In this issue:

• Liberty Perspective: Heretic or Hero

• Wealth Digest: Unrealized Capital Gains Tax is Unconstitutional

• The Word: Radicals

Heretic or Hero

Joe Biden’s human infrastructure bill has two wobbly legs which may cause a total collapse. Freedom loving Americans who fear his socialist agenda can thus far thank Sen. Kyrsten Sinema (D-AZ) and Sen. Joe Manchin (D-WV).

Manchin has said he wouldn’t support any new entitlement programs without means testing and work requirements. The Democrats want their new entitlement programs to be for everyone, including illegals, without any requirements; even though they call it a safety net bill. Senator Manchin is also against public support for abortions.

Sinema, on the other hand, isn’t publically objecting to specific programs. She just doesn’t want to raise corporate taxes, individual rates or taxes on capital gains. As far as many Democrats are concerned, wanting to keep the Trump tax cuts is an unforgiveable sin. It’s blasphemy against their anti-orange man spirit.

The Arizona Senator also opposes ending the filibuster, believing that bipartisanship is necessary when there’s talk of radical transformation. With that in mind, she was the lead negotiator for the smaller $1.2 trillion infrastructure bill that had some Republican support. The bill has already passed the Senate, but House Speaker Nancy Pelosi (D-CA) has been holding it up so progressives can get their radical $5 trillion bill passed first.

It may be a stretch for Joe Manchin to be successfully primaried by a socialist progressive in 2024, but not so with Kyrsten Sinema.

The left is already warning Sinema they will oppose her in ’24 with a primary challenge. A recent poll by Data for Progress shows that 70% of Arizona Democratic primary voters disapprove of Sinema (49% strongly disapprove and 21% somewhat disapprove).

If this progressive wish-list stuffed bill comes tumbling down, Democrats will become apoplectic about their missed opportunity. There may not be another chance to “build back better” since 2022 is an election year.

When Republicans gain some power after the midterms, Biden’s agenda will be forever stalled and Trump’s tax cuts will remain. If that’s the case, Sinema better run for the hills. When her term is up, she will definitely face opposition from the left for her heresy.

The Liberty Perspective is that Kyrsten Sinema should become a Republican right now. At this point, her path as a Democrat for the 2024 Senate Primary doesn’t look promising. The far-left progressive who will challenge her will have a massive war chest behind them from small donations. They’ll also be gifted with a 70% Democratic voter dissatisfaction for Sinema from within Arizona.

The Senator could become an Independent, but she would certainly lose without being on the ticket as either a Republican or a Democrat. There wouldn’t be a natural constituency for her.

If Sinema switched parties now, she would instantly become a hero to Arizonian Republicans. They won’t hail her so just because the GOP would control the Senate, but because of her conviction for country over party. She would be seen as stopping the socialist agenda in its tracks.

As a moderate Republican, who values liberty and free enterprise, she will be supported by Republicans and win any primary challenge. After all, John McCain had their support. Even Jeff Flake did too before he went nutty anti-Trump.

If she waits to switch parties, however, it will not be viewed as heroic. Any GOP primary challenger would point out that she had the chance to switch earlier when it would have mattered, but she chose not to.

Given the options set before her, the best one for her career and for the country is choosing to be a hero.

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Wealth Digest: Unrealized Capital Gains Tax is Unconstitutional

Sen. Ron Wyden (D-OR) is proposing to raise revenue by taxing unrealized capital gains on the ultra-wealthy. This new wealth tax would be on individuals worth at least $1 billion or on those who earn $100 million in income for three straight years. I have no idea why the latter isn’t already covered by the income tax.

They say it will only apply to about 700 people, but they said the same of the income tax that it will only affect the super rich. Those who want big government fool us this way with new taxing schemes, but before long, it broadens and traps nearly everyone. We can’t give them an inch!

The details of the plan will be released later tonight, but it will basically be a tax on wealth appreciation. When income is earned, it’s taxed and when assets are sold, any gain is taxed. What Democrats are proposing is taxing unrealized gains on capital assets.

The Wyden plan is a way of taxing wealth that’s not from income but from yearly appreciation. It’s yet to be determined if realized capital gains will still be taxed or offset somehow.

The tax will be imposed annually for easily tradeable assets such as stocks, but deferred for non-tradeable assets such as real estate. So a family farm will just accrue taxes owed until the asset is sold or the tax is paid off from some other source.

They’re calling it a capital gains tax, but in reality it’s a wealth tax.

Unconstitutional Wealth Tax

Even though it’s called a capital gains tax, it shouldn’t be classified so. A capital gain is taxable because constitutionally it falls within the Sixteenth Amendment as a source of income. Unrealized gains are not sources of income. Therefore, the 16th Amendment cannot be used to justify the legality of this direct tax.

Advocates may absurdly claim they’re changing the definition of income to include unrealized capital gains for only billionaires. There's already a legal definition for the term income so that wouldn't hold up. And, since the redefinition would be for tax purposes, it necessarily will apply for everyone so that the tax satisfies the Uniformity Clause in the Constitution. At least, the Supreme Court should view it that way. This would mean that everyone with any appreciated asset will be viewed by the IRS as having income.

If they don’t want to change the definition of income, they will make other arguments about the tax’s legality.

The Constitution mandates that all direct taxes, except all sources of income from the 16th, must be apportioned among all the states. The proposed tax doesn’t adhere to apportionment because it would be impossible to implement. The Democrats, however, may claim that this isn’t a direct tax but indirect, which only requires uniformity.

If Democrats want to claim it’s an indirect tax, then it still fails. The courts have found certain taxes can be classified as indirect if the tax is on an ownership action or on some privilege.

Appreciation of a capital asset isn’t an incident of ownership or a privileged action. There are no actions or privileges they can claim to tax. They are directly taxing the individual.

Ownership Actions

This is when a tax isn’t on the taxpayer, but on an incident such as gifting the property to someone else. The act of transferring property is what’s being taxed, not the taxpayer directly.

There are no incidents of ownership with this unrealized capital gains tax because the owner of the asset isn’t doing anything. The asset just appreciates due to inflation or market forces. What are they going to tax, the laws of supply and demand?

Privileged Act

This is when a tax is on some privilege that can be avoided. Before the Sixteenth, courts classified the income tax as indirect requiring only uniformity. They ridiculously called it an excise tax because they considered the act of earning income a privilege and that’s what they were taxing. They then determined the tax owed based on the amount which was earned.

If Democrats want to claim that it’s a privilege to buy a capital asset, then that action theoretically could be taxed. But they’re not taxing that action, just any future appreciation occurring within a fiscal year long after the action.

I could be wrong and they may just contend that the tax shouldn’t be classified as direct simply because the founders didn’t intend for such taxes to be. They would be wrong on this front too.

Even though a wealth tax is highly desired by Democrats and may yet pass Congress, any wealth tax will be found to be unconstitutional. Read Organic Wealth to learn why. I also have written here at Liberty Word why their constitutionality arguments are dishonest nonsense.

The Word: Radicals

Today’s Democratic Party is openly radical. Those of us on the right have always believed them to be so. But in years past, leftists were covert radicals. They hid it well claiming to be a part of mainstream America.

They are no longer hiding their true beliefs and have become overt with their radicalism. We used to fight them on how big a safety net we should have. That was radical enough because a social liberalism philosophy still holds for self-reliance and free market capitalism. Over the years, Democrats have come to demonize both.

The new Build Back Better plan will transform America from a free enterprise system to one that’s managed by Washington. They want to unionize America whether the workers want it or not. They want to enact their green agenda, which includes forcing renewable energy to everyone’s economic detriment.

Instead of having a safety net, Democrats want entitlement programs to be universal, meaning for everyone. They want open borders to bring in new people who may not value liberty, but who would value government control and its handouts.

Why do Democrats want to transform America? The question is radical enough because America is uniquely successful as compared to much of the world. Why does success need transforming? If it were tweaks to the system to make our Union better, that would be understandable. Democrats, though, want to transform away from individual liberty and free market capitalism to a system that’s under their control.

It’s simply insufficient to pretend that it’s a normal debate about a spending bill. “We can’t afford it”… “It will raise inflation”… Blah blah blah. The Republicans don’t have enough votes to stop them, but they can sound the alarm. The power of the electorate may be the deciding factor. Anyone with a platform should be talking about the radical plans of Democrats.

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In this issue:

• Liberty Perspective: The 15% Global Minimum Tax is America Last

• Wealth Digest: Economic Activity

• The Word: Freeze Spending

• Historical Hero: Samuel Adams

The 15% Global Minimum Tax is America Last

A key initiative of the Biden Regime is advancing along. 136 countries have just agreed to an outline regarding a global minimum tax of 15% and other tax rules. It would still need approval by Congress to be enacted unless the Regime can skirt normal treaty procedures. There are four countries that have not yet agreed to the terms, but they are inconsequential and will not stop the deal.

The rules are complex, but there are two major provisions. First: there is a 15% global minimum tax rate for large multinational corporations. If a subsidiary is taxed lower than 15%, then the country where the corporation is domiciled can tax that revenue up to the 15% level. So if a subsidiary is taxed at 5% on some island, then the U.S. can tax that revenue an additional 10% (15%-5%).

Second: big tech companies will be partly taxed where they have sales not just where they are headquartered or have operations. This second provision is what the rest of the world is excited about since it means taxing companies like Alphabet and Facebook. Tax revenue to the U.S. will decrease because the Treasury will not collect the same amount of taxes from big tech firms.

What Treasury Secretary Janet Yellen and President Biden are excited about is the global minimum tax of 15%. Paying taxes to the country where a company has operations is known as a territorial tax system, which is how most nations currently tax corporations and subsidiaries now. The big takeaway isn’t where profits are taxed, but the minimum tax rate of 15% that can be topped up by the country where a firm’s headquarters are located.

The benefit, advocates say, is that it will discourage large corporations from using tax havens since they’ll still have to pay 15% no matter what. Yellen has been everywhere yelling that it will eliminate a “race to the bottom” where some countries were competing with one another to attract these kinds of subsidiaries.

The subsidiaries in question are setup in tax haven countries by multinational corporations. They do this because they have significant income from intangible assets such as from patents, trademarks and royalties. The purpose is to avoid paying corporate taxes on these profits to their home country. There are no operations in the tax haven country; it’s just an office address.

The Trump Tax Reform

The problems that the Biden Regime says they’re solving have mostly already been solved. Before the 2017 Tax Cuts and Jobs Act, companies would offshore their headquarters to avoid paying the 35% U.S. corporate tax in a scheme called tax inversion.

Additionally with subsidiaries, foreign profits would remain outside the U.S. to avoid paying the U.S. worldwide tax on profits. The U.S. would tax profits for foreign operations at the 35% level, but with a credit for any tax paid to the foreign country.

With the 2017 tax reform, the U.S. partly transitioned away from a worldwide tax system to a territorial system for countries that had similar taxing structures as the United States. We also lowered the corporate rate from 35% to 21%.

The part that remained worldwide was for other countries with low corporate tax rates that attract subsidiaries with profits from intangible assets. There is a minimum tax of 10.5% the U.S. charges homebased corporations on such foreign profits, allowing for a tax credit on what the company paid in corporate taxes to the foreign country.

The result of the Act was that future foreign profits from comparable advanced countries could be repatriated without paying a worldwide tax. Amounts that were previously deferred were repatriated with a flat 15% tax. The Act also reduced the incentive for companies to set up subsidiaries in tax haven countries since there was a minimum tax of 10.5%. And, by lowering the rate from 35% to 21%, companies were less incentivized to setup tax inversions.

The Liberty Perspective is that the Biden Regime didn’t push this agreement because they wanted to be good global citizens by sharing big tech tax dollars or for solving long standing problems. Many in the media are portraying it as return to multilateralism and a reversal of Trump’s America First policies. And somehow that’s a good thing?

Every other country in the world has a “their country first” policy. It’s why many agreed to this deal because they’ll receive more revenue from technology giants. It’s why Ireland wouldn’t agree to the terms before they got what they wanted. Only the U.S. has political leaders and citizens who demand that we don’t negotiate for what’s best for our country. Instead, we get America last policies.

It’s just a Pretext

Now, the real reason that the Biden Regime wants a minimum global tax is so that they can increase the corporate tax rate in the U.S. from 21% to 28%, or even higher one day back to 35%.

The Regime was fighting for the global minimum tax to be 21%, but countries like Ireland wouldn’t agree. The agreement also had language stating a minimum tax of “at least…” meaning that it could be raised easily. The new agreement that Ireland held out for was the global minimum tax to be 15% and they removed the at least from the language so it can’t be raised in the future without updating the agreement.

With these tax rules, the floor effectively goes from 10.5% to 15% as far as the United States in concerned. This will supposedly justify increasing the corporate tax rate by Democrats.

America Last Policy

There would be a new bottom of 15%. But by increasing the U.S. corporate rate to 28% or higher, it will still incentivize tax havens (for subsidiaries) and inversions (for moving headquarters). Also, the tax revenues Yellen projects won’t materialize.

More Tax Havens

Let’s look at an example. Zcorp opens a subsidiary for their royalty income in the Cayman Islands, which doesn’t have a corporate tax. They do so because they don’t want to pay the 21% in U.S. taxes. Instead, they pay the minimum to the U.S. of 10.5%.

If Yellen and Biden get their way, Zcorp will still remain in the Cayman Islands to avoid paying the 28% in U.S. taxes. Instead, they’ll pay the minimum tax of 15%.

Under the new system, businesses will be even more incentivized to move operations out of the U.S. because saving 13% (28%-15% minimum rate) under the proposed Biden plan is more attractive than saving 10.5% (21%-10.5%) under the current system.

