Why Taxes Are Un-American

Once again, we are asked to meet our civil responsibility to fund the government.

But what purpose does our tax system serve? Some pay virtually pay no taxes while many others get back more than they put in, and a small percentage of Americans pay the lion's share of the federal income tax bill. Despite bringing in trillions in tax revenue, our debt keeps rising.

The battle of the day is over whether Americans should be spending more or less of their hard-earned money to fund the federal government. I contend that our tax system is not in place just for raising revenue, but it is used for much despotic purposes. Those purposes are un-American in nature.

In January of 1946, Beardsley Ruml, chairman of the New York Federal Reserve, wrote a thesis, which was published in the 1946, January edition of American Affairs magazine.  The title of the thesis was "Taxes for Revenue are Obsolete."

He argued that "given control of a central banking system and an inconvertible currency (a currency not backed by gold), a sovereign national government is finally free of money worries and needs no longer levy taxes for the purpose of providing itself with revenue. All taxation, therefore, should be regarded from the point of view of social and economic consequences."

Remarkably, many present day politicians seem to agree with the sentiment. This is essentially the game we have been playing for a long time. Politicians divide the populace over hot button issues like immigration, abortion, gay rights, and entitlements; little attention is paid to the value of our dollar purchasing power. These issues intensify because the government made social issues tax policy. DOMA, Social Security, Immigration, number of children, etc., everyone is affected by our tax policy in some form by their life styles.  

Our tax policy is diametrically opposed to our founding documents. Bearnardsley Ruml clearly and truthfully states that fact. The tax code is arbitrary in setting who receives certain breaks, credit and who does not. This is like playing a game were the rules are constantly changing. Some people try to help change the rules to their advantage (lobby groups), and others just get sick of the game and quit (people quit looking for jobs). 

The tax code of today has been a tool of the government to keep the public fighting amongst themselves while they have been busy taking care their own self-interests (stay in power). In order for this to all work, the government must keep the debt rising, because if we eliminate all debt, we have no money. The goal of the government is to balance public opinion and change policies in accordance: To hell with honoring their sworn oath the Constitution.

The Bush tax cut debate exemplified this to perfection. Whether the tax cuts were extended or not, it would make no difference in paying the bills. Both sides have lost before the argument they even started. The only ones winning are the creators (Federal Reserve) of the game. The Federal Reserve makes its money off the interest in the loans that it gives to the federal government. So, no matter what they do with taxes, they never intend to stop deficit spending because that will kill our money supply and it is bad for their business. They will continue to tinker with the tax code but only to please the loudest group at the time. While the Federal Reserve keeps that magical money coming to cover our debt. The real tax is hidden from us in the form of inflation, this a much more subtle taxing power the government and the Federal Reserve use.   

If our government continues to use the magical mechanism to make money from nothing, everyone’s taxes will go up with any law being passed to raise taxes. The taxes we pay will never pay for the debt, because as Ruml points out, that is not why we pay taxes. So, as we watch the show put on in Congress, and get distracted by the tremendous actors on stage, the Federal Reserve is in the parking lot stealing our tires.