So I have decided to take a slightly different approach to my articles. I have found a way that will both help me learn a great deal more about history, economics, and politics, while allowing me to elaborate on what I have learned and try to tie everything in to how our world is today. My first book on the list was The FairTax Book, written by Neal Boortz and John Linder. This book came out back in 2003 and I originally read it back in 2006 when I was first starting to get interested in politics. Being a book on taxes, I was a little intimidated at first, but this is a very well written, and easy to follow book about both the history of taxation in this country and what the FairTax is all about. This article will first dab a little into the history of America’s tax system, and the following articles will be more directly focuses on the FairTax.

The preface of this book has a great quote from T. Coleman Andrews who was the commissioner of the IRS from 1953 – 1955:

“The income tax is fulfilling the Marxist prophecy that the surest way to destroy a capitalist society is by steeply graduated taxes on income and heavy levies upon the estates of people when they die.“

Now, what makes the income tax a Marxist idea? What better way to find out than to look at The Communist Manifesto itself. Marx and Ingles composed a list of 10 planks that they found were essential in transforming a free market society to a collectivist, communist society. We only had to get to plank number two which stated the need for “A heavy, progressive income tax” to find out why T. Coleman Andrews found the progressive income tax to be a Marxist idea. Karl Marx was very stubborn in his view that capitalism was a war between the proletariats (the “working” class) and the bourgeoise (those who “exploit” the working class). This also goes hand-in-hand with the famous Marx quote, “from each according to their abilities, to each according to their needs.” If you disproportionately tax those who produce and redistribute that wealth to those who do not produce, the basis for the free market system is cut off at its knees – the idea of risk and reward.

Another thing to quickly look at regarding Communism and taxes was Marx’s establishment of an “abolition of all rights of inheritance” which was plank number three. Sound familiar? Considering that if Obama allows Bush’s tax cuts to expire, the death (inheritance) tax will jump to an astounding 55% on all estates worth over 3.5 Million. A lot of families will be forced to sell off those assets just so they can afford to pay the taxes on them. What is the craziest part about this? The deceased owner had been paying taxes on their estate and assets their entire life. Then comes the tax man to tax already-taxed property. This is the easiest way for governments to confiscate property from the “rich” and redistribute one’s estate as they see fit.

Now that we have that out of the way, let’s take a quick look at some of the history of income taxes that were highlighted by Neal Boortz and Congressman Linder. They claim that the first income tax came about during the Civil War. The numbers were: “3 % income tax on income between $600 and $10,000 a year.” (in today’s dollars $10,000-$166,000). Anything above that was taxed at 5%. Compared to today’s tax rates, these are minuscule. Once the war was over, and the citizens voiced their displeasure of an income tax, Congress eliminated the income tax. Another note worth pointing out in this book, is the claim in the 20 years following the Civil War, “Congress introduced no less than 68 bills to enact another income tax.” All politicians are the same. Once they have power, the only other thing they want is more power. When you control someone’s wallet, you control them almost entirely. That was the biggest ideal to people like Marx. Communism is inherently a controlled society, where the dictators or rulers control the means of capital and wealth. That is the danger of a heavily progressive income tax.

1894 proved to be the beginning of the snowball effect regarding taxes. On August 27, 1894 Grover Cleveland passed the first graduated income tax. Now it must be noted that this was not passed as a means to raise revenue in a time of war. This is the part that made me scratch my head – The same law that Cleveland did not actually sign, but allowed to pass, made its way to the Supreme Court. Guess what the black robes had to say about it. According to Kipnotes, “The Court interpreted the income tax as a direct tax which, according to the Constitution, isn’t within the federal government’s legislative powers.” Never let the law of the land get in your way if you are a politician. The politicians brought forward the idea of voting to make the income tax a constitutional amendment. According to The FairTax Book, “The amendment sailed through the House and Senate. 77-0 for the Senate, 318 – 14 for the House.” With the promise that these taxes would only effect the wealthy, the 16th amendment became law on Feb. 12, 1913.

So what has our tax code, which started off as nothing more than taxes on goods, ballooned to now? We now have 5 tax brackets in our graduated income tax code: 10, 15, 25, 28, 33, and 35%. These are just federal income tax brackets. Robert Williams of the Tax Policy Institute has some pretty telling numbers to reaffirm the claim that Karl Marx’s ideas on taxes are very much alive here in America. He claimed that in 2009, 47% of Americans had zero federal income tax liability. The by-product of a progressive income tax. Another statistic: “The total share of taxes they (the top 1%) pay is around 24%, and they have about 16% of the income.” So we have 1% of Americans paying nearly a quarter of all federal income taxes. One more: “The top fifth starts a little bit above $100,000. That group makes about 56 percent of all income and pay about 70 percent of all taxes.” Just think, this all started over 100 years ago with a measly 2% income tax.

I could go on forever on our current tax system. Not only do we have the large amount of federal income taxes, we have withholding taxes, social security taxes, medicare taxes, marriage taxes, death taxes, state taxes, city taxes, sales tax, registration taxes, property taxes, capital gains taxes, dividend taxes, energy taxes, corporate taxes, fees after fees, and the list just continues. And there are some people out there who have the audacity to say we are not overtaxed. Not overtaxed? Consider these striking numbers from the Treasury Department:

• Americans spend roughly 7 billion hours a year to comply with the tax code.
• Individual taxpayers spend an estimated 3.55 billion hours working on taxes.
• Individuals spend about $27 billion on tax software or outside tax preparation services.
• 90% of American households use some sort of professional tax preparation service.
• The instruction booklet for Form 1040 is now 155 pages in length.

If those numbers don’t convince you that Americans are overtaxed, and that the process of taxing has become more complex than Einstein’s theory of relativity, then I could chop your arm off and you would think it was still there. The CATO institute did a study in 2003 on taxes, and found that back in 2003, the U.S. tax code was an astonishing 55,000 pages long. In 1913, it was 400 pages long. Again, all of this started with that harmless 2% income tax courtesy of Grover Cleveland’s unwillingness to stand up for what he knew was wrong from the beginning. Tomorrow night I will be re-reading and taking notes on the meat of The FairTax Book. There is much to learn and discuss about this simple solution to our current taxing fiasco.