Income Tax History and Socialist tactics in U.S.

Bill Federer

On APRIL 15, 1865, President Lincoln died. He was shot the night before in Ford's Theater.

On APRIL 15, 1912, the Titanic sank. It struck an iceberg the night before.

1,514 lives were lost, including millionaires John Jacob Astor IV, Benjamin Guggenheim and Isa Strauss, all of whom were vocal opponents of the Federal Reserve Act.

In 1954, APRIL 15 became the deadline for filing Income Tax returns.

Originally, Article I, Section 9 of the U.S. Constitution prohibited a direct Federal Income Tax on American citizens:

"No capitation or other direct tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken."

The Federal Government's revenue was derived from Excise Taxes on specific items like salt, tea, tobacco, etc., and Tariff Taxes on imports.

Prior to the Civil War, most tariff taxes were collected at Southern ports, like Charleston, South Carolina.

Tariffs made foreign goods more expensive, motivating people to buy domestically produced goods, made mostly in Northern factories.

The South had few factories, as its economy was based on agricultural crops, mostly cotton and rice, which unfortunately relied heavily on slave labor.

Thus, the tariff taxes that helped the North, hurt the South.

During the Civil War, Republican President Abraham Lincoln passed an emergency "Revenue" Income Tax to raise $750 million to help fund the Union.

It was repealed in 1873.

The first non-emergency "peacetime" Income Tax was attempted in 1894, but the Supreme Court declared it unconstitutional in Pollock v Farmers' Loan.

Justice Stephen J. Field concurred:

"The income tax law under consideration ... is class legislation.

Whenever a distinction is made in the burdens a law imposes or in the benefits it confers on any citizens by reason of their birth, or wealth, or religion, it is class legislation, and leads inevitably to oppression and abuses ..."

Justice Field continued:

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

Industrialists helped bring about the greatest rise in the standard of living for the average person, with more goods at cheaper prices, than ever before in world history.

Industrialists then began to create monopolies, influence political parties and plot to gain control of the banking system.

Republican President Theodore Roosevelt attempted to limit their power with an inheritance tax.

Republican President William Taft yielded to mounting public pressure to tax these rich industrialists by placing a 2 percent tax on corporate profits, as only the wealthiest owned corporate stock.

With the emergency of World War I threatening, Democrat President Woodrow Wilson naively thought there would be world peace if tariff taxes between countries were eliminated.

Wilson proposed replacing the lost tariff revenue with an Income Tax on the wealthy.

This was passed in 1913 with the 16th Amendment.

Originally, the Income Tax was a one percent tax on the top one percent richest people.

It was a type of "soak-the-rich" tax only intended for industrialists such as:

  • Rockefeller,
  • Carnegie,
  • Vanderbilt,
  • Fisk,
  • Flagler,
  • Gould,
  • Harriman,
  • Mellon,
  • J.P. Morgan, and
  • Schwab.

Industrialists strategically avoided paying the Income Tax by transferring their assets into tax-exempt charitable and educational foundations, such as the Rockefeller Foundation and Carnegie Foundation.

This tax-exempt category had previously been for churches, which historically were the providers of social welfare through their:

  • hospitals,
  • medical clinics,
  • orphanages,
  • schools,
  • soup kitchens,
  • where they cared for orphans, widows, maimed soldiers, prisoners, unwed mothers, widows, shut-ins, homeless, juvenile delinquents, and immigrants.

Churches also provided a significant social service by instilling morals and virtues into the nation's population.

This helped reduce crime, child abuse, broken homes, derelicts, and other social ills, which, since the relinquishing of these responsibility to government, have become an immense financial burden on taxpayers, being, in many cases, the largest items on State budgets.

In 1942, with World War II, Democrat President Franklin Roosevelt increased and expanded the Federal Income Tax with "the greatest tax bill in American history," even instituting paycheck withholding.

John F. Kennedy stated April 20, 1961:

"In meeting the demands of war finance, the individual income tax moved from a selective tax imposed on the wealthy to the means by which the great majority of our citizens participate in paying."

