Lies the government told you by Andrew Napolitano (big screen ebook reader .TXT) 📕

unless that power is expressly given by Congress. So, therefore, in the realm of “temporarily” seizing private property, it requires two branches of the federal government to make an unconstitutional act constitutional!

Although the National Defense Act has been phased out, several similar programs that were passed in times of crisis as a “temporary fix” still linger today. It seems the American government has never refrained from using the “opportunity” presented in a crisis as an excuse to expand the government and indulge in the money of taxpaying Americans.

America was founded on basic principles of limited government. Then, throughout American history when situations such as war or economic downturn became apparent, these principles were often abandoned and the federal government expanded. These expansions, which run counter to fundamental American values, were often permitted because they happened in times of emergency. Yet, instead of going away once the emergency situations subside, these programs have lingered and eroded the way our government functions. Over and over, these “temporary” government programs have proved to be nothing but permanent.

“Temporary” Government Program #1: Taxation

At the root of government expansion lie taxes. The government funds its wars, its welfare system, and its programs through the taxes it places on citizens. Sadly, Benjamin Franklin’s old adage, “In this world nothing can be certain, except death and taxes,” has proven to be an immutable truth.

Big government and high taxes were far from what the Founding Fathers had in mind. Paradoxically, taxes acted as a catalyst to America’s revolt from Britain. In his book about America’s tax system, Timothy J. Gillis explained:

The rebel colonists remembered why they and their forefathers had come to the New World. The colonists were people, or offspring of people, who fled environments where royal favor and grants were common and success could depend much less on what a person did than on whom he knew. They remembered that government taxation and fiscal policy were primary means of subjugating liberty and imposing tyranny, both petty and great. This influenced the colonists to construct limited and frugal government.3

In America’s youth, the possibility of freedom from taxes was alive and well for its citizens. So, what has happened over the years to make no taxes seem like an impossible dream?

As the United States grew, so did the federal government. The idea of limited government was pushed aside in favor of collecting funds for various crises. The first big expansion of the federal government’s budget, and in turn the people’s taxes, came in 1861 with the start of the Civil War. The federal income tax laws that were passed in the 1860s by the Union and Confederacy were unpopular, unconstitutional, and immoral, and they were repealed by Congress in 1871. After the federal income tax was repealed, the government paid off the rest of the Civil War debt in twenty-four years with money from excise taxes and customs duties. There were excise taxes on items such as playing cards, gunpowder, feathers, telegrams, iron, leather, pianos, yachts, billiard tables, drugs, patent medicines, and whiskey. Many legal documents were also taxed, and federal license fees were collected for almost all professions and trades.4

In 1893, the income tax returned. This time, however, the country was not at war, and many citizens viewed the tax as unjustifiable. In 1895, a lawsuit claiming that the federal income tax was unconstitutional was brought and eventually reached the Supreme Court. The Court held that since the income tax was based on income from real estate, it was unconstitutional because the Constitution requires that direct taxes imposed by the federal government on the states be proportional based on population.5

A little over a decade after this ruling, President William Howard Taft proposed a law which circumvented many of the Constitution’s impediments to the 1893 income tax. Get this: A president who swore an oath to uphold, preserve, protect, and defend the Constitution proposed a way to avoid and evade it, a way that would purport to allow the federal government to steal cash from groups of individuals with impunity. This law would allow the federal government to tax corporations (as opposed to individuals), and was passed by Congress with near unanimity. Later, in 1913, the United States ratified the Sixteenth Amendment, which permits the federal government to tax the income of individuals.

The government did not waste any time before taking advantage of its new power. Just eight months after the Sixteenth Amendment was ratified, President Woodrow Wilson signed a law that levied a 1 percent tax on net personal incomes over $3,000.6 The law also provided for a 6 percent surtax on incomes exceeding $500,000.7 These taxes were aimed at the wealthiest Americans, however, and did not reach the vast majority of the people.8 In 1918, only 5 percent of Americans paid income tax, and the income tax remained a “class tax” until World War II.9

During World War II, however, the federal government expanded its assaults on personal income. The government passed the Revenue Act of 1942, declaring that it was just a war measure. It significantly increased the marginal tax rates, and added a 5 percent “Victory Tax” on annual income exceeding $624.10 Under this Act, the income tax rolls increased from 13 million persons to 50 million persons in just one year.11 The government also implemented a system requiring that employers withhold federal income taxes from employee wages and salaries.12 Finding it unrealistic to arrest all tax evaders, the government saw income tax withholding as a device to extract income automatically from the taxpayers.13 It also helped folks “save” money for the government, as it guaranteed the government a steady revenue stream during the costly war.

Milton Friedman, who worked at the Treasury Department during World War II, was involved in the development of the withholding tax.14 Recently, Friedman stated that the tax was developed because the government needed to raise massive amounts of money quickly and temper the growth of inflation.15 Friedman explained, “I wasn’t as sophisticated about how to do it then as I