenbacks." The direct tax on property pulled in about $17 million. The income tax, over the ten-year period it remained in force, raised about $347 million. Wars are seldom financed out of tax revenue alone. Inevitably, they are funded by government debt, the monetization of which causes inflation - a form of taxation few people understand. Americans in the northern states paid, in addition to the property tax, a hidden tax of a full one-half of all their savings as a result of a 50 percent decline in the purchasing power of their money during that period."

You realize that those two objections contradict each other?

Not at all, one deals with taxes per-se the other deals with growth of government for lack of visibility of tax burdens.

One the one hand, you're saying that tariff revenues would never be enough for a "modern" government,

True.

and on the other, you're suggesting that they would result in excessive taxation.

I suggest they would do nothing to curb tthe growth of government however it is financed. When the tax burden is hidden in inflation, (e.g. price increases of goods and services) it merely fosters the fiction of a free lunch on the back of someother mythological other guy, and demand for largess. Thus government grows without bound for lack of visibility of the real burdens and consequent on the part of the electorate.

If people believe in the toothfairy (i.e. some other guy is footing the bill) there is no restraint on the growth of government, as is exemplified in socialist government of the Eurpean Union and their VAT systems.

[inquest]

You had better take another look at history my friend. Specifically Decline of the Roman Empire, Pre-Nazi Germany 1900's, United States after the Civil War, etc

The Roman Empire was rotten to the core for a good number of reasons. The devaluation of its currency was at least as much a symptom as a cause of its problems. As for the other two examples you mentioned, those were problems that resulted from wars, not from tax policies. Just one of many things that makes war a thing to be avoided.

I certainly wouldn't advocate sticking to tariffs alone while trying to finance a war effort, but there's no indication that such a policy during peacetime would lead to the impression that government goodies can come without cost. The social-welfare state didn't get going until after the income tax replaced the tariff as the primary source of federal revenue, and that's certainly no conincidence. During the tariff era, there was no effort to take advantage of people's supposed ignorance of how government raises its money, in order to spend into oblivion. Rampant inflation during peacetime is simply next to impossible unless the political system is so corrupt as to not allow any meaningful opposition. And even then, taxes are likely to be oppressive anyway.

[ancient_geezer]

but there's no indication that such a policy during peacetime would lead to the impression that government goodies can come without cost.

You must be living with your head in the sand:

The Honorable James DeMint (R-SC)
United States House of Representatives
THURSDAY, APRIL 5, 2001
12:00 noon

• "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government. And at that point, DeMint warns, we have reached a major crisis in our democracy."

---

Milton Friedman as quoted by Northwest Florida Daily News, 10-16-2000:

• "If we're to have an income tax, it's a good thing for everyone to pay at least a nominal amount," he said. "If non-taxpayers become a majority in society, what would restrain them from voting for ever higher taxes on others?"

---

Walter Williams, World Net Daily, 10-25-2000

According to the most recent U.S. Treasury Department figures, in 1997 the top 1 percent of income-earners (those with income of $250,000 and higher) paid 33 percent of all federal income taxes. The top 5 percent of income-earners ($108,000 and over) paid 52 percent, and the top 50 percent ($36,000 and over) paid 96 percent of income taxes. Guess what the bottom 50 percent of income earners paid?

If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?

Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamors for more from government figuring the top 40% of income earners/producers foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC.

Those who perceive little burden play the role of Poor little Paul:

Effective Individual Federal Income Tax Rate (Percent of gross income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
Lowest Quintile	-0.6	-0.8	-0.2	-0.5	-0.2	-1.3	-1.9	-2.9	-3.4	-5.6	-6.8
Second Quintile	3.6	3.9	4.6	3.5	3.9	3.2	3.3	2.7	1.8	1.8	0.9
Middle Quintile	7.1	7.5	8.3	6.8	6.8	6.1	6.5	6.3	5.9	6.1	5.4

Those that readily perceive some of the burden.

Effective Individual Federal Income Tax Rate (Percent of gross income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
Fourth Quintile	9.7	10.4	11.3	9.5	9.3	8.7	8.9	8.7	8.5	8.7	8.4
Highest Quintile	15.8	16.3	17.1	14.5	14.3	15.1	15.1	14.8	15.5	16.2	16.1

To play the role of mean ole Rich Peter.