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

Kennedy explained, April 20, 1961:

"Withholding ... on wages and salaries (was) ... introduced during the war when the income tax was extended to millions of new taxpayers."

Businesses gradually became subject to:

  • Higher Taxes;
  • Higher Wages & Benefits;
  • More Lawsuits;
  • More Governmental Bureaucracy;
  • More Environmental Restrictions; and
  • Political Favoritism, or "cronyism," toward some companies at the expense of others.

Businesses that did not receive this favoritism began to be faced with the alternative of going out of the country or going out of business.

As companies outsourced jobs to stay competitive in the growing global market, patriotic attachments diminished, giving rise to financial globalists.

John F. Kennedy noticed, February 6, 1961:

"I have asked the secretary of the treasury to report on whether present tax laws may be stimulating in undue amounts the flow of American capital to the industrial countries abroad."

Kennedy told Congress, April 20, 1961:

"In those countries where income taxes are lower than in the United States,

the ability to defer the payment of U.S. tax by retaining income in the subsidiary companies provides a tax advantage for companies operating through overseas subsidiaries that is not available to companies operating solely in the United States."

To remedy this, Democrat President John F. Kennedy proposed a stimulus plan of lowering taxes across-the-board, as he stated September 18, 1963:

"A tax cut means higher family income and higher business profits and a balanced Federal budget.

Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education, and investment.

Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the Federal Government will ultimately end up with more revenues."

Kennedy stated January 17, 1963:

"Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased - not a reduced - flow of revenues to the federal government."

Kennedy stated, November 20, 1962:

"It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now ...

Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."

John F. Kennedy stated in his Annual Message, January 21, 1963:

"In today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the Federal deficit - why reducing taxes is the best way open to us to increase revenues ...

It is no contradiction - the most important single thing we can do to stimulate investment in today's economy is to raise consumption by major reduction of individual income tax rates."

JFK mentioned in his Message to Congress on Tax Reduction, January 24, 1963:

"Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort-thereby aborting our recoveries and stifling our national growth rate."

Where Kennedy wanted to reduce taxes to stimulate the economy, economist John Maynard Keynes had proposed stimulating the economy by going in debt.

John Maynard Keynes reasoned that:

  • if the government went in debt
  • spending money in the private sector to create jobs,
  • those jobs would pay taxes and
  • pay off the debt.

Unfortunately, politicians were tempted to continually increase debt in order to funnel money to their districts and constituencies to help them get reelected, hoping the next Congress would be responsible and pay it off.

James Buchanan, Jr., received the Nobel Prize in Economics in 1986, for his examination of how politicians make economic policy decisions.

He discovered politicians tend to vote to increase debt so they can funnel money to their districts, as this will help their reelection - but they will not vote for corresponding tax increases to pay for it - as this will hurt their reelection.

Buchanan indicated that, rather than being disinterested public servants, most career bureaucrats are primary interested in getting re-elected.

Self-preservation is a powerful motivator. It is natural for people to want to keep their jobs. But when millions of people work for the government this results in them wanting the government to get bigger and bigger as job security.

This grows into an enormous Deep-State bureaucracy of individuals who are tempted to use their positions to perpetuate their jobs, while harassing, auditing, leaking, investigating, and prosecuting those threatening to eliminate their job.

The Keynesian debt-stimulated economy has resulted in an unsustainable $22 trillion U.S. National Debt.

Ronald Reagan bankrupted the Union of Soviet Socialist Republics with the "arms race."

The U.S. spent money increasing its military, and when the Soviet Union tried to keep up, it collapsed their economy, and the Berlin Wall came down.

It is an ironic twist that in the decades since the fall of the Soviet Union, the United States has instituted policies to bankrupt itself.

Regarding socialism, President Gerald Ford later stated in Rock Hill, SC, October 19, 1974:

"What they don't tell us when they propose all these benefits that they are going to give you from our Government ... that a government big enough to give us everything we want is a government big enough to take from us everything we have."

