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Rousas Rushdoony: What Jesus taught about taxes

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Rousas Rushdoony gives the traditional Christian understanding of the great subversive parable of Jesus, regarding the payment of tribute to Caesar, notwithstanding the attempt by some to use Jesus to support libertarian beliefs.

Rushdoony’s understanding is supported by the readings of others (per Wikipedia):

Mennonite Dale Glass-Hess wrote:

It is inconceivable to me that Jesus would teach that some spheres of human activity lie outside the authority of God. Are we to heed Caesar when he says to go to war or support war-making when Jesus says in other places that we shall not kill? No! My perception of this incident is that Jesus does not answer the question about the morality of paying taxes to Caesar, but that he throws it back on the people to decide. When the Jews produce a denarius at Jesus’ request, they demonstrate that they are already doing business with Caesar on Caesar’s terms. I read Jesus’ statement, “Give to Caesar…” as meaning “Have you incurred a debt in regard to Caesar! Then you better pay it off.” The Jews had already compromised themselves. Likewise for us: we may refuse to serve Caesar as soldiers and even try to resist paying for Caesar’s army. But the fact is that by our lifestyles we’ve run up a debt with Caesar, who has felt constrained to defend the interests that support our lifestyles. Now he wants paid back, and it’s a little late to say that we don’t owe anything. We’ve already compromised ourselves. If we’re going to play Caesar’s games, then we should expect to have to pay for the pleasure of their enjoyment. But if we are determined to avoid those games, then we should be able to avoid paying for them.[13]

Mohandas K. Gandhi shared this perspective. He wrote:

Jesus evaded the direct question put to him because it was a trap. He was in no way bound to answer it. He therefore asked to see the coin for taxes. And then said with withering scorn, “How can you who traffic in Caesar’s coins and thus receive what to you are benefits of Caesar’s rule refuse to pay taxes?”

At the same time, Gandhi, certainly saw that Jesus would have supported non-cooperation and civil resistance through non payment of taxes:

“Jesus’ whole preaching and practice point unmistakably to noncooperation, which necessarily includes nonpayment of taxes.[14]

In Rushdooney’s reading,  Jesus’ teaching is more submissive than it is in Gandhi’s. But it is submissive in a subversive way, similar to the reading of Jacques Ellul:

“Render unto Caesar…” in no way divides the exercise of authority into two realms….They were said in response to another matter: the payment of taxes, and the coin. The mark on the coin is that of Caesar; it is the mark of his property. Therefore give Caesar this money; it is his. It is not a question of legitimizing taxes! It means that Caesar, having created money, is its master. That’s all. Let us not forget that money, for Jesus, is the domain of Mammon, a satanic domain!
My sense is that Jesus’ parables should not be taken out of context to support a dogmatic and anachronistic reading. They should be read in the general spirit of his other teachings.
Elsewhere, Jesus taught that worldly power and wealth were obstacles to the soul. This is hardly the same as libertarian anti-state ideology, but it is subversive and unworldly.
Rousas Rushdoony:

“6. The Tribute Money

One of the best-known stories of the New Testament is the one con­cerning the tribute money question: “Is it lawful to give tribute unto Caesar or not?” Christ’s answer, “Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are Gods” (Matt. 22:15-22; Mark 12:13-17; Luke 20:20-26), is one of the most familiar sentences of Scripture. The general implications have long been recognized; in the specific application, there has been much variation.

The purpose of the Pharisees is again to “entangle him in his talk” (Matt. 22:15); Luke is more specific, “And they watched him, and sent forth spies, which should feign themselves just men, that they might take hold of his words, that so they might deliver him unto the power and authority of the governor” (Luke 20:20-26). The Roman governor was meant. Apparently the expectation was that Jesus, in faithfulness to the law, would declare that only a theocracy was valid in Israel, not Roman rule and law. Behind this strategy were the Phari­sees and the Herodians (Matt. 22:16; Mark 12:13), a minor, political, non-religious party of the day. The Herodians favored the Roman tax and the Herodian dynasty, which they regarded as preferable to direct Roman rule. The Pharisees were normally hostile to the Herodians, but they joined forces in hostility to Jesus. If Jesus opposed the tax, He could be denounced and delivered to the Roman authorities for arrest and trial.