While Congress plays both ends against the middle; hiding the real burden in inflation, higher prices on all goods and services, lower takehome pay, lower return on investment, and higher interest rates. All keeping the poor right where they are and pushing for more freebees.

Consider that 15.3% SS/Medicare tax on the 1st $75K of wages/self-employment income, plus the 6% Federal/State Unemployment tax, all of which are but a portion of the effect of federal taxes embedded the price of all products we purchase. Taken together with the Individual tax rates above we all pay more than:

Effective Total Federal Tax Rate (Percent of reported income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
All Families	22.8	23.4	23.5	21.4	21.8	22.6	22.5	22.6	23.5	24.7	24.2

Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0

---

60% of the voters PERCEIVE no problem with the income taxrates and vote for polidiots that promise to bring home the most bacon because they are the only ones that benefit from higher taxes with more spending on socialistic "gimme" programs.

We are all paying through the nose, rich and poor while politicians play the tune of envy and resentment that Americans continue to respond to not understanding the full picture what is happening to them. As this continues under Bush or anyone else for that matter, we can expect a liberal tax and waste congress for many years to come.

The NRST is a means to open VOTERS eyes to the reality, and cause the very necessary change in perception need to effect a change in our representation and what we demand from government.

[inquest]

Hmmm, let's see... quote's from 2001 and 2000, and data going back to 1977. My history may be a little rusty, but I'm pretty sure these dates are rather solidly in the "income tax" era, as opposed to the "tariff" era. So I think you'll need to do a little better than that in order to make your point.

[ancient_geezer]

The social-welfare state didn't get going until after the income tax replaced the tariff as the primary source of federal revenue, and that's certainly no conincidence.

Actually we were well on the way at the end of the 19th century, The theories of Marx was very popular in this country throughout the later 1800's and early 1900's. The tariff was extremely unpopular since they were precluding access of import goods and services due to extemely high rates and rampant trade wars, inflation was rampant and the "soak the rich mindset" was a very populist view of the times and was one of the dominant factors for the popularity of the 16th amendment in the land.

All the income tax did was reinforce the perceptions of the free lunch and accelerate the transition to the current state of affairs.

Rampant inflation during peacetime is simply next to impossible unless the political system is so corrupt as to not allow any meaningful opposition.

We and many other nations have been through many such bouts of inflation in history and not all of them have been associated with wars.

And even then, taxes are likely to be oppressive anyway.

That is an excuse to continue the trend? I think not.

[ancient_geezer]

Hmmm, let's see... quote's from 2001 and 2000, and data going back to 1977. My history may be a little rusty, but I'm pretty sure these dates are rather solidly in the "income tax" era, as opposed to the "tariff" era.

Since you are the Tariff buff, I figured you already were aware of the history of such in comparison to current conditions. Since that apparently is not the case here is a brief summary of the effect of tariffs in this nation history.

From Colony to Republic

British trade policy toward the American colonies was mercantilistic. The mother country expected to gain materially from all colonial trade. The Navigation Acts, as noted earlier, generally required that all colonial trade be conducted on British ships manned by British sailors. Also, certain goods had to be shipped to Great Britain first before they could be sent to their final destination. The country’s mercantilist policies were a major burden on the colonies.² In that way, British protectionism was a significant cause of the Revolution.

Having achieved independence, however, many Americans advocated protectionist policies similar to those they had earlier condemned.³ Alexander Hamilton, the principal advocate of import restrictions, based his proposals on the alleged needs of infant industries. As he wrote in his "Report on Manufactures" (1791):

The superiority antecedently enjoyed by nations who have preoccupied and perfected a branch of industry, constitutes a more formidable obstacle . . . to the introduction of the same branch into a country in which it did not before exist. To maintain, between the recent establishments of one country, and the long-matured establishments of another country, a competition upon equal terms, both as to quality and price, is, in most cases, impracticable. The disparity . . . must necessarily be so considerable, as to forbid a successful rival ship, without the extraordinary aid and protection of government.⁴

The First Wave of Protectionism

Although Congress adopted the first tariff in 1789, its principal purpose was to raise revenue. Rates went from 5 percent to 15 percent, with an average of about 8.5 percent. However, in 1816 Congress adopted an explicitly protectionist tariff, with a 25 percent rate on most textiles and rates as high as 30 percent on various manufactured goods. In 1824, protection was extended to goods manufactured from wool, iron, hemp, lead, and glass. Tariff rates on other products were raised as well.