Less Tax Revenue

In addition, it only appears that Zcorp will pay more in taxes to the U.S. because 15% is more than 10.5%, but that won’t be the case. Currently, it’s the U.S. that has a minimum tax, not the rest of the world. Consequently, tax havens still have low or no taxes to also attract other foreign subsidiaries.

If there’s an agreement, however, between all nations to have a global minimum tax, then these tax havens will begin to raise their corporate taxes up to the 15% level. The reason is because the subsidiaries that reside in these countries will be paying the minimum tax anyway to their home countries; they might as well pay the 15% to the tax haven country. Therefore, as a result of multilateralism cooperation, the U.S. won’t receive anything from these subsidiaries.

More Tax Inversions

As for tax inversions: let’s say Acorp is contemplating moving its headquarters out of the U.S. to the Cayman Islands to avoid paying the current minimum tax of 10.5% on their foreign profits. They’ll still, of course, have to pay the 21% for their operations in the United States.

Under the Biden plan, though, they will be even more motivated to setup a tax inversion to avoid paying the 15% in foreign profits because it’s nearly 50% more in taxes than if they did it within the current system.

This new plan will have the opposite effect of what they’re claiming. It will result in more tax inversions and the using of subsidiaries in tax haven countries. As companies escape U.S. taxation, we’ll lose American headquartered businesses, jobs and a ton of tax revenue.

If Republicans in Congress green light this agreement, then they are also green lighting raising the corporate rate. I can also imagine that once a new agreement is operational and countries like Ireland have adjusted, a future increase in the minimum rate would be likely. This, of course, would facilitate even higher corporate rates around the world.

A better course, that’s America first, is to keep the corporate tax rate and the minimum tax on foreign profits exactly where they’re at. If you want to be a good global citizen, then proceed with the provision where tech companies have to pay some taxes where their sales occur, but only if countries such as France agree to no longer tax these companies.

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Wealth Digest: Economic Activity

There’s a superior way to see higher tax revenues than by raising the corporate tax or the personal income tax. The better way is with economic activity.

Raising taxes on the supply side, for both business and labor, will mean less economic activity. When individuals are taxed more, they obviously spend and invest less.

With higher rates, corporations cut spending too, especially on wages. They do this to maintain a certain level of earnings for their shareholders, which are calculated after paying the corporate tax. Most companies would prefer to increase revenues, but when the supply side is being constrained by the government, downsizing is the usual response.

So taxation results in less economic activity and the tax revenue to the government isn’t what it would be if economic activity didn’t decline. Government does bring in more revenue with the higher rates, but it also loses revenue at the same time due to lower economic output.

The government primarily collects its revenue by taxing personal income and business profits. The higher the income and profits, the more revenue they’ll collect.

Therefore, good government policy is to encourage economic activity by incentivizing the supply side, which includes both business and labor. It’s not to encourage demand or more spending because if supply is free to meet demand in a favorable economic climate, then transactions will naturally occur.

Our policies should be to give as much freedom for businesses and individuals to earn as much income as possible by meeting market demand. This means less taxation and regulations to create the best economic climate. A freedom based economy has robust job growth, higher wages, upward mobility and more opportunities for everyone to enter the marketplace to meet demand.

When companies and individuals are earning more money, they then have the power to demand more. Demanding more means creating more income for other parties. A growing economy from economic activity will bring in the tax dollars our political leaders desperately crave.

The Word: Freeze Spending

Here’s a revolutionary idea to balance the budget, freeze spending until revenues catch up. Any inflationary increases to entitlement programs should be offset by cutting elsewhere. Once we have a balanced budget, we can then start paying off the debt.

A politician who actually cares about this country should be talking about fiscal restraint and how we can get there.

Historical Hero

Since 1984, there’s been a beer bearing the name of Samuel Adams. While Adams did inherit his father’s business of being a supplier of malted barley for brewers, he didn’t become famous for his crafted brew.

There’s little evidence of an actual lager made and sold by Samuel Adams except for an ad published in a Boston newspaper that said, “Strong beer, or malt for those who incline to brew it themselves; to be sold by Samuel Adams, at a very reasonable rate (emphasis mine).”

It wouldn’t be long before the business he inherited went bankrupt. Perhaps his lager just didn’t catch on, but the most likely reason was that Adams was grown from the American soil for a greater purpose than that of a beer merchant.

Adams was a revolutionary thinker, writer and political leader. He received his undergraduate degree and Master of Arts (1743) from Harvard College. He was influenced greatly by Enlightenment philosophers, especially the writings of John Locke. Notably that every human being has natural rights that can’t be infringed upon and that governments should only exist by the consent of the people.

His master’s thesis was about the legal resistance against British rule if the Commonwealth couldn’t be preserved. About two decades in the future, Samuel would come to recognize that the Commonwealth was indeed in peril.

Adams Makes Himself Known

In 1765, the British passed the Stamp Act, which was a direct tax taking wealth away from the Colonists. About that same time, Adams was elected to the Massachusetts House. He spoke and wrote openly against the Stamp Act which he believed to be tyrannical. Also at that time, he joined an underground group called the Loyal Nine which were formed to resist British taxation without representation.

Thanks to Adams, the Loyal Nine became known as the Sons of Liberty and chapters spread throughout the colonies. It was these groups that organized protests against the Stamp Act and they intimidated those who would be the tax collectors so that all resigned. The first Congress of the Stamp Act was created and the colonies issued the Declaration of Rights, disputing that Parliament had the right to issue taxes without representation. As a result of all the protests, the Stamp Act was repealed by Britain in 1766.

Britain didn’t acquiesce; however, they passed other Acts to declare that they had the power to make laws binding upon the colonies and to raise revenue.

In 1768, with the backing of the Massachusetts House of Representatives, Samuel Adams issued a statement against taxing the colonies without having representation in Britain’s parliament. He also called on the all the colonies to resist them.

It was treachery to the British governor over Massachusetts and he dissolved the state's legislature. Soon after, British troops arrived in Boston. Because of the Quartering Act of 1765, Bostonians were obliged to provide food, quarters and transportation to the soldiers.

Samuel would continue writing against British rule and he encouraged the boycotting of British goods. After the passage of the Tea Act in 1773, which allowed Britain’s East India Company to sell its tea below the price of other competitors, Adams organized groups to resist their shipments. His friend, John Hancock was doing his part by smuggling imported tea to avoid taxation.

Members of the Sons of Liberty, possibly planned by Adams, escalated the protest by boarding British ships to dump the imported tea into Boston harbor. This of course has become known as the Boston Tea Party.

In 1775, Britain decided enough was enough and sought Samuel Adams and John Hancock’s arrest in Lexington. They were warned, however, by Paul Revere that the British were coming. See Historical Hero in Liberty Word.

He would become a signer of the Declaration of Independence and a member of the Continental Congress. He helped draft our first Constitution, the Articles of Confederation.

John Hancock became governor of Massachusetts with Adams as Lieutenant Governor. When Hancock died in office, Samuel Adams became governor in his place and served from 1793 to 1797.

Image: Sons of Liberty, Public domain, via Wikimedia Commons

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In this issue…

• Liberty Perspective: Individual Independence

• Wealth Digest: Labor is on the Supply Side

• The Word: Success without the Government

• Historical Hero: Frederick Douglass

Liberty Perspective

A month after the battles at Lexington and Concord, the Second Continental Congress convened in Philadelphia. They authorized the creation of the Continental Army, a currency and a group who could confer with foreign powers. In short, a real governing body was created so the colonists could defend themselves against the British.

At that time, most of the delegates were against fighting for independence. They wanted to remain loyal to the Crown. Thus in July 1775, the Congress sought a peaceful resolution with King George III known as the Olive Branch Petition. The King, however, responded by declaring the colonists were in a state of rebellion and he refused to negotiate.

Over the next year, many more grievances occurred so that the desire to be an independent nation spread throughout the colonies. Fighting for freedom was no longer a minority opinion and on July 4, 1776 America declared its independence from Great Britain.

Individual Independence

Freedom is within the DNA of most Americans. It began with the pioneers who left the old-world for the new, risking everything to freely worship God. The colonists felt the enslaving hand of Great Britain and chopped it off. It continued within those who were actually enslaved against their will. These African descendants saw the free world around them and yearned for the same God-given right for liberty.

The Liberty Perspective is that freedom is a precious gift from God. Unfortunately, there are many on the left who would rather create government dependents rather than promote individual independence.

The more people who rely on the government, the less free our society becomes. Our society becomes less free because ceding power to the government means following it’s rules—e.g., how much money someone can earn and how much assets one can own and accumulate. If a dependent wants to create organic wealth or earn more income, the benefits could stop flowing. I can imagine one day that thought crimes could preclude assistance.

Not only are people trapped, but they no longer seek income by meeting demand in the marketplace. This isn’t good for our economy because ultimately everyone suffers with unmet demand, whether we know it or not.

Even more insidious, there’s a political party that promises even more benefits, only if voters keep them in power. That’s anti-American and something all of us should resist.

It would be nice if our leaders actually encouraged organic wealth creation and individual success. Joe Biden’s Build Back Better agenda spends a lot of money and creates new entitlement programs. Nowhere in his plan, however, does he promote individual success, just the need for more government.

With the millions of job openings, have you heard Democratic leaders encourage people on the sidelines to get a job? Doing so would be beneficial for those who don’t have a career. Instead, these politicians would rather extend unemployment insurance and make child tax credits a monthly benefit.

I can’t recall many, from either side, speaking about living within one’s means, downsizing, saving and investing; all to create organic wealth for oneself. A good government policy would simply be to encourage society to actually improve their lives. If politicians want to do something, enact laws that make it easier for people to become free without an entitlement program.

Every year, many articles are written about the numbers of new millionaires in our society. About 10% of households are currently worth at least a million dollars. I’ve never heard any politician say they want to double or triple those numbers so that many more people can have economic freedom. Wouldn’t that be beneficial so people don’t ever need government assistance?

Encouraging individual independence should be our goal. It will reduce the size of government and even more importantly, allow people to live out the American Dream as they define it.

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Labor is on the Supply Side

The greatest opportunity for individual financial success is with supply side economics. This theory maintains that the more freedom we give people, the more successful people will become.

As you know, supply side economics is most associated with businesses. Examples of good policies would be low taxation, less regulations and fair trade agreements with other nations. When businesses are unshackled, they will work to compete to earn more revenue by meeting demand. This pursuit of profit leads to a robust job market as businesses look to hire people to help them expand.

But that’s only part of the story. Supply side economics isn’t just a theory for business freedom; it also includes labor freedom. It may be surprising that labor is included within supply side economics, but workers meet the demand in the employment market. Therefore, labor is on the supply side.

Businesses are on the supply side when they supply products and services, but on the demand side when hiring workers and paying vendors. Workers are on the supply side with their labor, but on the demand side when spending their incomes.

So when we talk about supply side economics, we should be talking about the entirety of the supply side, not just business. If we want to have a growing economy and opportunities for everyone, then we need supply side policies that give more freedom to all of supply.

A terrible policy, for example, that some may think is supply side economics is permitting the hiring of illegal immigrants. It enables businesses to keep their labor expense down so it does help them compete. But it harms the legal workforce by taking jobs away and it puts downward pressure on wages.

Another bad policy is creating an environment where businesses are incentivized to move their operations to another country. It may appear that it’s supply side economics because businesses have to compete, but in fact it harms the labor supply within the United States.

The recent federal unemployment compensation is another policy that harmed one side. When state governments said it was okay to put the lights on, many businesses couldn’t fully meet demand because of labor shortages. People were being paid to stay home even though job openings exceeded the unemployment numbers.

Here are just some of the good policies that benefit all of supply: low taxes, less regulations, fair trade agreements, job training programs, E-verify, and legal immigration that’s merit and market needs based.

As a society, we need to create policies that give the entirety of supply more freedom to pursue income by meeting demand. If a policy harms one side or the other, then it’s not good for our country. This assumes that we want a dynamic job market and an economy where everyone can obtain success. If some politicians don’t want that, stop listening to them and vote them out.

The Word

In the Liberty Perspective, I closed with encouraging individual independence should be our goal. With that in mind, politicians on the right should be talking about just that, all the time.

The voters would be attentive in hearing how GOP policies will make all Americans more free to live out their God-given potential. Not only is it inspirational, but is something that is preferred to that of the Democratic vision.

People know the vision of the left, to create socialistic policies because the world isn’t fair. But what’s the GOP vision, to let people fend for themselves or get left behind?

We need to correct that vision by promoting policies that will enable people to succeed without a government assistance program. Sure, we’re for a temporary safety net, but we believe most people would prefer a hand up as opposed to being a permanent dependent.

Self-defined success (the American Dream) is only possible within a free market based economy. It’s not achievable if one is reliant upon the government.

There’s a large group of young Democratic voters out there who are entrepreneurial and desire to achieve something. We need to speak to those people. Their best bet is voting for freedom not a controlled economy by the government.

Historical Hero

Frederick Douglass (1818-1895) grew up in slavery. He was taken away from his mother while still an infant and given to an older slave who could no longer work in the fields.

He only saw his mother four or five times his whole childhood, brief periods at night. They barely talked, she just held him until he fell asleep. When he was about seven he was told that his mother had died. No doubt the brutality of slavery was the cause.

Douglass as a young boy witnessed severe whippings firsthand. One was of his aunt where she was tied to a gate and lashed so severely that blood gushed everywhere. Frederick gathered the reason for the beating was because the slaveholder was jealous of her seeing another slave. At least that’s what he heard while she was whipped.

The beating didn’t stop until the slaveholder grew tired. Douglass wrote, “It was the blood‐stained gate, the entrance to the hell of slavery, through which I was about to pass.”