The question was prefaced with fulsome flattery; the questioners asked as if motivated by a tender conscience rather than a desire to entrap. They attempted to push Jesus into an answer heedless of con­sequences by asserting that “thou art true, and carest for no man; for thou regardest not the person of men, but teachest the way of God in truth” (Mark 12:14). Such an integrity, they hoped, would compel Him to deny the legitimacy of the Roman tax. “Is it lawful for us to give tribute unto Caesar, or no?” (Luke 20:22).

The Greek text makes clear that the tax was a “capitation tax,” not an indirect tax.[1] “Luke uses phoros, the wider word for ‘tribute’ as it is paid by one nation to another; Matthew and Mark use the more specific kenos or poll tax that is levied upon every individual for his own person and is thus especially galling as a mark of servitude to the Roman power.”[2]

Israel already had a poll tax, that required by God’s law in Exodus 30:11-16. Its purpose was to provide for civil atonement, i.e., the covering or protection of civil government. Every male twenty years old or older was required to pay this tax to be protected by God the King in His theocratic government of Israel. This tax was thus a civil and religious duty (but not an ecclesiastical one).

There was thus a particular aggravation in the fact that Rome also required a poll or head tax. The Roman Empire and emperor were progressively assuming divine roles, requiring religious assent, and claiming priority over religion. The poll tax was thus a particularly offensive tax, in that it seemed to require a polytheistic faith, the worship of a god other than the true God. Moreover, the Herodian tax was so heavy that twice the imperial government compelled Herod to reduce his tax demands in order to avoid serious trouble. Judas Galilaeus had earlier presented himself as the messiah and had summoned Israel, in the name of God and Scripture, to refuse to pay the tax. The Romans were merciless in putting down the rebellion (Acts 5:37).

The matter had been aggravated as early as A.D. 29 by Pilate, who for a time issued coinage “bearing the lituus, the priest’s staff, or the patera, the sacrificial bowl-two symbols of the imperial philosophy which were bound to be obnoxious to the people.”[3]These coins were later withdrawn, but they did serve to underscore the fact that their bondage to Rome had religious overtones.

The right to issue coins had religious overtones for Israel as I Maccabees 15:6 implies, and it was thus important to them. “‘Coin’ and ‘power’ were regarded as synonyms, so that the coin was the symbol of the ruler’s dominance.”[4] In the second century A.D., Bar Kochba, the false messiah, replaced Roman coinage with his own coins as a means of asserting his power. To give tribute to Caesar thus meant to acknowledge Caesar’s power; to approve of giving tribute to Caesar was to acknowledge the legitimacy of Caesar’s power. The question implicit, in the Herodian’s statement was whether any government other than God’s has any legitimacy. Christ’s assertion of His messiahship was seen by his accusers as a denial of Caesar’s right to tax (Luke 23:2), since the Messiah as King had to have exclusive sovereignty, in their perspective. For Jesus to have denied Caesar’s right to tax Israel was a mark of insurrection and would make Him liable to arrest. For Jesus to have affirmed Caesar’s right to tax would have been, in the eyes of the people, a denial of His messiahship.