That first wave of protectionism peaked in 1828 with the so-called Tariff of Abominations. Average tariff rates rose to nearly 49 percent. As early as 1832 Congress began to scale back tariffs with further reductions enacted the following year. In 1842, tariffs were again raised; but by 1846 they were moving downward, and further lowered in 1857. Following the 1857 act, tariffs averaged 20 percent.⁵

Failed Tariff Policies

Economist Frank Taussig, in a thorough examination of those tariffs, found that they did nothing to promote domestic industry. "Little, if anything, was gained by the protection which the United States maintained" in the first part of the 19th century, he concluded. That finding considerably questioned the validity of the infant industry argument. "The intrinsic soundness of the argument for protection to young industries therefore may not be touched by the conclusions drawn from the history of its trial in the United States, which shows only that the intentional protection of the tariffs of 1816, 1824, and 1828 had little effect," Taussig said.⁶

Thus, the early experience of the United States confirms the weakness of the idea that protection can aid infant industries. In practice, so-called infant industries never grow competitive behind trade barriers, but, instead, remain perpetually underdeveloped, thus requiring protection to be extended indefinitely. As Gottfried von Haberler put it:

Nearly every industrial tariff was first imposed as an infant-industry tariff under the promise that in a few years, when the industry had grown sufficiently to face foreign competition, it would be removed. But, in fact, this moment never arrives. The interested parties are never willing to have the duty removed. Thus temporary infant-industry duties are transformed into permanent duties to preserve the industries they protect.⁷

It is also important to note that the adverse effects of tariffs in 19th century America were more than offset by the economic activity that constituted the western expansion across the continent. Some 20 million immigrants came to the United States in that century. Also, much economic growth came from transportation, farming, mining, and construction of infrastructure. In effect, the United States was a giant, continental-size free-trade zone, from the Atlantic to the Pacific -- the equivalent of the distance from Madrid to Moscow.

Figure 1:
Customs Duties as a Share of Imports

Source: The Department of Commerce

Following the Civil War, some tariff liberalization occurred, mainly assuming the form of exempting items from duties, rather than reducing tariff rates. As Figure 1 illustrates, until that time, duties had covered a large percentage of imports, as shown by the close relationship between the tariff rate on all imports and that on dutiable imports only. But after the Civil War, those rates began to diverge sharply.

Turn-of-the-Century Tariffs

In the election of 1888, Republicans called for tariffs to protect American manufacturing. Benjamin Harrison’s defeat of Democrat free trader Grover Cleveland led to passage of the McKinley tariff in 1890. An interesting aspect of the 1890 debate over the tariff is that protectionists abandoned any pretense that high tariffs were needed to protect infant industries. Even mature industries, they argued, needed protection. They further argued that high tariffs were needed to reduce the Treasury’s surplus. They understood that sufficiently high rates would so discourage imports that tariff revenues would fall.⁸

Protectionist tariffs remained the bedrock of economic policy of the Republican Party for the next 20 years. Indeed, Republicans were so intent on passing the Payne-Aldrich tariff in 1909 that President William Howard Taft supported the 16th Amendment to the U.S. Constitution creating a federal income tax as the political price for Democratic support of the tariff.⁹ That has to have been one of the worst deals in history -- a lose-lose situation if ever there was one.

The Underwood tariff of 1913, passed early in the administration of President Woodrow Wilson, liberalized trade somewhat. But as soon as the Republicans reassumed power after World War I, they raised tariffs again. The Fordney-McCumber tariff of 1922 generally increased tariff rates across the board. However, it also gave the President power to raise or lower existing tariffs by 50 percent.