Soon after this, Frederick was shipped away from the plantation to a new slaveholder in the city of Baltimore where the wife of the house began to teach him to read. They had only just started their lessons when the husband found out and became enraged and forbid it further. He said that learning to read would spoil Douglass and “there would be no keeping him. It would forever unfit him to be a slave.”

The entire episode was a revelation to Douglass. He knew at once his pathway from slavery to freedom; it was to teach himself to read. While living in Baltimore over seven years, Douglas did learn how to read. All Frederick could do was think about being free:

The silver trump of freedom had roused my soul to eternal wakefulness. Freedom now appeared, to disappear no more forever. It was heard in every sound, and seen in every thing. It was ever present to torment me with a sense of my wretched condition. I saw nothing without seeing it, I heard nothing without hearing it, and felt nothing without feeling it. It looked from every star, it smiled in every calm, breathed in every wind, and moved in every storm.

At about fifteen years old, he was passed on to a new slaveholder who wasn’t kind. To correct Frederick’s rebellion, he was lent to a brutal man named Edward Covey for a year to break him.

• I had been at my new home but one week before Mr. Covey gave me a very severe whipping, cutting my back, causing the blood to run, and raising ridges on my flesh as large as my little finger.

• I lived with Mr. Covey one year. During the first six months, of that year, scarce a week passed without his whipping me.

• If at any one time of my life more than another, I was made to drink the bitterest dregs of slavery, that time was during the first six months of my stay with Mr. Covey. We were worked in all weathers. It was never too hot or too cold; it could never rain, blow, hail, or snow, too hard for us to work in the field.

One day Douglass fell ill in the fields (heatstroke/dehydration) and while on the ground was kicked in the side to rise. He tried and failed and was kicked again. After stumbling to the ground yet again, he was hit over the head with a hickory slat. This caused a severe bloody wound.

Frederick then escaped to return to the actual slaveholder to complain and seek help because he feared certain death. The man, however, sent him back the next morning because he didn’t want to owe Covey a year’s wages.

Soon after returning, Covey came after Frederick, but for the first time he fought back. They fought for two hours and it only ended because both were exhausted. Covey got the worst of it, however, and was bleeding from where Douglass had cut into his skin with his fingers.

In Frederick’s last six months with Covey, the slave breaker never again attempted to whip him.

This battle with Mr. Covey was the turning‐point in my career as a slave. It rekindled the few expiring embers of freedom, and revived within me a sense of my own manhood. It recalled the departed self‐confidence, and inspired me again with a determination to be free.

Ove the next four years, Douglass worked for various slaveholders. Then on September 3, 1838 he escaped, “I left my chains, and succeeded in reaching New York without the slightest interruption of any kind.” He received his help from the Underground Railroad.

Frederick Douglass would end up marrying and writing his autobiography, which became a best seller. You can read it here. Soon after, he went to Ireland and Great Britain for a two year speaking tour, partly out of fear of being legally enslaved by his former slaveholder; he was then well known. While overseas some friends purchased his freedom and he was able to return to the U.S.

Douglass was a famous abolitionist and he started his own newspaper, the North Star to devote to the cause. The paper was used by the abolitionist movement to reach people across the country about the human right of freedom. He would also support the women’s suffrage movement with his speeches and with his paper.

In 1863 and 1864 Douglass visited the White House to meet with President Abraham Lincoln (R) on three different occasions to discuss various issues regarding black soldiers and the voting rights for those who were emancipated.

• He became the first African American presidential appointee as U.S. Marshal of the District of Columbia. This was in 1877 by Rutherford B. Hayes (R).

• In 1881 President James A. Garfield (R) appointed him as the recorder of deeds for the District of Columbia.

• Douglass was appointed as a minister to Haiti in 1889 by President Benjamin Harrison (R).

• During the Republican National Convention in 1888, he became the first black man to receive a vote for president of the United States.

“Knowledge makes a man unfit to be a slave.” – Frederick Douglass

Image: Library of Congress

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Quotable Suggestions:

“The Liberty Perspective is that freedom is a precious gift from God. Unfortunately, there are many on the left who would rather create government dependents rather than promote individual independence.”

“If we want to have a growing economy and opportunities for everyone, then we need supply side policies that give more freedom to all of supply (which includes labor).”

“Self-defined success (the American Dream) is only possible within a free market based economy. It’s not achievable if one is reliant upon the government.”

“The silver trump of freedom had roused my soul to eternal wakefulness. Freedom now appeared, to disappear no more forever. It was heard in every sound, and seen in every thing.” –Frederick Douglass

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In this issue…

• Liberty Perspective: Propaganda to Further Marxism

• Wealth Digest: Same Old Socialism

• The Word: We will not fund…

• Historical Hero: Aaron and Ellen Sargent

Liberty Perspective

There’s plenty of propaganda out there. Fake news organizations like CNN and MSNBC enthusiastically deceive their audience to further their perceived political goals. The same is true of the current regime in the White House. They have no problem using propaganda to shield truth or to perpetuate a lie just like a dark sunglassed dictator would overseeing a banana republic.

Joe Biden calls on reporters occasionally and then reads the answer from a teleprompter or uses his note card for the prepared question. His handlers don’t trust him enough to let him stumble through a real Q&A session. But more than that, they want to control what’s said. The regime isn’t concerned about communicating reality to the American people but rather, a different version that keeps those watching completely duped.

For example, a reporter asked President Biden about the chaos at the border and if he took responsibility. Biden said he did take responsibility, but then talked about the border agents on horses who he said “strapped” the migrants. He then promised that those despicable cowboys would pay.

He didn’t even address the actual crisis of 15,000 illegal migrants under a bridge in Del Rio, Texas. The point is the viewers watching may have believed the actual crisis was the outrage over the agents on horses, faked of course. That way the regime avoids accountability and can shift blame. This propaganda is purposely scripted by those who manage both Biden and the White House press corps.

If President Trump tried to do something like that, he would be met with reporters shouting follow up questions, holding him to account. That’s not what happens with the fake press covering the Biden Regime. They are complicit in the propaganda because they’re not journalists seeking the truth, but are merely activists cooperating with the regime because they wear the same team color of blue.

The Liberty Perspective is that it’s not just propaganda to shield a bad news story from singeing Joe’s puppet strings. That would be bad enough. The Biden Regime also uses disinformation to advance a Marxist political agenda.

The media has advanced the narrative that the issue with Biden’s Build Back Better plan is the cost. But this is just a smokescreen to hide what’s in the bill, which will put the country on a socialist path with Democrats in full control.

Since the perceived problem with the bill has become its cost, the Biden team has been taking on this issue. In order to do so, however, they have to deceive everyone into believing that we can pay for it. Otherwise, reality will doom their agenda.

When addressing the cost of their $5.5 trillion dollar socialist spending bill, Joe likes to use propaganda to deceive everyday people who may not know any better. First, he told a CNN audience that his huge spending bills “in fact, reduce inflation, reduce inflation, reduce inflation.” Like a good propagandist, he has to drumbeat the lies. He then talked about how it would create jobs and all that money would work in “driving down prices, not raising prices.”  

He must know that inflation is from too much money in the system which means a higher demand for products than what the supply can produce. Of course he does, but he would rather deceive us to get the bill passed.

Also, Joe recently tweeted that the cost of the bill would be zero, that it wouldn’t add anything to the national debt: “My Build Back Better Agenda costs zero dollars… And it adds zero dollars to the national debt.”

That’s not some late night Twitter typo like Trump’s covfefe. How can something with a $3.5 trillion dollar price tag cost zero? Well, you just raise taxes to pay for it. What they don’t tell us is that raising taxes comes out of everyone’s pockets one way or another and it will have a negative effect on the economy, which obviously is very costly. But to propagandists, it costs nothing.

The Biden regime really wants their Twitter followers to believe such nonsense. The Regime doesn’t project any slowing down of the economy from hiking taxes. In reality, however, the bill will add many $trillions to our national debt because the tax revenue will be far lower than what they project and they can’t raise taxes enough to cover the bill anyway.

The deception doesn’t stop there. The largest bill in American history costs a mere, they claim, $3.5 trillion. But the Biden Regime lowered the ten year cost by letting some provisions of the bill expire before the full ten years is up. That way it scored a lower cost of $3.5 trillion instead of its true cost of $5.5 trillion. They know that once an entitlement is created, it will certainly get renewed later so that it won’t expire. 

That means the bill is guaranteed to be $2 trillion short of revenue from this one piece of propaganda alone.

The cost, though, is just a smokescreen so we don’t discuss what the socialists will actually do to this country. Just like good Marxists, they only care about their desired destination and will use propaganda, lies and any power they have to get there.

Since they lost seats in the House, the Senate is split 50/50, and Joe ran as a moderate, the Democrats have no mandate to remake this country. Voters should be given the real choice in deciding between free market capitalism and a cradle to grave dependency on the government.

Wealth Digest: Same Old Socialism

Thanks to Senator Bernie Sanders (I-VT), the Squad and all the commies hanging out on every street corner of the internet, socialism has become very popular among Democrats. All these lefties are working to transform America from capitalism to democratic socialism, which is really just socialism without a ruling dictator. Rest assured, the Democrats will run everything from the bottom up and call it democracy. So sleep well tonight comrade.

A recent Fox News poll revealed that Democrats have a 59% favorable opinion of socialism. Back in February 2020, Gallup found that 76% of Democrats would vote for a socialist candidate for president.

Whatever propaganda these progressives are utilizing to declare that capitalism has failed and the people should demand socialism, it is having an effect. If this favorable opinion of socialism continues to grow, we may see changes to America that we couldn’t have imagined a decade ago. But why wait for the rumblings of a revolution when there are faster ways to get there?

As I detail in Organic Wealth, democratic socialism is just as harmful to liberty and prosperity as historical socialism. The wealth pie still gets consumed. Today’s socialists argue that this new kind is different because it’s democratic and non-authoritarian. It’s these differences, they contend, that will bring about their fantasied equity for all: no rich or poor folk—just folk.

Of course, it’s all fantasy. There’ll be no Tattoo pointing at our arrival to some paradise happily exclaiming, “The plane! The plane!”

As I go into great detail in the book, democracy is at the heart of everything in democratic socialism. It sounds great until you realize that democratization includes all relevant stake holders, which will include the woke crowd who’ll seem to be everywhere like fleas nesting in some dog’s armpit.

Not only democratization of everything, but democracy will replace our electoral college. This will be the Democrats first order of business as soon as they have the power to make it happen. Then, we’ll have one party rule just like California; and with that, a turd on every sidewalk.

They are already making overtures to federalize the elections with Biden’s Build Back Better Plan. They don’t’ want the States to have fair elections any longer; those get in the way of their version of democracy. Instead, the Democrats want to rid the country of the plague of voter id requirements. They also want to mail ballots to every resident and make ballot harvesting legal so anyone can turn in other people’s ballots. Then, we’ll have democracy that actually works the way Marx envisioned it would.

As far as not being authoritarian, the woke zombies will bite society infecting their leftism into every organization that exists. That’s pretty tyrannical.

State’s rights will be replaced by an all-powerful national government run by one party, the Democrats. Do you believe that Democrats with power will be non-authoritarian? That would be like believing Tom Brady won’t throw to an open receiver in the End Zone. Of course he’ll make the pass.

Lastly, restructuring our economic system to socialism will forbid people from earning too much income or accumulating too much wealth. If any money is saved, there’ll be no investment opportunities to grow that wealth because society will own the means of production not private entities. Preventing people from life, liberty and the pursuit of happiness is indeed very authoritarian and will be the hallmark of democratic socialism.

The Word

Image (greyscale): 2004 Debt Clock. Lotzman Katzman, Wikimedia Commons

The current U.S. national debt sits at $28.8 trillion. That’s only $229,000 per taxpayer and only $86,000 per citizen. You’re right that you won’t be given a bill due, but that wouldn’t be such a bad idea, would it?

Can you imagine, as a taxpayer, being given $229,000 of debt that you would have to pay interest on until it was paid off? Your interest due would only be $4,580 per year at a 2% interest rate or just $88 per week. We can do that, right?

If every taxpayer were saddled with this debt and be responsible for the interest payment until the government paid off the principle, many might get mad. There would be an outcry for the government to cut spending and use any available tax revenue to get rid of the debt as soon as possible.

Okay, this would never become a thing.

Though, what if we took each person’s share of the debt and divided that by 5. Then each of us would be responsible for just $916 of interest per year. That’s much better and it might have the same effect. Just have a line item on our tax returns in the Tax Due section. I know, this still has no chance of becoming law because it’s not progressive; the rich don’t pay their fair share.

Now here’s one last idea. Have the tax due like above, but also have a tax credit of the exact same amount. So in actuality, the taxpayer owes nothing. We would keep the tax credit the exact same as the tax due amount every year until the tax due amount drops from the previous year. In that case, the tax credit amount would remain the same as the previous year and for every year afterward.

For this last idea, we couldn’t use a varying rate or population number. The amount will have to be calculated by using an unvarying fixed rate and the actual debt number. It doesn’t matter the number of taxpayers, the amount will be the same for everyone. I would also like a much higher number, say closer to $5,000. Then have it expire a decade after the debt is eliminated.

This would create the incentive for taxpayers to demand reducing the debt so that they would have a tax credit every year. The more debt that’s reduced, the higher every taxpayer’s credit would be. Perhaps many more people would demand fiscal responsibility and vote accordingly.

Debt Showdown

There’s a showdown in Spending Town. The debt ceiling needs to be raised by October 18, 2021 or the U.S. won’t be able to borrow any more money. Yes, they want to get our debt above the $30 trillion mark ASAP! The Democrats could raise it themselves by adding it to the reconciliation bill, but leadership has said they wouldn’t go that route. Instead, they want the Republicans to join them in passing the authorization for the Treasury to borrow more money.