The answer of Jesus was to ask for a denarius; He asked it of His questioners. As Stauffer, whose chapter on “The Story of the Tribute Money” is very important, has written:

Jesus asked for a penny, a denarius. Why? There were a great many coins in the wide Roman empire which passed as legal cur­rency, old and new, large and small, imperial and local, gold, silver, copper, bronze and brass. In no country did so many different kinds of money circulate as in Palestine. But the prescribed coin for taxation purposes throughout the empire was the denarius, a little silver coin of about the worth of a shilling. (It can only be the sil­ver denarius which is intended in Mark 12:16, Luke 20:24 and Matt. 22:19, not a gold coin as Titian supposed, in his representa­tion of the tribute scene, nor a Herodian coin, as is often asserted; for the Herodian coins were not called denarii and were not tribute coins, but were local copper coins.) Jesus knew this, and so He asked for the silver imperial tax coin, using the Latin word, the Roman technical expression, which had become current in Palestine along with the coin itself. Bring me a denarius, He said. He did not produce one from His own pocket. Why not? The point now is not whether Jesus had such a coin in His pocket but whether His opponents had. With Socratic irony, he added: “That I may see it?” Why? He had the maieutic purpose with his questioners, He wanted to deliver them, in the Socratic manner, not a priori, but a posteriori. Not their logical or moral sense, but their historical situation and attitude would bring the truth to light. Something is to be seen, and deduced, from the denarius itself.[5]

When the coin was handed to Jesus, He did not yet answer their question, “Is it lawful to give tribute to Caesar, or not?” Instead, He asked another question: “Whose is this image and superscription?” (Matt. 22:20; Mark 12:16; Luke 20:24). The answer was, of course, “Cae­sar’s.” According to Geldenhuys,

After their acknowledgment that it is Caesar’s, the following two facts are vividly brought to light through Jesus’ masterly handling of the situation:

(1) Coins with Caesar’s image and superscription are in use among the Jews.
(2) The coins are evidently the property of Caesar, otherwise they would not have borne his image and superscription.
From these two facts it thus follows that the Jews had accepted the imperial rule as a practical reality, for it was the generally current view that a ruler’s power extended as far as his coins were in use.[6]

The practical reality was thus made clear. These men used the coins of Tiberius which carried a “bust of Tiberius in Olympian nakedness, adorned with the laurel wreath, the sign of divinity.” The inscription read, “Emperor Tiberius August Son of the August God,” on the one side, and “Pontifex Maximus” or “High Priest” on the other. The symbols also included the emperor’s mother, Julia Augusta (Livia) sitting on the throne of the gods, holding the Olympian sceptre in her right hand, and, in her left, the olive branch to signify that “she was the earthly incarnation of the heavenly Pax.”[7] The Coins thus had a re­ligious significance. Israel was in a certain sense serving other gods by being subject to Rome and to Roman currency. The point made by implication by His enemies, that tribute to Caesar had religious over­tones, was almost confirmed by Jesus, even as He proved their own submission to Caesar.

Then came His great answer: Render to Caesar the things that are Caesars [sic], and to God the things that are God’s (Mark 12:17). Ac­cording to Stauffer, render here means “give back.” “That is the first great surprise in this verse, and its meaning is: the payment of tribute to Caesar is not only your unquestioned obligation; it is also your moral duty.”[8] St. Paul used the same term in Romans 13:7, “Render to all their dues: tribute to whom tribute is due; custom to whom custom. . . .”

Judea was living within the Roman Empire, gaining military and economic benefits from that empire whether it wanted them or not. Even if the benefits of the empire were outweighed by its liabilities, the people were still to render Caesar his due.

The fact still remained that two poll taxes stood in opposition, one paid to the emperor, the other to God. The imperial tax provided “for the daily sacrifice for the welfare of the Roman emperor”; it maintained the empire as a religious entity.[9] The other tax, called then the temple tax, was God’s tax for maintaining His holy order. How could both taxes be paid? According to Stauffer, “He affirmed the symbolism of power, but He rejected the symbolism of worship. But this reservation was not made as a negative statement, but rather as a positive command. ‘Render to God what is God’s’ “[10] Stauffer is right in asserting that, ac­cording to Numbers 8:13 ff., this means that “Everything belongs to God.”[11] At the time that Jesus spoke, the Biblical poll tax was being collected in the spring, in the month of Adar. More specifically, Jesus asked that Caesar’s tax be rendered to Caesar, and God’s tax be rendered to God. The early church was apparently aware of this fact. Jerome, commenting on Matthew 22:21, declared, “Render unto Caesar the things that are Caesar’s, namely, coins, tribute, money; and to God the things that are God’s, namely, tithes, first-fruits, vows, sacrifices.”[12] Israel’s departure from God’s rule and law had placed them under Roman rule and law; they owed to Rome the tribute due to Rome. Rome did not serve God, but neither did Israel. Obedience is due to all authorities under who we find ourselves (Rom. 13:1-7). Rome was now their master, and Rome had to be obeyed. Obedience to God requires obedience to all those whom we find ourselves in subjection to. In the temptation in the wilderness, Satan had tempted Jesus to follow a way of empire: give the people bread and miracles; enable them to walk by sight. Now, through other tempters, the temptation was offered of rejecting all empires, all earthly powers.