Similarly, President Donald J. Trump stated February 18, 2019:

"The more power they get, the more they crave. They want to run healthcare, transportation, finance, energy, education ... Socialism is not about justice, it's not about equality, it's not about lifting up the poor ... it's about one thing only: power for the ruling class."

World War I fighter Ace Eddie Rickenbacker, who later was owner the Indianapolis Speedway and Eastern Airlines, wanted to repeal Woodrow Wilson's 16th Amendment Income Tax, stating:

"When Woodrow Wilson told us of the evils of concentrated power, less than 9% of our entire national income was enough to keep all of the federal and local governments going ... (By 1960, taxes took) one third of all our earnings, and the Federal Government ... spent 70% of that ...

The entire gross income of every American is subject to complete Federal confiscation ..."

Rickenbacker continued:

"Every time the liberals discover a brand new misinterpretation of the Constitution, every time they invent a new way to circumvent the constitutional limits of the Federal power, they pile up more power in Washington at the expense of individual liberty across the land ...

Instead of advocating freedom, modern liberals were striving to pile up the power of government in Washington."

On the other side of the world, Vladimir Lenin's plan to institute socialism included eliminating business owners, called "bourgeoisie":

"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

After the 1917 Bolshevik Revolution in Russia, Communist labor organizers, community organizers, agitators, and agent provocateurs (provoking agents) infiltrated other countries, including the United States.

Lenin considered socialism a transition phase from capitalism to communism, stating: "The goal of socialism is communism."

To stir of class-struggle in order to overthrow governments, socialists utilized the tactic of psychological projection or "blame-shifting" where the attacker blames the victim.

Sigmund Freud wrote in Case Histories II (PFL 9, p. 132) of "psychological projection" where humans resort to the defensive mechanism of denying in themselves the existence of unpleasant behavior while attributing that exact behavior to others.

A rude person constantly accuses others of being rude. Marx is attributed with the phrase "Accuse the victim of what you do" or "Accuse your opponent of what you are guilty of."

  • If you are lying, accuse your opponent it.
  • If you are racist, accuse your opponent it.
  • If you are sexually immoral, accuse your opponent it.
  • If you are engaging in voter fraud, accuse your opponent it.
  • If you are disseminating "fake news", accuse your opponent of spreading it.
  • If you are receiving millions from globalist and Hollywood elites, accuse your opponent of being controlled by the rich.

Political advisor David Axelrod verbalized this Machiavellian tactic in an NPR interview, April 19, 2010:

"In Chicago, there was an old tradition of throwing a brick through your own campaign office window, and then calling a press conference to say that you've been attacked."

Agitating groups formed tax-exempt educational foundations to fundamentally change the government by instigating a workers' revolution.

Naive individuals recruited to join their ranks were referred to by Lenin as "useful idiots."

In 1917, Roger Baldwin founded a tax-exempt organization to defend those who opposed World War I and were accused of being Communist agitators. It was renamed the ACLU.

In 1921, Margaret Sanger founded the tax-exempt organization to eliminate "human weeds" and promote racial "purification." It was renamed Planned Parenthood.

The growth of tax-exempt organizations advocating change resulted in the Congress attempting to limit what tax-exempt organizations could do politically.

Commenting on the increased size of government and tax burden, President Ronald Reagan remarked at the National Space Club Luncheon, March 29, 1985:

"Personally, I like space. The higher you go, the smaller the Federal Government looks."

Albert Einstein's accountant, Leo Mattersdorf of New York wrote (TIME Magazine, 1963):

"One year while I was at his Princeton home preparing his return, Mrs. Einstein, who was then still living, asked me to stay for lunch.

During the course of the meal, the professor (Einstein) turned to me and with his inimitable chuckle said: 'The hardest thing in the world to understand is income taxes.'"

Reagan stated in 1988:

"I believe God did give mankind unlimited gifts to invent, produce and create.

And for that reason it would be wrong for governments to devise a tax structure that suppresses those gifts."


American History