The Republicans thus far are a hard no, even though much of our future obligation is from legislation signed by President Trump. The GOP is saying no because they don’t want to assist the Democrats in passing their $3.5 trillion dollar spending bill, which would be a big government takeover of our economy and an assault on individual liberty.

The messaging by the GOP should begin with Larry Kudlow’s sentiment. He has been saying, “Save America, kill the bill.”

When asked about raising the debt ceiling:

“We will not fund… (then take your pick)

• one party rule by Democrats.”

• the federalizing of our elections so Democrats can cheat.”

• a socialized economy.”

• the Green New Deal.”

• giving citizenship to illegals.”

• Or some other good point.

So, will you support raising the debt ceiling Congressperson?

We’re trying to save America. We will not fund one party rule by Democrats.

Historical Hero

Women couldn’t vote in the U.S. until 1920. It took the passage of the 19th Amendment, coincidentally beginning in 1919, to make it happen.

The Amendment was first introduced in the Senate back in 1878 by Republican Senator Aaron Sargent (CA). His sympathy for the women’s right to vote movement was probably influenced by his wife, Ellen Clark Sargent, who was a suffragette and friend of Susan B. Anthony.

The Amendment:

The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.

The Republicans in Congress reintroduced a women’s suffrage amendment every year for next forty years but were blocked by the Democrats. Finally in the 1918 midterms, the Republicans won a sweeping victory and control of both the House and the Senate. The House passed the Amendment in 1919 and two weeks later, the Senate did so as well.

The 19th passed the House with 91% support from Republicans, but only 59% from the minority party. It passed the Senate with 82% support from Republicans, but only 59% support from the Democrats.

The States then finished ratifying the Amendment in 1920 with the exact same wording that A. A. Sargent first introduced.

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Quotable Suggestions:

“The cost (of the bill)… is just a smokescreen so we don’t discuss what the socialists will actually do to this country. Just like good Marxists, they only care about their desired destination and will use propaganda, lies and any power they have to get there.”

“It (democratic socialism) sounds great until you realize that democratization includes all relevant stake holders, which will include the woke crowd who’ll seem to be everywhere like fleas nesting in some dog’s armpit.”

“The GOP is saying no (to raising the debt limit) because they don’t want to assist the Democrats in passing their $3.5 trillion dollar spending bill, which would be a big government takeover of our economy and an assault on individual liberty.”

“The 19th (women’s right to vote) passed the House with 91% support from Republicans, but only 59% from the minority party. It passed the Senate with 82% support from Republicans, but only 59% support from the Democrats.”

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In this issue…

• Liberty Perspective: Communism from Capitalism

• Wealth Digest: Do Government Subsidies Create Wealth?

• The Word: Socialists or Marxists

• Historical Hero: Paul Revere

Liberty Perspective

Mao Zedong and Richard Nixon, 1972 China National Archives

According to recent analysis from the WSJ, China’s President Xi Jinping wants to transition from China’s version of capitalism to that of the socialist vision of Mao Zedong. Chairman Mao was a founding father of the Communist Party of China (CPC) which began in 1921. He eventually became the CPC’s first president of China (1949-1976).

For some background: in 1911, China’s emperor was removed from power during a revolution and Sun Yat-sen became president. After failing to adopt a multiparty political system like that of Britain or the United States, they settled on a one party ruled system known as the Guomindang (KMT).

Sun Yat-sen died in 1925. The new leader of KMT killed many of those who were a part of the new Communist Party.

After WWII and the defeat of Japan from within China, a civil war began between the ruling party KMT and the CPC. The communists won this civil war in 1949 with Mao Zedong becoming the president of China.

Mao was eager to move China out of third world status, but not through capitalism. Without much knowledge of economics, however, the CPC failed terribly with their Great Leap Forward (1958 -1961) and the Cultural Revolution (1966 -1976).

Their lack of success brought about reflection and with that, the belief that capitalism had a purpose. It wasn’t to bring about freedom or prosperity for their people, but according to Karl Marx, its purpose was to raise capital for development and to acquire the technology for advancement:

Hence, the credit system accelerates the material development of the productive forces and the establishment of the world-market. It is the historical mission of the capitalist system of production to raise these material foundations of the new mode of production to a certain degree of perfection. —Karl Marx, Capital Volume III, Ch. XXVII.

From 1949 to 1977 the CPC was committed to equal outcomes, but the country was still poor and isolated. Calls from the U.S. were for China to break out of its “angry isolation” and to join the “society of nations.”

In 1978, Chairman Deng Xiaoping introduced the socialist market economy which began to allow some economic freedoms and quasi capitalism. Until very recently, some in the West wondered if the CCP (Chinese Communist Party) would one day abandon communism altogether. Such sentiment as it turns out was misplaced.

CCP policies all along were just to use capitalism for a larger goal, known as the Bird Cage Strategy. This allows the bird some freedoms to fly around, but always contained within the CCP’s cage and under its rule. The bird will never be free.

It’s becoming apparent that China’s economic rise wasn’t to become a friendly partner in liberty. Richard Nixon and Henry Kissinger had many reasons to open up China, but they may not have realized that China wasn’t about to open up to capitalist America to reform, but to further their communist goals.

The Chinese have long departed from their angry isolationism and has engaged with the rest of world. As a result of foreign capital, international trade and economic freedoms, China has become rich and powerful. Even though tens of millions still live in extreme poverty, China could soon surpass the U.S. as the world’s largest economy.

China didn’t emerge with just capitalism, however. They also broke international trade laws, mandated intellectual property transfers, infringed on legal copyrights, implemented cyber espionage, and placed spies nearly everywhere within the U.S. and other advanced nations.

They now have the riches and the technology for the implementation of the final phase: They will begin transforming from their version of free enterprise to Mao’s vision of communism. Their ultimate goal is to have a successful communist system with equality for all.

To enter the final phase, they’ll continue to rein in billionaires and large Chinese companies that have brought them this far. Over time they will do the same to free markets and private property rights along with other freedoms to establish their ideal of communism, which necessarily leaves capitalism behind.

The Liberty Perspective is that China’s path is the same path that some Americans want the U.S. to get on. That’s called progress to these progressives who want to arrive at the same destination as those of the likes of Xi Jinping and Mao Zedong.

There are many socialists within the Democratic Party who may also have influence over the Biden Regime. There’s no doubt that the Squad are Marxists and they seem to have great power over this regime. I make the case in Organic Wealth that there are many within the Democratic Party who desire some form of democratic socialism; their policy positions betray them.

Even though Joe recently said, “I’m a capitalist,” it doesn’t mean that he isn’t willing to use the riches of capitalism to further the utopian dreams of the socialists who make up the Democratic Party.

To resist this Marxist plan of transforming U.S. capitalism to democratic socialism, we must support only those who value individual liberty and free markets. And equally important, reveal the socialists’ objectives to others.

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Do Government Subsidies Create Wealth?

In the last issue of Liberty Word, wealth was defined as the saved monetary value from meeting demand. This type of wealth, by meeting demand, expands the wealth pie. It’s brand new wealth that didn’t exist before.

But what if someone doesn’t meet demand? They receive an income, but it’s from a government subsidy such as unemployment compensation, child tax credits or a universal basic income. If this money is saved and therefore becomes wealth for the saver, does it increase the size of the wealth pie as new wealth?

Wealth of this kind isn’t new and it doesn’t effectively expand the wealth pie. The reason is that the subsidy payment was taken from taxpayers who don’t receive an equal value in return. A taxpayer’s loss for another’s gain isn’t an increase in value; it’s zero sum.

Any wealth from a subsidy will dwarf what would have been created by those who were taxed. This is because most of the subsidies are just consumed altogether, never becoming wealth.

If taxpayers’ incomes weren’t confiscated by the government, they could have saved it and created new wealth, or consumed it in our economy to receive an equal value in return. Instead their money is just removed in an unequal transaction.

As a result of redistribution taxation, the wealth pie’s growth potential is stunted. The opportunity to grow the pie is eliminated because potential savings by the actual earner of the income doesn’t occur.

In addition, redistribution taxation takes money which was earned by a person’s labor to give to others. This means that people are forced to work for another group’s benefit. In essence, redistribution is a form of slavery.

As a consequence of socialist policies that redistribute income, the nation’s total wealth doesn’t grow as robust as it could be. And if these policies begin to tax existing wealth to further redistribute, the nation’s total wealth will stop growing completely and will eventually decline. I detail in Organic Wealth how democratic socialism is a zero sum game that will lead to eating away of the existing pie.

Taxation to Fund Government

There is a difference between tax payments that go to fund the government, which benefits everyone and those that go to subsidize others.

Both divert otherwise productive capital that could expand our economy. The economy slows as a result of any taxation. Without taxation, those that earn income could demand an equal amount of products or investments. Economic activity that originates from meeting demand is great for our economy and generates opportunities for everyone.

Tax revenue taken out of the economy to fund the government isn’t redistribution like with subsidies. Such taxation at least has an indirect benefit to the taxpayer of paying for a functioning government.

Some may argue that not all government expenditures meet taxpayer demand because of waste, unused or unwanted services, and because they are compulsory. A good case can be made that they are unequal transactions.

Most of us would agree, however, that all of the tax revenue collected is used to fund the government whether we’re happy about it or not. If we’re not happy, then we can vote for new representatives.

Because taxation to fund the government technically meets taxpayer demand, it’s much different than that of subsidies, which don’t provide any value to those who are taxed. Redistribution taxation is just a loss of an earner’s income and more importantly, it’s stolen labor for another’s benefit.

Just because socialist policies do harm our economy in multiple ways, it doesn’t mean that we should rid ourselves of all individual government subsidies. The majority of Americans want a safety net of some sort.

Unemployment, for instance, should exist but be temporary and without federal assistance. Welfare should be tied to a work program. Social Security is a contract, but should gradually be replaced by the Savings Tax as described in Organic Wealth. Disability should exist but reformed to eliminate fraud. And so on.

Our political leaders should ensure they’re not wasting the money of those who earned it. After all, the taxpayers are given no value in return for these kinds of expenditures and it’s an opportunity loss. Whenever D.C. proposes a new program, ask yourself if they care about the taxpayer or is it just a giveaway to buy votes.

Taxpayers shouldn’t be robbed for another groups’ benefit who could otherwise meet demand in the labor market. We should never accept a universal basic income, guaranteed government jobs or giving people money to not work because of a sick political strategy to keep people dependent upon the government.

Individual government subsidies, both the safety net kind and the socialist kind, do not expand the wealth pie. They stunt its growth. If socialism is ever implemented by a one party ruled Democratic Party, the wealth pie will shrink as the riches of capitalism are consumed until only crumbs remain.

The Word

It’s pretty obvious that using the word liberal to describe today’s democrats isn’t accurate any longer. We designate certain crazed political positions as coming from liberals, but this should change. I can hear Rush Limbaugh now, “They’re liberals folks, that’s who they are!”

Here are two traditional types of liberalism:

Classical liberalism is a limited government philosophy that emphasizes the inalienable rights of the individual. These rights include the civil liberties within the Bill of Rights, private property rights and access to a free market economy.

Social Liberalism also promotes freedom of the individual and free markets, but it also espouses an active role by the government to ensure everyone’s liberties and to provide a social safety net. Though, the funding of the safety net diminishes the individual liberty of the taxpayer.

Today’s left, however, has deviated even more from individual liberty protections in a couple of ways. First, they believe the government should guarantee so-called positive rights, which include free health care, higher education and even a basic income.

How can something be a right that costs money? Forcing one group to pay for another group violates individual liberty. The reason is taking one’s income away is the same thing as taking one’s labor. Remember, money is just a medium of exchange.

Secondly, today’s left has become authoritarian. They’re no longer idealists who advocate for free speech, unless the person or group agrees with them. If you disagree or your speech offends them, they want to cancel you and shut you down. They want total domination in advancing their agenda despite the cost to individual freedoms.

Though many say the Democratic Party is a “big tent party,” the policies that they support don’t seem to be influenced by traditional liberals. I guess they’re the ones with the masks on serving the celebrities within the Party.

There are a couple of more descript words that Republicans should use when referring to today’s political opposition. We should use either socialists or Marxists.

Socialists: Their support for positive rights requires wealth transfers just like with socialism. I outline in Organic Wealth how the Democrats want to remake the U.S. economy from capitalism to democratic socialism.

Marxists: Karl Marx wanted societies to transition to communism. In order to do so, they would need a “dictatorship of the proletariat.” This doesn’t mean dictatorship by an authoritarian. It means a one party rule in a democracy to ensure the transition to communism, which supposedly society would demand.

Today’s left wants one party rule. It’s why they want to federalize the elections to ensure they win. It’s why the Democrats want open borders to have millions of new voters who’ll be more than happy to demand a collective system where they’ll benefit. In Organic Wealth, I detail how their one party rule and their version of democratic socialism would be authoritarian.

So using liberal was kind of a dirty word to describe the left, but it’s a word they themselves dirtied up. Instead, we should use what they truly are, socialists or Marxists. Then, those who don’t know what’s happening will begin to ask why do you call them that?

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Historical Hero

A hysterical piece was recently issued by The Babylon Bee that depicted General Milley riding a horse through the streets of Beijing shouting, “The Americans are coming!”

This funny but fictitious article combined two references. The first was Bob Woodward’s new book, titled Peril, in which it says that General Milley called his counterparts in China to say that he would warn them if the United States was going to attack. The second, of course, was Paul Revere's famous midnight ride.

Paul Revere was employed as an express rider in Massachusetts. His job was to carry messages and documents between different parties.