Christ conquered this temptation afresh with His words about the double duty of obedience to the way and to the goal of history, to the kingdom of the world and to the kingdom of God. Mark 12:17 is spoken by Christ in conspectu mortis, in the sight of the messianic death. Holy Week is the existential exegesis of His words: submission to the dominion of Caesar, submission to the dominion of God — united in the acceptance of that monstrous judicial murder by which Caesar’s most wretched creature fulfils sub contrario the work of God (Matt. 26:52 ff.; John 19:11)[13]

Let us return to St. Jerome’s words. Two kinds of taxation exist, and Christ requires our obedience to both. The world of Caesar seeks to create a new world without God, and without regeneration; it exacts a heavy tax and accomplishes little or nothing. We are, as sinners, geared by our fallen nature to seeking Caesar’s answer. We pay tribute to Caesar thus, in our faith and with our money. The answer to Caesar’s world is not civil disobedience, the final implication of which is revolution. This is Caesar’s way, the belief that man’s effort by works of law can remake man and the world.

The answer rather is to obey all due authorities and to pay tribute, custom, and honor to whom these things are due. This is the minor aspect of our duty. More important, we must render, give back to God what is His due, our tithes, first-fruits, vows, and sacrifices. The re­generate man begins by acknowledging God, the author and Redeemer of his life, as his lord and savior, his King. At every point in his life, he renders to God His due service, thanksgiving, praise, and tithe. His salvation is God’s gift; the bounty he enjoys is God’s gift and providence; the regenerate man therefore renders, gives back to God, God’s appointed share of all things.

The way of resistance to Rome chosen by Judea led to the world’s worst war and to the death of the nation. Neither the Roman imperial answer nor the Judean revolutionary answer offered anything but death and disaster. Self-consciously, the Christians followed their Lord. Justin Martyr wrote:

And everywhere we, more readily than all men, endeavour to pay to those appointed by you the taxes both ordinary and extraordinary, as we have been taught by Him; for at that time some came to Him and asked Him, if one ought to pay tribute to Caesar; and He answered, “Tell me, whose image does this coin bear?” And they said, “Caesar’s”; And again He answered them, “Render therefore to Caesar the things that are Caesar’s, and to God the things that are God’s.” Whence to God alone we render worship, but in other things we gladly serve you, acknowledging you as kings and rulers of men, and praying that with your kingly power you be found to possess also sound judgment. But if you pay no regard to our prayers and frank explanations, we shall suffer no loss, since we believe (or rather, indeed, are persuaded) that every man will suffer punishment in eternal fire according to the merit of his deed, and will render account according to the power he has received from God, as Christ intimated when He said, “To whom God has given more, of him shall more be required.”[14]

Christ’s answer did not prevent His enemies from charging Him with “perverting the nation, and forbidding to give tribute to Caesar” (Luke 23:2). His answer in reality had demolished all grounds for any accusation against Him.

Their duty, Jesus had declared, was “to render back” “to pay what is owing”[15] to Caesar and to God. What is due to Caesar is due to Caesar only by the providence, purpose, and counsel of God. What is due to God, what all men owe Him, is everything. Jesus set forth “God’s absolute and peculiar right in respect of every man individually and of all men collectively-an exclusive and paramount right possessed by God alone.”[16]

Those who reduce this great sentence of Christ’s to a declaration about church and state have missed the point of the incident.