Deepening Depression

The infamous Smoot-Hawley tariff of 1930 was the last outrage inflicted by the Republican protectionists. Rates on dutiable imports rose to their highest levels in over 100 years. Increases of 50 percent were common and some rates went up 100 percent. Table 1 indicates how much tariffs in creased during the 1920s as a result of both the Fordney-McCumber and Smoot-Hawley tariffs. A recent analysis estimates that the Smoot-Hawley tariff, on average, doubled the tariffs over those in the Underwood Act.¹⁰

Figure 2:
Collapse of World Trade Following Smoot-Hawley

Source: League of Nations

Economists and historians continue to debate how important the Smoot-Hawley tariff was in causing the Great Depression.¹¹ Whatever the degree, the effect certainly was adverse and the tariff was certainly bad policy. As Figure 2 indicates, world trade virtually collapsed following passage of the Smoot-Hawley tariff. Thus, if that tariff was not the single cause of the Great Depression, it certainly made a bad situation worse.

The Free-Trade Path

Politically, at least, in the long term the memory of the Smoot-Hawley tariff has kept Americans committed to a free-trade policy. For more than 60 years, a guiding principle of U.S. international economic policy has been that tariffs and other trade barriers should be reduced, that trade wars must be avoided at all costs, and that the best way to achieve those goals is through multilateral negotiations. Thus, the United States took the lead in establishing the General Agreement on Tariffs and Trade that reduced global tariffs in the decades following World War II, and spearheaded major GATT rounds of multilateral trade liberalization, including the Kennedy Round, Tokyo Round, and Uruguay Round.

In recent years, the free-trade consensus has begun to weaken. One must look back to 1929 to find protectionist rhetoric as heated as that commonly heard today. Throughout most of the postwar era, protectionists were embarrassed to call themselves protectionists. Today, however, prominent politicians such as Republican presidential candidate Pat Buchanan and Senator Ernest Hollings (D-S.C.) wear the label proudly.¹² Yet protectionist policies have not been the source of America’s economic strength. And American policy, fortunately, remains largely directed toward free trade.

[ancient_geezer]

Some statistics of what tariffs were from the late 1800's through 1950

 

Note that in that the high rates of the US made a very poor prospect for international trade in those pre World War II years directing imports along with our exports away from international markets.

Actual revenues derived from such tariffs dropped through the floor, with internal excise taxes and simply printing money (i.e inflation) taking up the slack. The 30's collapse was as much a result of the death of world trade as it was from other factors.

You are welcome to your ideas about tariffs, but I certainly am not interested in them at all.

[inquest]

Actually we were well on the way at the end of the 19th century, The theories of Marx was very popular in this country throughout the later 1800's and early 1900's. The tariff was extremely unpopular since they were precluding access of import goods and services due to extemely high rates and rampant trade wars, inflation was rampant and the "soak the rich mindset" was a very populist view of the times and was one of the dominant factors for the popularity of the 16th amendment in the land.

It's true that there was a marked socialist bent to public opinion in the late 19th century, but to attribute it to our tariff policies I think is just a little far-fetched. The main cause of those views was the simple fact that rapid industrialization was making life unbearable for so many people. Socialism was an understandable, if tragically misguided, response to that. And the fact that the 16th amendment was so popular was pretty solid evidence that the people were acutely aware that the tariff did not provide enough revenue for anybody's free lunch.

[inquest]

There's nothing in your #592 to bolster your contention that tariff policies lead to a "free lunch" socialist mentality. And nowhere on this thread did I try to justify tariffs as a means of protecting infant industries.

And just to take care of #593 in the same post, the collapse of the 1930's was a result of taxes of all species being jacked sky-high. How you were able to single out one as the main culprit, I'm not sure.

[ancient_geezer]

There's nothing in your #592 to bolster your contention that tariff policies lead to a "free lunch" socialist mentality.

That is not, nor has it been my contention at all. The "free lunch" socialist mentality has been around since the beginning of time. Take a look into what happened to the first years of the Plymouth Rock colony for chapter and verse on that.

Tytler stated it clearly back at the beginnings of our Nation, that being a clear lesson from world history of governments from the beginnings of recorded history.

Sir Alex Fraser Tytler (1742-1813). Scottish jurist and historian:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

How you were able to single out one as the main culprit, I'm not sure.

I hardly single out tariffs. All buried excises, VATs, and other forms of taxes that become embedded in price, hidden from public view merely fosters the belief that a "free lunch" is to be had on the back of someother guy behind the tree. The reality is that there is a price, sooner or later; directly or indirectly and that price will be collected in the end.

It is better that the price be up front and clear from the beginning than to allow the politician to implement his favorite formula for encumbency:

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

To remove the perception of taxation of the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high because a majority of the electorate do not perceive their proportionate share in the burden their demand for largesse imposes on a mythical minority of citizens.