On April 18, 1775, Revere was hired to ride to Lexington, Massachusetts to deliver the news the British troops were about to arrive by sea to arrest Samuel Adams and John Hancock. The alert also warned the troops may continue to Concord, MA where military equipment was being stored.

The original midnight rider first had a friend place two lanterns in the tower of Christ’s Church to warn everyone that troops would arrive by sea.

Revere was taken by boat across the river to Charlestown where he began his run, about 11 pm. He set out warning the town of Medford and their local militia. He arrived in Lexington shortly after midnight. Revere delivered his message to the town of Lexington and warned Adams and Hancock.

On his way to Concord, Revere was captured by some British troops and questioned. They stole his horse, but let him go. Revere walked back to Lexington where the battle of Lexington Green was underway.

George Washington wrote in his diary of this battle, "The Spot on which the first blood was spilt in the dispute with Great Britain."

Of the 77 minute men that faced the British troops, 8 died and 10 were wounded. The British had two that were injured. After the battle was over, Samuel Adams said to John Hancock, "What a glorious morning for America!"

If it weren’t for Revere’s famous run, the outcome may not have been so glorious.

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Quotable suggestions:

“China’s path (abandoning capitalism completely) is the same path that some Americans want the U.S. to get on.”

“Individual government subsidies, both the safety net kind and the socialist kind, do not expand the wealth pie. They stunt its growth.”

“So using liberal was kind of a dirty word to describe the left, but it’s a word they themselves dirtied up. Instead, we should use what they truly are, socialists or Marxists.”

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In this Issue…

• Liberty Perspective: Human Infrastructure Bill

• Wealth Digest: Wealth from Meeting Demand

• The Word: Biden Regime

• Historical Hero: Marquis de Lafayette

Liberty Perspective

The Republicans, who are in the minority, are rightly decrying the human infrastructure bill. But our country’s only hope in preventing such a bill from becoming law are a couple of moderate Democrats within the Senate.

The constituencies of these moderates need to pressure them so that they give the thumbs down when the final bill is voted on. But what kind of pressure will these voters apply?

The basic objection to the bill is the price tag, at least that’s what the media is portraying.  Republican spokespeople and Joe Manchin (D-WV) seem only to be concerned over the bill’s cost. Their basic disagreement is how to pay for the monstrosity because the massive tax increases within the bill won’t be enough.

There are many valid points against the bill regarding its price. It’s true it would increase deficit spending and that we don’t need more spending in an inflationary economy. But these arguments, while concerning, completely miss the mark.

Voters are influenced by the media. When they’re told continuously that the problem is the price, then that will be the main issue.

If holdouts like Manchin and Kyrsten Sinema (D-AZ) are appeased with a smaller bill, then the country still loses. Compromising from $3.5 trillion to $2.0 trillion, for instance, may be enough to get it passed. This actually may be the strategy; throw anything and everything into the bill that may pass reconciliation scrutiny. Then, negotiate it lower so they get what they really want.

The Liberty Perspective is our objection isn’t over the cost, which obviously is outrageous, but is what’s within the bill. Do voters in West Virginia and Arizona want the Green New Deal, election takeover by Democrats, crippling tax increases that’ll slow down our economy, citizenship for illegals, and all sorts of social spending?

Republicans need to say the bill eliminates freedom by the socialist Democrats or something similar. Then articulate why they’re making this claim by mentioning what’s in the bill.

Voters then, in red West Virginia and purple Arizona, will apply the right pressure and demand that their Senators vote against the bill—even if it’s just a nickel.

Wealth from Meeting Demand

Freedom based economies, like that of the United States, are able to produce new wealth, having never existed before. To put it another way, the so-called wealth pie just gets bigger. The reason the wealth pie grows is because free markets are based on equal transactions.

Just the idea that wealth is created and not distributed is a shock to some. Many believe our entire nation’s wealth has already been stolen away long ago by white supremacists and some dudes called robber barons.

But the fact is, within free market capitalism, whenever anyone saves their income, it’s brand new wealth that previously didn’t exist. It’s from meeting demand in a marketplace and not from slicing up a rich baron’s pie.

Let’s say someone saves $100 per week from their paycheck. After one year, they would have a total of $5,200 saved. If their plan was to invest this money and not spend it, then it is brand new wealth that never existed before. 

The reason it’s brand new is because it was the result of receiving an income in exchange for their labor. The employer providing the wage isn’t doing so from some kind of wealth transfer but rather, in an equal transaction. The employer gets production and the employee receives an equal value of money for that production.

The person’s $5,200 in wealth, therefore, was created directly from their production and not from the employer’s wealth. Because the employee’s production had a monetary value, any amount that’s saved is new wealth that never existed before.

At this point we can define wealth as the saved monetary value of one’s labor.

New wealth isn’t just from labor, however. It’s actually created by earning an income by meeting demand. So it doesn’t matter if you’re an employee who meets demand with your labor or a business who meets demand with a product. Any time demand is met in exchange for money and any portion of that money is saved, it’s new wealth that never existed before. The wealth pie goes boom.

We can therefore define wealth more perfectly as the saved monetary value from meeting demand.

Businesses Meet Demand

We’ve briefly looked at employees. Now let’s consider a business that meets demand. A business will take their employees’ production and use it to produce a product or service to sell that they hope will meet demand.

Going back to our example, if our employee who saves $100 per week receives a wage of $1,000, the company then is obviously out $1,000 in money. Over the course of the year, the employee has created $5,200 in new wealth from an income of $52,000. But does that mean the employer has lost $52,000 of its wealth?

The employer has not lost $52,000 of its capital or wealth because it uses an equal value of production from the employee to create and sell products to its customers. The customers pay for something they want in an equal transaction so they haven’t lost anything. The company, however, receives revenue that effectively replaces what it paid out to its employees. So the company likewise hasn’t lost its wealth.

If the company is good at meeting demand, then they’ll replace what they paid out in wages and their other expenses to earn a profit for the owners. Profit making is the ultimate goal of any business. If the owner saves a portion of that profit, it’s new wealth just like if an employee saves a portion of their income.

Investors Meet Demand

Even the stocks you own that appreciate in value fit this description. Stock prices primarily go up when a company is meeting demand and has increased its earnings (profit or saved revenue). For the shareholder, the profit could be distributed or reinvested in the company to increase revenues. Either way, the increase in wealth for the shareholder represents the saved monetary value from meeting demand by the company.

If you drill down on this definition, it will apply to any other investment. For example, a house flipper buys a distressed house, rehabs it and sells it for a profit. The flipper met demand in the housing market when he sold a house to a buyer in an equal transaction. The buyer’s wealth didn’t decline. The after tax profits that’s saved by the seller also represents the saved monetary value from meeting demand.

Whenever any type of investor sells their asset to another party, then they are meeting demand in that market. Any gain that’s not consumed is also the saved monetary value from meeting demand.

It’s important that we note this definition of wealth to ensure everyone understands where new wealth comes from; it comes from meeting demand to earn income and then saving a portion of that income.

What’s great about free market capitalism is that earning an income by an employee, a business or an investor doesn’t prevent others from doing so as well. The reason is because wealth isn’t from a transfer or from slicing up a pie. It’s all about meeting the needs and wants of a market. Any of us can do that with liberty and free markets.

The Word

Back during the George W. Bush years, when referring to the Bush Administration, Democrats would instead call it the Bush Regime or just, “this regime.” All of them did it from Democrats on cable news to NPR to their activists who resided at moveon.org. 

This began even before his first inauguration. The Wall Street Journal had this article on Jan. 8, 2001 entitled, Green Groups Brace for Bush Regime; Some See Hope, but Many Expect Strife.

Most meant it in a derogatory way. The Collins Dictionary says by referring to a government as a regime, “You are critical of it because you think it is not democratic and uses unacceptable methods.”

Bush’s opponents vilified him so much that many to this day believe he knew 9/11 was going to occur and that it was an inside job. It seems that all these negative vibes had an effect on W.

Mr. Bush revealed his contempt for Trump supporters during his 9/11 twenty year anniversary speech. Bush seemed to equate the protestors turned semi riotous, who stormed the capital this past January, to the terrorists who killed nearly 3,000 people on September 11th.

The former President said, “There is little cultural overlap between violent extremists abroad and violent extremists at home. But in their disdain for pluralism, in their disregard for human life, in their determination to defile national symbols, they are children of the same foul spirit.”

He wasn’t specific, but he didn’t seem to be speaking out against the foul spirit of BLM or Antifa. Both groups rioted, looted, destroyed, injured and killed in cities across the country. In Minneapolis, they took over a police station. In Seattle, they created their own country called CHAZ, and then later CHOP. All this during the Summer of Love. That was all cool, though.

Bush instead appeared to be referring to those who rushed the capital with American Flags and Trump signs. These protesters were far from cool. They were from the pit of Hell.

Could it be that he hates those who supported Trump over his low-energy brother, Jeb, that much? I don’t believe so. It may be that he wants to receive his long-coveted approval by the media and historians for joining their Trump hating club. That way his regime will be forgotten, but his administration will be remembered more positively.

The problem with President Bush was that he never fought back. He let every false accusation against him go unanswered. Bush was the opposite of Donald Trump, who probably learned from Bush to not let things slide. The characterization of regime wasn’t accurate then, but still very effective given Bush’s continual silence during his time in office.

The Biden Regime, however, has proven to be obscenely authoritarian, highly partisan and extremely incompetent. The word regime is very appropriate to use when describing this Administration.

By accurately referring to them as the regime will be an effective message that voters will understand and not forget. After all, they supposedly voted for a moderate who would be the President of all the people. That’s not what we have now. Moderate Joe was just a mask worn by an old yet aspiring puppet who was locked down in a basement. After winning the presidency, however, the puppet that emerged was a mumbling stumbling marionette who’s being handled by his leftist masters.

So whenever we talk or write about the Biden government, a good strategy would be to refer to it as the “Biden Regime” or “this regime.” It’s not payback for Bush, at this point why would we care; it’s just fitting.

Image (greyscale): flickr, Binary Koala  

Historical Hero

Known in the United States as just Lafayette, Marquis de la Fayette was an orphaned French aristocrat worth millions. He learned horse riding by three future kings: Louis XVI, Louis XVIII and Charles X.

He married at age 16 to a girl from a noble family, but became enamored with America’s growing conflict with Great Britain. Already a military officer at home, he set sail to fight for America’s independence without pay. The revolutionary arrived in the New World in 1777 still a teenager.

Being a French military officer who was also rich, Lafayette was quickly brought to General George Washington and was made Major General. By September 1777 at age 19, he was leading troops in the Battle of Brandywine where he was shot in the leg.

Washington and his doctors looked over Lafayette while he recovered. The two became lifelong friends as Washington was like a surrogate father to Lafayette and maybe likewise Lafayette a son to the General.

Lafayette was with Washington at Valley Forge, enduring a brutal winter where hundreds of soldiers perished. Lafayette led troops in other battles outwitting the British, including blocking British Army General, Cornwallis so that other French and American forces could capture Yorktown in 1781. This victory led to the war’s conclusion and America’s independence.

In the middle of the War, Lafayette sailed back to France to help Benjamin Franklin and John Adams persuade Louis XVI (Lafayette’s family friend) to send more troops and supplies. He arrived back to the battle in 1780.

After the War, Lafayette returned home to France and was hailed a hero for defeating the county's enemy, Great Britain. With Thomas Jefferson’s aid, he wrote the first draft of the Declaration of the Rights of Man and of the Citizen, which established that “men are born and remain free and equal in rights.”

As commander of the national guard of Paris, he saved Louis XVI and Queen Marie-Antoinette from invaders and was seen with the Queen on the balcony of the King’s Chamber. The King and Queen went into exile, but were later killed by guillotine during the Reign of Terror of the French Revolution, which abolished the monarchy.  Lafayette himself went into exile as well, but was arrested by the Austrians and spent five years in prison.

Napoleon Bonaparte secured his release in hopes he would assist him, but Lafayette was no fan and refused to work in his government.

In 1824, at the invitation of President James Monroe, Lafayette returned to the U.S. and was recognized by all as a hero of the Revolution. He visited every state in the country. Even today, there are hundreds of cities, streets, parks and buildings named after Lafayette.

When he died in France in 1834, he was buried under the soil from Bunker Hill brought over from the U.S.

When the government violates the people's rights, insurrection is, for the people and for each portion of the people, the most sacred of the rights and the most indispensable of duties. — Marquis de Lafayette

Spread the Liberty Word

The most fun I had in this issue was writing, “Moderate Joe was just a mask worn by an old yet aspiring puppet who was locked down in a basement. After winning the presidency, however, the puppet that emerged was a mumbling stumbling marionette who’s being handled by his leftist masters.”

Imagining Joe as a marionette flailing about is just too funny to me :)

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In this Issue…

• Liberty Perspective: Texas Heartbeat Act

• Wealth Digest: Wealth for All

• The Word: Real Voters Chose Trump

• Historical Hero: Patrick Henry

Liberty Perspective

The Texas Heartbeat Act is now law. The Supreme Court rejected Planned Parenthood’s emergency request to block the bill. The Court determined that private citizens had standing to sue any person for $10,000 in damages who assists a woman in having an abortion. Such heartbeat laws will likely be taken up by the Highest Court in the future to determine their constitutionality.

42 of our states restrict late term abortions already. Late term is 20 to 28 weeks and is when a baby is viable outside the womb. The heartbeat bill is about 6 weeks and is when a heartbeat can be detected.

Roe v. Wade allowed states to restrict abortion after the first trimester, but not outlaw it during the second trimester. During the third trimester, however, at the point of viability, a state could outlaw abortion in the interest of a “potential life.” The exception to prohibiting abortion was if the health of the mother was at stake.