[1] Plummer, Luke, p.465.[2] Lenski, Luke, p.988.

[3] Ethelbert Stauffer, Christ and the Caesars (Philadelphia: Westminster Press, 1955), p. 119.

[4] Ibid., p. 125.

[5] Ibid., p.122 f

[6] Geldenhuys, Luke, p.504.

[7] Stauffer, op. cit., p. 124f.

[8] Ibid., p. 129.

[9] Ibid., p.131.

[10] Ibid., p.132.

[11] Ibid.

[12] Ibid.

[13] Ibid., p. 135.

[14] Justin Martyr, First Apology, chap. XVII.

[15] Geldenhuys, op. cit., p.507.

[16] Ibid., p.508.

Jesus and the Tax Revolt – The Chalcedon Foundation – Faith for All of LifeRender Unto Caesar

More Capital Controls Hidden In Obama Stimulus Act

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Zerohedge notes the tightening of capital controls in the hiring incentives act (HIRE) passed on March 18 by the Obama administration. A more sober summary of the changes introduced can actually be found at Lexology.  Salient points from Lexology’s summary:

1. Withholding Tax on Payments to Foreign Financial Institutions, Trusts and Corporations. Effective January 1, 2013, the HIRE Act essentially forces foreign financial institutions, trusts, and corporations to choose between either agreeing to provide the IRS with information about their U.S. account holders, grantors and owners, or subjecting themselves to a 30% withholding tax on almost any payment they receive from a U.S. payor. The rules applicable to foreign financial institutions differ from those that apply to foreign trusts and corporations……….

….In general, “withholdable payments” to an FFI are subject to the 30% withholding tax unless the FFI enters into an agreement with the Treasury Secretary requiring the FFI to:

  • Obtain sufficient information from every holder of every account maintained by the FFI to determine whether the account is a United States account.
  • Comply with the verification and due diligence procedures that the IRS and U.S. Treasury may require regarding identification of United States accounts.
  • Provide annual reports on each United States account maintained by the FFI, which must include:
    • The name, address, and TIN of each account holder which is a specified U.S. person and, in the case of any account holder which is a U.S.-owned foreign entity, the name, address, and TIN of each substantial U.S. owner of such entity;
    • The account number;
    • The account balance or value; and
    • Except as provided by the Treasury Secretary, the gross receipts and gross withdrawals or payments from the account.
  • Deduct and withhold a tax equal to 30% of any “passthru” payment by the FFI to either a “recalcitrant account holder,” which is a U.S. account holder who withholds information from the FFI, or another FFI that does not meet the requirements necessary to avoid the 30% withholding tax.
  • Comply with requests by the Treasury Secretary for additional information about any United States account held by the FFI.
  • If foreign law would prevent the required reporting on United States accounts, attempt to get a valid waiver, if one is available under the applicable foreign law, from the account holder, and close the account if a waiver is not obtained within a reasonable period of time…………..

Foreign Entities that are not Foreign Financial Institutions. The new Code Section 1472 also requires 30% withholding on withholdable payments made to nonfinancial foreign entities, unless the withholding agent is provided with certification either (1) that the foreign entity has no substantial U.S. owners or (2) that identifies the name, address, and TIN of each substantial U.S. owner.

Payments to corporations whose stock is regularly traded on an established securities market or of (Lila: correction, “to”) an expanded affiliated group of such corporations, to entities organized under the laws of a U.S. possession and owned entirely by bona fide residents of that U.S. possession, to foreign governments and central banks, and to international organizations are not subject to 30% withholding under Code Section 1472.

[Lila: File under Crikey, What Does This Gobbledygook Mean?]