The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the the politician (i.e. Congress) to get away with the creation of the evergrowing monster that it fosters.

Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism that Tytler so clearly warns us against.

[ancient_geezer]

And nowhere on this thread did I try to justify tariffs as a means of protecting infant industries.

I didn't say you did, however you do appear to contend that tariffs are somehow sufficient for government revenues when it is clear even from your own statements they were not historically.

the collapse of the 1930's was a result of taxes of all species being jacked sky-high. How you were able to single out one as the main culprit, I'm not sure.

Obviously tariffs were insufficient to the purpose of even the much more limited government of that agrarian society in comparison to the demands of a much larger population and high tech economy of today. That is why all species of tax were being pushed to their limits in that era. Tariffs failed to be sufficient at any rate, supplementary taxes became the rule the income tax rapidly gained acceptence with the promise of pushing the burden onto the rich reducing and removing the targeted excises, tariffs, direct (i.e. property) tax burdens that were so very unpopular with broad constituencies.

The expection of the piper's bill to be paid by that much maligned rich man was seductive in the extreme (at least until the individual income tax morphed into IRS run monster we see today.)

[inquest]

Obviously tariffs were insufficient to the purpose of even the much more limited government of that agrarian society in comparison to the demands of a much larger population and high tech economy of today. That is why all species of tax were being pushed to their limits in that era.

Wrong. If you're talking about the same era I am, taxes were being pushed to the limit because there was a crisis that government sought to exploit for its own gain. If they had simply left things to sort themselves out, the crisis would have resolved itself quite quickly.

The expection of the piper's bill to be paid by that much maligned rich man was seductive in the extreme (at least until the individual income tax morphed into IRS run monster we see today.)

So you're acknowledging that this illusion no longer exists today. And yet government is larger and more intrusive than ever. I think you're focusing way too much on making taxes "visible" when the real emphasis should be on restricting government's ability to impose them. That's the only proven solution for keeping government in its place.

[ancient_geezer]

If they had simply left things to sort themselves out, the crisis would have resolved itself quite quickly.

Nice assertion, you care to back it up with studies and real facts? You seem to forget human nature creating the kind of government you complain off. That is a direct result of hiding the impact of tax burdens from large sectors of the electorate by embedding taxes behind the veil of inflation or attributing their payment by some nebulous foreigner, rich guy, or someone hiding behind a tree.

Sir Alex Fraser Tytler (1742-1813). Scottish jurist and historian:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

The Honorable James DeMint (R-SC)
United States House of Representatives
THURSDAY, APRIL 5, 2001
12:00 noon

• "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government.

So you're acknowledging that this illusion no longer exists today.

It is very much an illusion to 70% of the electorate.

70% of the voting public clamors for more from government looking for the top 40% of income earners/producers to foot the bill

The other 30% are those play the roll of Peter in the perpetual shell game of the politicians:

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

The simple reality is that we all pay, however the illusion exists by virtue of shifting substantial portions of the burden of government into the commercial sector to be embedded into the overall cloud of inflation.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.

Tariffs, selective excises, miscellaneous duties, not paid in full view by the individual are merely hidden in price increases to him, add on selective deductibility of income, personal exemptions and targeted credits , enable and serve to perpetuate the belief of someother guy paying the freight.

Tariffs are merely another way to misdirect attention to the mistaken belief that the burden they impose is avoidable or paid by some foreigner or rich guy, fostering the fiction of the free lunch.

[inquest]

I suggest you pay a little less attention to what polls say (which can always be manipulated up, down, and sideways) and a little more attention to what actual people say. I have news for you: the people are aware that they're being heavily taxed. Quite aware, actually. And if they happen to forget, they get rudely reminded every April. So your indictment of the "invisibility" of the current tax code is a pure bogeyman. In fact, if the government starts to cut any of the programs that people know and love, the reaction you will hear from them (as opposed to the reaction you'll hear from people like Daschle) is not that those filthy rich should be helping them out more. Their reaction, which I've heard over and over from people I've talked to, is "I pay taxes, so I should be entitled to these services." Yes, it's next to impossible to reason with this kind of attitude, but it is nonetheless as prevalent as it is irrational.