Back in 1973, the Court determined that only babies that were viable could potentially be considered a person with rights. Those unborn babies then could be protected by the state.

The Liberty Perspective is that determining when life begins had nothing to do with the Court finding a “right to privacy” within the Due Process Clause of the 14th Amendment. Allowing for exceptions to protect life was added by that Court at the point where they believed life began, at viability.

Such an opinion of when life begins surely can be updated by another Court by looking at today’s scientific evidence. Roe, therefore, could be partly overturned on that basis. The Court is unlikely to remove the privacy rights aspect of Roe that permits abortion, but will allow states more flexibility in determining when life begins.

Wealth for All

A great benefit for those who live within free market capitalism is the ability to create wealth. The process of creating wealth begins by taking something of value such as one’s labor and exchanging it for income within a marketplace. This income then can be saved to create new wealth.

Having the freedom to meet demand encourages society to earn more than just enough to survive. It’s within our God given nature to do so. We not only desire a better quality of life for today, but we also want to invest in the future. A free economy begets income creation which then allows for wealth creation.

As I detail in Organic Wealth, saving income results in brand new wealth having never existed before. The so-called wealth pie just gets bigger. Most new wealth is created this way while asset appreciation makes up the rest. In order to initially buy assets without a loan, however, requires saved income.

What this means is that anyone can create wealth. All that’s necessary is meeting demand in a marketplace and saving a portion of one’s income. Then, bingo, new wealth is created.

Those in the media and on the political left who bemoan wealth inequality never encourage people to create wealth for themselves. When was the last time you heard an appeal to live within our means or to save for our future?

They don’t even propose policies that would produce a tight labor market, which would increase average wages so people could save more. In fact, policy makers usually support the exact opposite.

For example, our political leaders support policies that encourage illegal immigration. These types of stances include not mandating E-Verify, failing to secure our borders, and having benefits for illegals that act as magnets. The aftermath is an increase in the labor supply which not only takes jobs away from citizens and legal visa holders, but also puts downward pressure on wages.

The left also support policies that target businesses. They want higher tax rates and burdensome regulations, which both eliminate jobs altogether or end up sending good jobs away to other nations.

The consequence of such laws or policy positions is lower or stagnate average wages. A weak economy makes it almost impossible to save and invest for anyone not in the upper middle class.

Giving businesses and people more freedom, on the other hand, means employers competing for workers resulting in a strong labor market. Of course, this leads to higher wages, upward mobility and low unemployment rates. The natural outcome is that people earn more income permitting them to save more.

Brand New Wealth

Having an economic system that’s freedom based is necessary for everyone to succeed financially by meeting demand. Once we have more freedom and people are prospering, the question is do people who build wealth remove the opportunity for the rest of society to create their own? Do they even diminish the chance even slightly?

I prove in Organic Wealth that the answer is no. Those who create wealth are essentially building wealth out of thin air. It’s brand new wealth that never existed before because it’s not the result of a wealth transfer. It’s directly from their labor or by meeting demand in some other way. As such, they’re not preventing others from doing the same.

Let’s say, for example, there’s a large private company that earns billions of dollars each year. The sole owner is the only person who receives the company’s profits which equates to $100 million yearly. Did this company or owner cause anyone else in society to lose their wealth or their opportunity to build wealth for themselves? Did the “wealth pie” shrink because of this company sucking up billions each year?

Those who bought the products from the company didn’t lose anything because the items met the buyer’s demand. They got what they wanted. The transactions were each a net zero being equal on both sides.

The billions the company earns are mostly paid out to employees, vendors and government treasuries, which becomes income to those people and entities. The people who receive that money will consume it which then becomes income once again to others. So the billions that were removed from society is put right back in as income to others. No wealth or income was permanently lost as a result.

As for the owner’s profit of $100 million, it will be exchanged for other assets. The profit won’t likely remain as cash. If any money is saved, however, it will be used by banks to loan out. Loaned money, of course, is consumed in our economy and becomes income once again. For example, if someone buys a new car with a loan, the car dealership receives that money as new income, which will be consumed and become income again.

Any assets the owner purchases becomes income or a gain to the seller of the assets. This person could then consume that money in our economy. If the seller instead just buys other assets with their new money, then those sellers could consume the proceeds. This could go on many times until it’s eventually spent in our economy by someone instead of just buying other assets. Of course, once it is consumed, it becomes income once again.

Money is withdrawn from investment accounts continually to raise funds to consume. For instance, this occurs with venture capital or to lend to others who will spend it. Also people sell assets for other reasons like to buy luxury items, to purchase a second home, to give to charities or for traveling. It’s especially true at retirement when people live off their investments. Let’s not forget times of economic hardship or when estates are ultimately liquidated.

On a side note, the same process is true for stock buybacks that the left says doesn’t benefit our economy.

The bottom line is that when any of us create wealth, we are not preventing others from doing the same. All of us can build wealth because wealth creation is from earning an income by meeting demand and not from some wealth transfer. The money isn’t permanently removed out of society because it finds its way right back in as income again for other people and entities.

Since this is true, the real issue then is assisting people so they can meet the needs of a marketplace to earn an income. Additionally, we need to encourage more saving and investing. This should be our focus and not on punishing those who create jobs, income and wealth.

The Word

The left is good at picking a narrative and getting their people on board with it. At one time, Democrats believed Republicans were winning because of messaging. The GOP, however, was never good communicators. They just stated the truth and sometimes it resonated.

The solution the left came up with was to adopt a cleverly worded message and then line up every one of their sheep political leaders and the media to ‘bah’ the same thing. It doesn’t matter so much as to what’s true or not, just that it’s a consistent message that people can believe.

For instance, take their retort of “the big lie” as a response to those who claim the 2020 election was stolen. It doesn’t work because it’s true that Trump and his voters are lying. It works because it’s simple and it places the burden of proof on those who make the claim. That’s not easy to do without the media revealing all that happened.

Instead of the big lie, what if they just said that Joe Biden won fair and square? Well, then any evidence to the contrary would place the burden on them to defend Biden’s victory. Was it really fair and square?

If he did win fairly, then it would have been a good talking point.

Now, consider these facts: The GOP gained seats in Congress… Trump won nearly all bellwether counties… and Trump expanded the base of Republican voters.

How could Donald Trump have won 16 of the 17 bellwether counties, which historically vote for the winner, and still lose? How did he lose the presidency while at the same time the GOP picked up seats in Congress? After all, new Republican voters were motivated to turn out to support Trump not the congressional candidates. It doesn’t add up.

Could the Republicans’ message (not including the Never Trumpers) have been a consistent, “real voters chose Trump”? The implication is that fake voters chose Biden.

Yes, the burden would be on Trump supporters, but that’s okay because it’s based in truth. They could just say the facts that I listed, and others, to back it up and any evidence of fraud would also resonate. The point is that a simple easy to say true message from the whole team is what people would remember.

Going forward, The Word will be devoted to GOP messaging. I have no desire to deviate from the truth, but rather to state things clearly. Truth presented clearly and concisely will reverberate with voters more than just clever slogans.

Historical Hero

Patrick Henry is a Founding Father who’s famous for his Give Me Liberty or Give Me Death speech. Henry stood up in the Virginia Convention after others spoke against an armed conflict with the British. His voice echoed throughout the hall as he passionately convinced his fellow Americans, including Thomas Jefferson and George Washington, there was a real chance for freedom. But that freedom had to be fought for as the Brits were already arming up around the colonies. Armed conflict was inevitable.

At the end of his speech, Henry raised his arms together as if they were handcuffed or shackled and said, “Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty...” He then lowered his hands to pick up an ivory envelope opener and pretended to stab himself in the heart. While doing so, he continued by saying “or give me death!”

The War began one month later.

In our day, we don’t have to pick up arms to fight against our oppressors, at least not yet. We’ve already won our freedom thanks to our Founding Fathers. Our job though is to maintain that freedom by voting for people who’ll protect it. Be like Patrick Henry and only support liberty and vote against those who support more government control.

Spread the Liberty Word

Quotable suggestions:

“The Court is unlikely to remove the privacy rights aspect of Roe that permits abortion, but will allow states more flexibility in determining when life begins.”

“Wealth creation is from earning an income by meeting demand and not from some wealth transfer.”

“Real voters chose Trump. The implication is that fake voters chose Biden.”

“Our job… is to maintain that freedom by voting for people who’ll protect it. Be like Patrick Henry and only support liberty.”

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This article is part of the wealth tax series.

Many on the political left are running a full-court press to defend their notion that a wealth tax is constitutional. Some are even claiming the rule of apportionment was just a mechanism to raise revenue and it wasn’t meant to handcuff Congress’s ability to reach for an individual’s wealth.

What these advocates are saying are both true and false. The true part is that apportionment is a legitimate way of directly taxing existing wealth. Apportionment applies to only direct taxation, but not the income tax which was permanently removed from the rule by the Sixteenth Amendment.

The rule requires a complicated calculation where you have to consider the population of each state to determine how much each person owes. Each state will have different rates or amounts due. So a person who was the object of a tax living in Colorado would owe a different amount than if they lived in Idaho.

Because the rule is so difficult to administer and its perceived unfairness, the chance Congress will impose such a tax is virtually zero. What proponents of a wealth tax say is that back during the Founding Era a direct tax would have been easier to enact because the rule was only meant to apply to land values or capitations, which didn’t greatly vary in value back then.

They say since implementing such a tax isn’t feasible today; the rule shouldn’t apply to any taxation, even direct taxes on land and capitations. This is because, they contend, the rule was just a mechanism to raise revenue which is too difficult in today’s world.

So not only do they maintain the rule wasn’t meant to protect wealth, but also its purpose to raise revenue has become outdated. Therefore, it should be scrapped with the cooperation of all three branches of the federal government, especially the Supreme Court.

Protection of Wealth

Today’s left argues that apportionment was just a method to raise funds and it was never meant to protect property. Before the Constitution’s ratification, however, there was a great debate on the power of the national government to directly tax.

The Anti-Federalists of that time were against direct taxation because it reached into private property instead of just taxation on commerce, which could be avoided. They printed the following in newspapers throughout the United States:

The power of direct taxation will further apply to every individual, as congress may tax land, cattle, trades, occupations, etc. in any amount, and every object of internal taxation is of that nature, that however oppressive, the people will have but this alternative except to pay the tax, or let their property be taken, for all resistance will be in vain. The standing army and select militia would enforce the collection.1

Speaking at the Virginia Convention on the adoption of the Federal Constitution, James Monroe said he would give the government “absolute control over commerce,” but take one power away, that of direct taxation. He believed direct taxation to be “not necessary” and called it “the subversion of liberty.”2

Alexander Hamilton, hoping to satisfy concerns, wrote in Federalist 36 that apportionment “effectually shuts the door to partiality or oppression (emphasis mine).” Hamilton insisted the rule of apportionment would prevent an oppressive government.

The reason people were against direct taxation was because they didn’t want their property (wealth) to be taken by a powerful federal government. To say they were okay with such a tax as long as it was fair and uniform is a false portrayal of history. The apportionment rule isn’t easily administered and therefore, protects wealth, at least according to Hamilton.

Does anyone think a government run by the likes of Bernie Sanders wouldn’t become oppressive if they had unrestricted power to confiscate wealth? If Marxists can tax wealth, they can then setup their socialist economic system, "From each according to their ability, to each according to their needs."

Outdated

The left also believes the rule of apportionment is outdated because it was only a fair system back at the time of our Founding, but not so today. Consequently, apportionment as a rule shouldn’t apply to direct taxation in today’s world.

It may be more complicated now, but it was never a simple taxing method or was it equal. Would it have been easy to value different properties across a diverse and growing country? And if it was implemented, using apportionment to tax land owners back then would still end up being unfair to some who would have to pay a higher rate than others.

Direct taxes were so difficult that politicians and judges had to misconstrue the income tax. They ridiculously called it an excise tax so it wouldn’t be considered what it truly was, a direct tax.

The 16th Amendment was enacted which allows the income tax to be imposed without apportionment. By giving Congress this taxing method, it replaced consumption taxes as the main source of revenue. The Sixteenth as well has relegated direct taxation as obsolete.

The Founders were concerned about emergency expenses that could arise such as in wartime. That was the purpose of a direct tax. General expenses would be supplied by consumption taxes, otherwise known as indirect taxes.

James Madison made the following points in the Virginia debate on the Constitution’s adoption regarding direct taxation:3

“It can be of little advantage to those in power to raise money in a manner oppressive to the people (emphasis mine).”

“Direct taxes will only be recurred to for great purposes… Not the expenses of their governments, but war.”

“It is necessary to establish funds for extraordinary exigencies, and to give this power (direct taxation) to the general government.”

In other words, direct taxes are oppressive and shouldn’t be used unless in extreme circumstances like war. Accordingly, the power should be given the federal government.

James Monroe thought differently. Not only did he believe direct taxation to be a subversion of liberty, but also unnecessary. Our future 5th President said direct taxation wasn’t necessary because indirect taxation methods would be sufficient to pay for the federal necessities and because we could borrow money. He also mentioned unused lands that had value and a requisition system for small amounts.

Monroe concluded that the nation’s credit “will enable us to procure, by loans, any sums we may want.”4

As it turns out, borrowing has become how the United States pays for emergencies. Given the fact that direct taxation doesn’t apply to income and that a direct tax was only meant for emergencies, there is no reason to utilize such a taxing method today to reach the people’s wealth. If we have an emergency, we have access to loans. Direct taxation, therefore, is what has become outdated.