2. Required Disclosure by Individuals of Foreign Financial Accounts, Increased Penalties, and Extension of Statute of Limitations.The HIRE Act requires individual taxpayers who have an interest in a “specified foreign financial asset” to attach a statement to their income tax return if the aggregate value of all such assets during any year is greater than $50,000………

Required Disclosure. The taxpayer must disclose: In the case of any account, the name and address of the financial institution in which such account is maintained and the number of such account.

  • In the case of any stock or security, the name and address of the issuer and such information as is necessary to identify the class or issue of which such stock or security is a part.
  • In the case of any other instrument, contract, or interest, such information as is necessary to identify such instrument, contract, or interest, and the names and addresses of all issuers and counterparties with respect to such instrument, contract or interest.
  • The maximum value of the asset during the taxable year.

Penalties. There are new penalties for both the failure to disclose a foreign financial account and for understatements of tax attributable to undisclosed foreign financial assets.

The HIRE Act imposes a $10,000 penalty for failure to furnish the required information when due. If the taxpayer fails to correct such failure for more than 90 days after receiving notice of the failure, an additional $10,000 penalty is imposed for each 30-day period (or fraction thereof) during which the failure continues after the expiration of the 90-day period following the notice, up to a maximum penalty of $50,000.

In addition, the HIRE Act increases the penalty on of any portion of an underpayment of tax that is attributable to any undisclosed foreign financial asset understatement from 20% of the understatement to 40% of the understatement.

Extended Statute of Limitations for Undisclosed Foreign Accounts. The HIRE Act extends the statute of limitations for audits of certain unreported income from a foreign financial account from three years to six years.

3. Repeal of Foreign Exceptions to Registered Bond Requirement. The HIRE Act denies an interest deduction for interest on any unregistered bond (typically these will be bearer bonds), effective for bonds issued after second anniversary of the date of enactment.

4. PFIC Reporting. In addition to the reporting already required from shareholders of a passive foreign investment company (PFIC), effective as of March 18, 2010 the HIRE Act requires that each United States person who is a shareholder of a PFIC file an annual report containing such information as the Secretary may require. A foreign corporation that generates passive income (typically interest and/or dividends) is classified as a PFIC if (a) 75% or more of the corporation’s gross income is passive income for purposes of the CFC rules or (b) 50% or more of the average value of the corporation’s assets produce, or are held for the production of, passive income.

5. Electronic Reporting by Financial Institution Withholding Agents. The HIRE Act authorizes the IRS to impose electronic reporting requirements on financial institutions that are withholding agents, even if the institution files less than 250 information returns (the current threshold).

6. Foreign Trust Changes. The HIRE Act makes a number of changes in the rules governing foreign trusts. A transferor to a foreign trust that has a U.S. beneficiary is treated as owner for U.S. tax purposes of the portion of the trust payable to or accumulated for the benefit of a U.S. beneficiary. The HIRE Act provides that an amount is treated as being accumulated for the benefit of a U.S. beneficiary even if the U.S. person is only a contingent beneficiary or if any person has the discretion to distribute from the trust to any person unless the trust specifically identifies the class of permitted beneficiaries and none of the members of the class are U.S. persons.

Loans to a U.S. person or allowing a U.S. person to use trust property are also treated as payments to or accumulations for the benefit of a U.S. person unless the U.S. person repays the loan at a market rate of interest within a reasonable period of time or pays fair market value for the use of the property.

The HIRE Act also requires that any person who is taxable as the owner of a foreign trust must provide such information about the trust as the IRS may require. Penalties for failure to comply with the foreign trust reporting requirements were also increased, effective for returns required to be filed after December 31, 2009.

7. Taxation of Dividend Equivalents. The HIRE Act provides that dividend equivalents used in lieu of dividends to avoid 30% withholding on FDAP income, such as securities lending transactions, sales-repurchase agreements, and notional principal contracts, are treated as U.S.-source dividends for U.S. tax purposes………..”

My Comment:

The Zerohedge headline is rather alarmist, but on closer inspection, despite the dreadful sneakiness of sticking this into some apparently minor stimulus legislation, the controls are only a continuation of a trend already well under way.