You can read more about the wealth tax in these articles:

1. The Wealth Tax is Unconstitutional

2. The Obstacle to the Wealth Tax

3. The Claim of 'Not Easily Apportioned'

4. The Claim of a 'Slavery Compromise'

5. The Claim of 'All Taxes Were Direct Until Apportionment'

This article is part of the wealth tax series.

The Bernie Sanders’ website links to an American Bar Association article where the authors attempt to convince us that before the U.S. Constitution, all state taxes were considered federal direct taxes. Then, once apportionment became associated with direct taxes in the new Constitution, those taxes that couldn’t be easily apportioned were no longer considered direct. They became indirect.

They want the reader to draw the conclusion a wealth tax, since it isn’t easily apportionable, should be considered an indirect tax just like the evolution of most other taxes that came before it.

Before we discuss their nonsense, let’s first define the actual meaning of direct and indirect taxation. Direct means any tax imposed directly to the taxpayer such as a head tax or a wealth tax. This should have been the definition used from the beginning.

Indirect taxes, on the other hand, were paid within a product’s price. It was considered indirect because the actual payer of the tax didn’t pay it directly to the government, but through a third party such as a merchant. A good example today is the gasoline tax we pay at the pump.

As Jean Baptiste Say wrote in his Treatise on Political Economy (1803): “Indirect taxation; for the demand is not made on any person in particular, but attaches upon the product or article taxed.”

These commonsense definitions may not be acceptable to those who want new sources of government revenue. It doesn’t mean, though, the rest of us must accept their redefinitions without a vigorous push back.

Before Alexander Hamilton became the father of big government, he was a son of liberty. Back in the day, he taught the meaning between indirect and direct. Indirect taxes were on objects of consumption while direct taxes were on storehouses of wealth. In Federalist 21, while still under the Articles of Confederation, Hamilton writes to the State of New York:

If duties (taxes) are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great… This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.

Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country. Those of the direct kind, which principally relate to land and buildings, may admit of a rule of apportionment (emphasis mine).

Hamilton clearly understood the meaning of the two terms. Consumption taxes on articles were classed as indirect taxes. The natural check on government to not overtax with such taxes was Hamilton’s main point. Those taxes on people’s wealth such as the land or buildings they owned were direct.

He said that direct taxes “principally relate to land and buildings.” Real estate was where the storehouses of wealth were at that time. He wasn’t defining all the possible objects of direct taxation, just principally (for the most part) or practically speaking at that time. Did you see how he mentions the rule of apportionment? This was the check on Congress’s power with regard to direct taxes and not just a mechanism to loot the citizenry.

Hamilton changed his tune, though, in 1795 regarding the Carriage Tax. As the former Secretary of the Treasury, he probably came to covet new sources of revenue. He argued the Hylton v. United States on behalf of the government before the Supreme Court contending the tax was a consumption tax. Congressman James Madison disagreed with Hamilton believing the carriage tax to be direct.

Hamilton’s speech before the Supreme Court included:1

"What is the distinction between direct and indirect taxes? It is a matter of regret that terms so uncertain and vague in so important a point are to be found in the Constitution. We shall seek in vain for any antecedent settled legal meaning to the respective terms—there is none."

Because the Constitution doesn’t define the terms and there wasn’t a legal definition that already existed, Hamilton decides he wants to change what the common understanding was for taxing convenience sake. He couldn’t conceive of letting luxury taxes be left to the States.

The funny thing is, even Alexander Hamilton believed a wealth tax should be a direct tax requiring apportionment. He also said during that same speech:2

The following are presumed to be the only direct taxes.

1. Capitation or poll taxes.

2. Taxes on lands and buildings.

3. General assessments, whether on the whole property of individuals, or on their whole real or personal estate;

all else must of necessity be considered as indirect taxes.

A general assessment is the total value of one’s real and personal property. I wonder why the socialists leave this out of their praise for Hamilton.

Despite those like Hamilton who were looking to redefine the terms to expand taxation, the terms direct and indirect taxes had an understood meaning throughout America, France and Great Britain.

Origin of Direct Taxes (According to the ABA Article)

The ABA article says, “The term direct tax first appeared in America in reference to requisitions—that is, taxes directly on the states—under a pre-Constitution 1783 proposal to reform the Articles of Confederation.”

They are claiming that direct tax was a new term in 1783 made to describe the requisition system during the Confederation. This isn’t true, however.

The term direct tax was used in the Wealth of Nations by Adam Smith published in 1776, seven years earlier than what these writers claim the people of America had used it. Many people of the Founding Era, of course, were very familiar with this work. Do you think they didn’t understand the terminology? Here are the only four different objects of taxes that Smith labels as direct taxes that have nothing to do with a requisition system. Notice how none of them are indirect taxes?

• He used direct tax when comparing taxing someone’s total money stock (cash) to taxing the value of their land.3

• He used direct tax when describing taxing labor income.4

• He used direct tax when describing capitation (head) taxes.5

Two years earlier than Smith’s book, Benjamin Franklin used the term in 1774, nine years before the article says the term even existed.6 After the repeal of the Stamp Act, Britain instituted a new act which levied the colonies’ exporting manufactures. It was another way to institute direct taxation. Franklin writes, “…it was in the power of Britain to burthen them (Colonists) as much as by any direct tax… (Emphasis mine)”

From The Collected Political Writings of James Otis published in the Boston Gazette in 1765 (eighteen years before the ABA article claims direct tax existed),7 “…they (Colonists) complain of direct taxes that really exceed their ability, and which have been imposed not only without their consent and grant, but against their will (emphasis mine).”

I’m sure there’s much more evidence that the term direct tax was used before 1783 in America and that the people of that period knew its meaning. It’s just a matter of access to available research. If you know of any, please forward it.

All Federal Taxes, i.e., Requisitions

The ABA article has this true sentence:

“All federal taxes allowed before the Constitution was adopted were direct taxes because the Congress had only the power to raise revenue by requisitions, that is, taxes directly on the states.”

This is a true statement because the Confederate Congress could only send a tax bill due (requisition) directly to each state. The Congress couldn’t tax people or commerce within each state to raise revenue so they had to rely on the requisition system.

It was then up to the States to tax its citizens to raise revenue to satisfy the requisition. This would mostly be consumption taxes and some capitation taxes.

The question is why did these writers say “all federal taxes” when there was only one, requisitions? Do they want the reader to think many?

The Evolution of the Term (According to ABA Writers)

The ABA article declares that “the term direct tax came to refer to (as)… taxes imposed by the states.”

In other words, they are saying the state consumption taxes became known by society as direct taxes because they satisfied a direct tax (requisition) from the government.

The writers then makes this statement, “A tax that could not reasonably be allocated among the states was not a direct tax, so direct tax and impost were opposites.”

What they are saying is that since imposts couldn’t be attributable to any one state, no state could then use the revenue from imposts to satisfy its requisition. So imposts weren’t direct taxes and everything else used to satisfy requisitions were.

Are you following? Now get this, under the new Constitution, once apportionment became the rule for federal direct taxes, the writers say all those taxes that the States used to previously collect, which couldn’t be reasonably allocated by the new federal government, became indirect just like imposts.

Voilà, just like that, all taxes that couldn’t be reasonably allocated ceased from being classified as direct. So then going forward, easily apportionable became the standard on whether a tax was direct or not. But is this narrative true?

The True Meaning of Direct and Indirect

It is very clear from the historical record that the people of the Founding Era knew exactly the meaning of direct taxes and that which were indirect. No mode of taxation changed from being direct to indirect. Let me inject some more truth into their propaganda!

During the Constitutional Convention, before the Constitution was ratified and while still under the Articles of Confederation, Mr. Gouverneur Morris famously proposed restraining House representation to that of direct taxation. He then says, “With regard to indirect taxes on exports and imports, and on consumption, the rule would be inapplicable (emphasis mine).”8

Mr. Morris and those who favored the apportionment rule weren’t clueless as to what indirect taxes were. They certainly didn’t consider them to be direct as this article falsely maintains. Rather, they called them what they were, indirect taxes.

If the spin from the ABA writers were true, then Morris would have used different language such as: With regard to taxes on exports and imports, and on consumption, those taxes will no longer be considered direct, but indirect and the rule would be inapplicable. But nowhere within the debate of the Constitution does anyone discuss changing the labeling of any tax from direct to indirect.

Alexander Hamilton writing in Federalist 12 to the State of New York:

No person, acquainted with what happens in other countries, will be surprised at this circumstance. In so opulent a nation as that of Britain, where direct taxes from superior wealth, must be much more tolerable, and from the vigor of the government, much more practicable, than in America, far the greatest part of the national revenue is derived from taxes of the indirect kind; from imposts and from excises. Duties on imported articles form a large branch of this latter description (emphasis mine).

Hamilton referred to the actual meaning of direct taxation pointing out that Britain taxes the wealthy, but America uses indirect taxation on consumption. Alexander Hamilton didn’t tell the people of New York, don’t worry all your direct taxes will become indirect. The earlier quote in this post from Hamilton in Federalist 21 shows the same understanding of what the terms meant.

The idea all taxes were considered direct until the Constitution is simply a false one. I have much more proof which makes the ABA article's claims laughable within my book, Organic Wealth. Learn how James Madison classifies any payment made directly to government as a direct tax. Also, see how those who opposed the Constitution were fearful of the power of the government to directly tax its citizens and much more!

You can read more about the wealth tax in these articles:

1. The Wealth Tax is Unconstitutional

2. The Obstacle to the Wealth Tax

3. The Claim of 'Not Easily Apportioned'

4. The Claim of a 'Slavery Compromise'

5. The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'

This article is part of the wealth tax series.

The Bernie Sanders for President website, not surprisingly, advocates for a wealth tax. He says a wealth tax would be Constitutional and uses several articles to support his view written by legal experts.

One piece of evidence the site substantially quotes is an article written in 2011 by Bruce Ackerman and Anne Alstott. They insist the clause, “capitation and other direct taxes,” was written as some sort of compromise for the slave-holding South. But this is simply not true.

The clause they appear to quote is from Article II, Section 9. The draft at that point during the Constitutional Convention just began with, “No capitation tax shall be laid…” An amendment to the clause was made and it became, “No capitation, or other direct, Tax shall be laid…” This was on September 14, 1787 and it had nothing to do with slavery.

They may have been referring to Article I, Section 2 where clause 3 begins, “Representatives and direct taxes shall be apportioned among the several States...”1 This was the area of the draft where the debate regarding House representation and direct tax apportionment centered.

The “Compromise”

The article postulates that the provision, direct taxes shall be apportioned, was part of a compromise with the southern states. Its purpose, according to the authors, was to prevent a head (capitation) tax on slaves because such a tax isn’t possible to apportion. There are two fallacies here: the compromise and the purpose. First up is the compromise claim.

In Organic Wealth, I describe direct taxes and apportionment from the Constitutional Convention debate in detail. To summarize, the main focus of the debate was how to determine each state’s representation in the House of Representatives. Would it be based on population numbers or on the wealth of each state? Those who argued wealth thought since they would contribute more in taxes, they should have more voting power.

Eventually, the delegates agreed that representation would be based on population while at the same time restraining direct taxation to population too. That way, a wealthier state with a smaller population wouldn’t be out-voted to impose unfair direct taxes against its citizens.

As a part of that larger debate, arose the issue regarding counting slaves. Would they be counted to determine the population of each state? If so, then southern states with slaves would have an advantage in House representation and it would encourage even more slavery, which many from the Convention objected to. On the other hand, slaves contributed to wealth creation and also increased the South’s contribution to any direct taxation.

Here are some key points in chronological order:

July 12, 17872

Mr. Morris moved to vary the representation in the House according to the principles of wealth and numbers of inhabitants (including slaves). He proposed the provision, “that taxation shall be in proportion to representation.”

There was an objection that it would lead to requisitioning the States for revenue. As a result, the rule was then changed to restrain taxation to only direct taxation. The approved provision: “provided always that direct taxation ought to be proportioned to representation.”

Mr. Davie then spoke out saying the southern states wouldn’t receive any representation for their slaves and that South Carolina wouldn’t agree to the Constitution unless slaves were counted for representation as three fifths.

Mr. Randolph urged that slaves be included in the ratio of representation as three fifths. Madison writes, “He (Randolph) lamented that such a species of property existed; but, as it did exist, the holders of it would require this security.”

Mr. Wilson thought less people would object to slaves being included in the rule of representation, if they were only an indirect ingredient to the rule. He proposed changing the provision by reversing it: “provided always that the representation ought to be proportioned according to direct taxation.”

Wilson’s idea meant they would calculate the proportion of direct taxation first, which would include counting slaves, then base House representation on that proportional number.

July 24, 17873

Mr. Morris wanted to remove the clause proportioning direct taxation to representation. He had only meant it as a bridge.

September 13, 17874

Mr. Dickinson and Mr. Wilson moved to remove “and direct taxes” from article I, section 2 believing it to be misplaced as a part of section 2.

Mr. Morris pointed out that the insertion here (section 2) was in consequence of what had passed to this point. They didn’t want the appearance of counting the slaves as part of the representation. The including of them, though, allows them to be seen as being counted for direct taxation purposes, and only as a by-product to that of representation.

The motion by Dickinson and Wilson was defeated so now what appears in the Constitution are two clauses that deal with apportionment from Article I. They are in sections 2 and 9.

The final version of the Constitution doesn’t link representation to direct taxation or vice versa. It just says that both need to be apportioned. James Madison doesn’t note this final change, but maybe Mr. Morris’s bridge mentioned on July 24th (linking the two) was indeed the catalyst for the removal. The issue was resolved with the three fifths rule for slaves for both representation and direct taxation.

The original sin, of course, was slavery, but the compromise that actually occurred relevant to slaves was counting them as 3/5 of a person. This was the compromise which is detestable, not the bigger idea of apportionment. The provision of direct taxation requiring apportionment had nothing to do with slavery. Its purpose was to raise revenue for times of emergency while protecting the wealth from within each state.

In fact, the counting of slaves was more relevant to House representation and not direct taxes. Would the authors of this article claim we should rid ourselves of the House of Representatives because of this initial debate over the counting of the slaves?

The “Purpose”

The authors then claim the purpose of direct taxes requiring apportionment was to prevent a head (capitation) tax on slaves, which would be impossible to apportion.

The problem is there was no such thing in these debates to even support the existence of such a tax. No one advocated for taxing slave owners based on the number of slaves they had. If they did, it wouldn’t be called a capitation tax, but a slave tax. Capitation taxes of the time fell on everyone equally who were the objects of the tax. A slave tax doesn’t fit this description.

In Organic Wealth I offer the opinion the income tax most resembles a modern capitation tax and not an excise as Courts have decided. Pick up a copy to learn why capitation works best. It doesn’t fall on everyone equally, but based on their ability to pay.

What Compromise?

To further prove my points, on May 29, 17875 a plan for a federal constitution was submitted early on in the Convention. The segment of interest said:

“The proportion of direct taxation shall be regulated by the whole number of inhabitants of every description… No tax shall be laid on articles exported from the states; nor capitation tax, but in proportion to the census before directed.”

The idea of limiting direct taxation, including capitations, to a census of each state (apportionment) was envisioned before any debate on the wording of the Constitution had even begun, let alone any compromise. And, it included the whole number of all inhabitants, which includes the slaves as whole persons, which would work against the South because they would pay more with direct taxation.

The article’s claim that apportionment for direct taxes had to do with some slavery compromise with the South is ludicrous.

You may conclude these professors are incompetent, but I don’t believe so. There are many more legal experts with similar published articles all over the internet. They’re not all inept. I think the real reason is to sway the American public into believing a wealth tax is Constitutional. Then, when Democrats have enough power to stack the Supreme Court with activist justices and not ones with judicial restraint, they can pass a wealth tax without public outcry.

Another False Claim

The article also says an 1895 Court declared the income tax to be unconstitutional. Then, afterward, with better judgment, the ruling was superseded by the 16th Amendment.

The fact is the Springer v. United States (1880) found the income tax to be Constitutional. The 1895 Pollock case didn’t address employment income (deferring to Springer) but rather, taxes on property and the income from property such as dividends and bond yields. The Wilson-Gorman Tariff Act of 1894 was ruled unconstitutional in Pollock because the Act taxed income from property. The Sixteenth ensured that income from all sources could be taxed without apportionment.

They assert the Pollock Court was using the “slavery compromise” to justify their ruling that the income tax was unconstitutional. This judgment then forced Congress and the States to enact the 16th Amendment having used much better moral clarity.

Their conclusion: “Given this history, it is extremely unlikely that the justices will cite the founders’ original compromise with slavery to bar a tax that would serve the cause of economic equality and democratic legitimacy.”

The problem with their conclusion is everything they claim is false. Therefore, justices will have no problem citing truth and not made up facts which are promoted in this article.

You can read more about the wealth tax in these articles:

1. The Wealth Tax is Unconstitutional

2. The Obstacle to the Wealth Tax

3. The Claim of 'Not Easily Apportioned'

4. The Claim of 'All Taxes Were Direct Until Apportionment'

5. The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'

Image by Elliot Schwartz for StudioEIS / CC BY-SA

This article is part of the wealth tax series.

It was the nation’s first judicial review case; Congress had passed the Carriage Tax bill. The luxury tax would be imposed yearly on all owners of passenger carriages. The issue to Daniel Hylton, who owned 125 of such vehicles, was he believed it to be a direct tax requiring apportionment. So, Daniel sued.

Hylton v. United States was decided in 1796 and was found in favor of the United States. One of the reasons the Court gave was that if a tax couldn’t be easily applied, then it shouldn’t require apportionment.

This same sort of reasoning was used by other Courts in other cases and is the basis for many arguments today in attacking Pollock. Applying this rationale, it makes perfect sense to overturn the Pollock opinion because any wealth tax couldn’t be reasonably apportioned.

The entire argument that the Founders didn’t intend for taxes to require apportionment, if it would be too difficult, goes against the historical record. Organic Wealth proves the exact opposite. It proves the Founders intended for all direct taxes to require apportionment whether easily applied or not. In fact, they knew some direct taxes would be near impossible to be apportioned among the States. They wanted it that way.

It’s a mystery to me how the Courts and those who argued before them missed the historical truth. The evidence is clear and is revealed in Organic Wealth. Maybe some didn’t want the Framers’ true intent to come to light so the government’s taxing power could be expanded. They must have believed they knew better than our Founding Fathers. If so, subversives, that’s what they were.

Besides the original intent of the Constitution, using logic to combat their argument also works.

Uniformity — the Only Rule

The two Constitutional rules that govern taxes are the Uniformity Clause and the Apportionment Clause. If a tax is indirect, then it must adhere to uniformity where all objects of the tax are treated equally. If a tax is direct, it must conform to apportionment where the revenue raised from a state must be proportional to that state’s population percentage as compared to the total of all the states.

Wealth tax apostles make the claim that only taxes that are easy to implement should be considered a direct tax. Their argument not only fails the original intent of the Framers, but it also fails logically. The very fact that apportionment is a rule is proof that it was meant to make direct taxation very difficult to impose.

The reason is because easily implemented direct taxes have the exact same outcome as the rule of uniformity. If it was the case that the Founders only intended easily applied taxes, then uniformity would be the only rule needed.

The Courts have identified several objects of direct taxes: capitations, land; and because of Pollock, personal property. Despite the mental inventions of many, Organic Wealth reveals the Founders believed that any object could be the subject of a direct tax.

To illustrate why uniformity is only needed, take the Constitutional direct tax of capitations. A capitation tax is a head tax where each person who is of a certain age has to pay a tax. This kind of tax is easily apportionable because everyone would be taxed the same amount and the total raised from each state would be proportional to that state’s population percentage.

Imposing a capitation tax by apportionment has the same outcome as imposing a capitation tax by uniformity. Therefore, it’s absurd to allege only taxes that are easily apportionable can be direct taxes that must follow the apportionment rule because the only rule necessary for such taxes is uniformity.

The very existence of the apportionment rule was meant to distinguish certain taxes from others. The writers of the Constitution used the apportionment rule to place a check on Congress to prevent them from taking the wealth away from the States.

The easily apportionable assertion further breaks down when you consider land taxes. This is another undisputed Constitutional direct tax requiring apportionment. A land tax would not be easily applied. That’s the very reason why there isn’t a federal real estate tax. It would be impossible to impose because it would have to conform to the apportionment rule.

There you have it. You can debate such ideas using the Founders original intent as revealed in Organic Wealth. You also have two logical arguments. To summarize, easily apportionable taxes have the same outcome as uniformity. Therefore, the Founders would have only required uniformity. Secondly, land taxes are nearly impossible to impose with apportionment and they’re direct taxes.

You can read more about the wealth tax in these articles:

1. The Wealth Tax is Unconstitutional

2. The Obstacle to the Wealth Tax

3. The Claim of a 'Slavery Compromise'

4. The Claim of 'All Taxes Were Direct Until Apportionment'

5. The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'

Photo by Samuel Uhrdin, Public Domain

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This article is part of the wealth tax series.

Wealth tax advocates will be attacking the Supreme Court’s 1895 Pollock opinion which maintains that a tax on property is a direct tax.

They have to do so if they want to enact a wealth tax because for the last one and a quarter century, Pollock has protected Americans’ private property from government mobsters.

The U.S. Constitution (art. 1, sec. 2, cl. 3) says that any direct tax must be apportioned among the States. A direct tax means that a federal tax is imposed directly to the taxpayer. At least that’s what it’s supposed to mean. I detail in Organic Wealth how the Courts have misconstrued the meaning of direct taxation to the point where they couldn’t even define it.

Having courts decide if a particular tax was direct or not based on how easily it would be apportioned is not what the Founders intended. This is how the income tax became legal even though it clearly is a direct tax. Later, the 16th Amendment was enacted to remove all doubt:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Early on in our republic’s history, all revenue to the federal government was from indirect taxation. This was revenue raised from commerce where citizens paid the tax which was included in the price of an item. The merchants would then forward the tax to the government. These were all voluntary transactions while direct taxes are compulsory.

According to Pollock, taxes on property are direct taxes and have to conform to apportionment. This wouldn’t be an easy task. If the goal is also uniformity or fairness, many believe it’s virtually impossible to implement.

A tax that requires apportionment simply means it must be proportional to each state’s population percentage. Since California, for instance, has 12% of the U.S. population, then any direct tax on citizens of California cannot exceed 12% of the total raised across the country. So, if the federal government wanted to raise $100 billion from wealth taxes, they could only take $12 billion from citizens of California.

As you can imagine, there are more billionaires residing in the Left Coast State than any other state. According to this 2020 Forbes article, California has 165 billionaires as residents. So it would be an unfair tax on the states with very few or no billionaires. You certainly couldn’t call it an ultra-billionaire’s tax. There are seven states without any billionaires: Alabama, Alaska, Delaware, New Hampshire, New Mexico, North Dakota and Vermont.

The difficulty in implementing such a wealth tax requiring apportionment is why there will be an all-out assault on the Pollock opinion. This onslaught will undoubtedly require misrepresenting history and the actual meaning of direct taxation. They will have to invent facts in order to make us all believe their false narrative.

I go into great detail within Organic Wealth in revealing historical truths that destroy many of their arguments. In future posts, I will take some of their assertions and reveal just how wrong and dishonest their claims to be.

Wealth tax supporters contend the Founders’ intent was for any direct tax to be easily apportionable. People who make this claim say if it’s not easy to implement, then it should be considered an indirect tax. The only Constitutional requirement with indirect taxation is uniformity so it would be easily applied. A wealth tax is uniform if it applies to the objects of the tax equally. In other words, if they want to tax billionaires at 2%, then it applies uniformly to everyone who has a net worth that qualifies.

Read Organic Wealth to learn how the Founders didn’t intend for direct taxes to be easily apportionable as they argue. The claim of otherwise is made by those who desire a far reaching government to tax as it desires. Organic Wealth proves them all wrong.

You can also read more about the wealth tax in these articles:

1. The Wealth Tax is Unconstitutional

2. The Claim of 'Not Easily Apportioned'

3. The Claim of a 'Slavery Compromise'

4. The Claim of 'All Taxes Were Direct Until Apportionment'

5. The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'

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Despite what you may have heard, a federal wealth tax would be defeated at the U.S. Supreme Court. Such a tax is a way of taking accumulated wealth from those who have too much as determined by government policy makers.

Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are popular within the Democratic Party partially because of their support for confiscating the wealth of successful and prudent Americans. They aim to do so for equality reasons and also to support the left’s utopian objectives such as free college, free healthcare and a universal basic income.

Even though neither Bernard nor Liz became their party’s nominee for president, the idea of a wealth tax is still likely to be advanced with Joe Biden in the White House. President Biden has never endorsed a wealth tax, but he’s revealed that his promises of moderation were untrue. It’s apparent now that Joe is willing to acquiesce to the hard left on most issues.

Since the wealth tax has become such a prevalent idea, I devoted a substantial portion of my new book, Organic Wealth, to the issue. I detail the wealth tax’s invalidity, a workaround that exists for persistent proponents and the forever fix.

The primary reason why a federal wealth tax passed by Congress will be defeated at the Supreme Court is because of a long-standing decision known as Pollock.

Pollock v. Farmers’ Loan & Trust Co. was decided in 1895 in a 5 to 4 decision in favor of Charles Pollock. The case centered around the Wilson-Gorman Tariff Act of 1894, which was a federal flat tax of 2% on incomes over $4,000. Charles Pollock believed the tariff to be a direct tax requiring the Constitutional need for apportionment. I won’t define apportionment in this article, but did so rather elegantly in my book and in this post.

The Act was written to not only include employee income, but also the income derived from property; e.g., rent payments, stock dividends and bond yields. The Court did not consider employee income letting previous Court precedent stand that the income tax was not a direct tax, but indirect needing only uniformity.

The Court, however, concluded that a tax on income from personal or real property would be a direct tax. But they didn’t stop there; they also believed personal property itself couldn’t be taxed without apportionment.

Because the Act was written to include income from property, the law was found to be unconstitutional and therefore nullified the U.S. income tax. Instead of rewriting the income tax law to exclude income from property, Congress and the States went another route and passed the 16th Amendment which ensures all sources of income can be taxed without apportionment.

The 16th Amendment did take care of income from property, but the Pollock decision had also protected property itself from being taxed without apportionment calling such a tax on property direct taxes.

The High Court partly stated: “We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.”1

This means that a wealth tax on real and personal property such as investment and bank accounts, business interests, real estate and shares of stock would be a direct tax as determined by this decision.

It’s not just the Pollock case sitting in the wind by itself. There are many other cases that have come before the Supreme Court that touched on Pollock, but no Court diminished its validity. Having such a long standing precedent, the Pollock case will likely stand against any push for a socialist wealth tax.

In order to pass a wealth tax law, progressive lawyers will have to convince the Supreme Court that Pollock should be ignored. I’ve taken of what I know of their would-be arguments and revealed just how erroneous they are. Please read more about their false claims in these articles:

• The Obstacle to the Wealth Tax

• The Claim of 'Not Easily Apportioned'

• The Claim of a 'Slavery Compromise'

• The Claim of 'All Taxes Were Direct Until Apportionment'

• The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'

Image by Marcela. Licensed under C.C.