The 30% withholding for refusal to disclose US account holder information is pretty high and so are the new penalties, and I’ll post on what I find out about them, but the disclosure rules are already in effect.

Most of this seems to be part of the administration’s attempt to go after off-shore business accounts suspected of money-laundering, tax-evasion, or criminal activity.

The proximate causes of the financial crisis lie in the off-shore and re-insurance racket. And the Obama administration is determined to end banking secrecy in order to end that. I can sympathize, because indeed multinational corporations do siphon off most of their profits through shell accounts in tax-havens, paying little or nothing to the jurisdictions in which they actually work and use public services. Meanwhile, the havens have become festering centers of crime, drugs, and arms sales, and also the home of  penny-stock fraud , as well as of naked short-selling scams.

The European Union Bank, chartered in Antigua in the Caribbean, for example, which boasted of being the first online bank, and which offered secrecy to account holders, was chartered as a subsidiary of Menatep, a large Russian bank, notorious for involvement with organized crime, as this Washington Post piece by Douglas Farah in 1996 noted.

The outfit Tax Justice.net is a global effort to deal with this huge relatively unrecognized problem, initiated by veteran off-shore investigator Lucy Komisar. It seeks banking transparency and an end to the off-shore racket.

This is a laudable goal. And so far as exposure of the crimes and corruptions of these havens help us understand poverty, development, and the impact of globalization, neo-liberalism, and various tax and regulatory regimes, I’m sympathetic.

But, beyond that, I’m wary of the methods and underlying premise. Strengthening the government regulatory and enforcement apparatus has more potential for abuse than use, this late in the crony capitalist game. There’s a much simpler and more libertarian approach to the underlying problems. And that is to reduce income taxes to the lowest level compatible with paying incurred obligations. A simple flat tax should do it.

Abolish pay-roll, personal income, and corporate taxes. Make up the short-fall where it should be made up –  in the kind of user fees and sales taxes described at Fair Tax.org, which are targeted at the biggest users.

Roads, for instance, are largely used..and damaged…by commercial trucks. Yet, these trucks pay far less than they ought, because of the lobbying of their trade associations. Fix these sorts of leakages and then cut income taxes and taxes on investment and job-creating activities, as illustrated in this WSJ piece on people moving to low income tax states. Then go back to sound money and a market interest rate.

You’ll get rid of the incentives for corruption, encourage small businesses to compete more easily, and keep big business onshore. But that’s unlikely to happen any time soon….

Instead, we’re going to have deeper infringements on privacy.

We already knew that private bank accounts were a thing of the past for most ordinary people. Not for the very rich, of course. But we already knew that too..

It remains to be seen whether the new controls will change that.

Obama Goes After Upper Middle-Class Savers

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Bloomberg reports:

“Congressional leaders are raising to 3.8 percent their proposed new Medicare tax on investment income in the final health-care overhaul plan, a Democratic leadership aide said.

The rate is higher than the 2.9 percent President Barack Obama proposed in February. Under Obama’s proposal, the new tax would apply to income from interest, dividends, annuities, royalties, capital gains, and rents for individuals who earn more than $200,000 and joint filers reporting more than $250,000.

House Speaker Nancy Pelosi, asked today if the tax applied to capital gains, said it would be imposed on unearned income “whatever category it is.”

It would be the first time Medicare taxes would cover investment income. The current 2.9 percent Medicare levy currently applies only to salaries and is split evenly between workers and their employees.”

My Comment:

No redistribution of the ill-gotten loot of the corrupt mega banks and their government and speculator associates …loot that runs to billions. Instead, the administration goes after middle-class investment income. This is a first, and it sets an unholy precedent for the future. Does this government not get that we need to increase capital formation, not slow it down?

Feds Uses Bribery, Class-Warfare To Catch Tax Cheats

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From CNN, via Lew Rockwell, the latest Federal incentives for snitching and snooping on your fellow citizen:

“In 2006, the IRS really started cracking down on big time cheaters and introduced a new whistle-blower program, in which informants are paid a minimum of 15% and a maximum of 30% of the amount owed.

But there’s a catch: In order to collect a reward, the taxes, penalties and interest in dispute must add up to at least $2 million. And if the suspected tax evader is an individual, his or her annual gross income must exceed $200,000.

So far, the new incentives have been effective. The IRS has received tips from about 476 informants identifying 1,246 taxpayers in fiscal year 2008, the first full year the program was implemented………

Who snitches?: In this program, the most common informants tend to be dissatisfied middle-ranking employees in big companies, said Tim Gagnon, an academic specialist of accounting at Northeastern University……..

Stephen Whitlock, director of the IRS Whistleblower Office, said that informants have had some connection to the taxpayer but they are not always close acquaintances. They have typically been employees, investors or business associates.

He also said many claims are for substantially more than the $2 million threshold and involve businesses or very wealthy individuals.”

My Comment:

In other words, what you have is the IRS incentivizing class-warfare. By dangling a chunk of cash in front of their noses, the government encourages employees to act against their own economic interest on the basis of a non-existent public good.

Non-existent?

Well, yes. Since the government is using its tax revenues mostly to pay off its own friends, to fatten the banks and financiers, loot the tax-payer, murder foreign nationals, and generally mismanage the country, the public interest (in so far as we can ascertain one) may well be better served by not paying taxes.

Tax cheats, while clearly not heroes from a moral standpoint, are also not the villains they’re often made out to be.

The villains are those who constantly demand higher and higher taxes and destroy the productive capacity of this country in pursuit of hubristic and vain schemes that have done nothing but turned a nation built on free enterprise into one enslaved by political patronage…

Tax snitches, as I said, don’t even serve their own economic self-interest. Sure, they get their one-off reward for snitching. But they’ve effectively ended any chance of their being hired by anyone…unless they manage to evade detection.

Any taxes an employer pays to the government must inevitably be passed on to employees and customers. That’s as ineluctable an economic law as any.

Ergo, pay taxes and the Feds get the money….don’t pay and the economy, the customer, or employees eventually get it.

An employee who plumps for snitching is obviously not only treacherous and disloyal as a human being, he’s also an economic fat-head.

Frank Chodorov On Destroying The Citadel Of Power

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Frank Chodorov, on the seduction of power, from  Mises.org

“For, it is said that while Saul of Tarsus was carrying out his duties as Commissar of Truth, the Messiah he had been denying appeared before him and convinced him of his error. So, after a bit of soul searching, he quit his job and thereafter dedicated himself to the task of preaching the very doctrine he had been denouncing. And because he was now the persecuted rather than the persecutor, he was effective; everywhere he went he found willing listeners, even in Rome itself. More important than their numbers was the conviction of his converts that in the eyes of God the lowliest in society was equal unto Caesar. The psalm of freedom — of the dignity of the individual — reawakened their souls. Neither the lash nor the dungeon vile nor the wild beasts in the arena could rob them of their self-esteem. By their very suffering and death they transmitted their faith to others, the sect grew, and at long last Caesar capitulated.

From the story of Saul, who came to be known as Paul, we draw the lesson: that when people want freedom they will get it. When the desire of the business man for “free enterprise” is so strong that he will risk bankruptcy for it, he cannot be denied. When youth prefers prison to the barracks, when a job in the bureaucracy is considered leprous, when the tax collector is stamped a legalized thief, when handouts from the politician are contemptuously rejected, when work on a government project is considered degrading, when, in short, the state is recognized to be the enemy of society, then only will freedom come, and the citadel of power collapse.”

Tom Woods On Wealth Creation

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Nice finale to Tom Woods’ piece at Taki Magazine, putting an end to some superstitions about labor and wealth:

“Leaving aside the odd view that only manual laborers engage in “work,” all the brawn in the world could never have produced a steam engine or a Pentium processor. Only when informed by the knowledge of inventors and supplied with the capital saved by capitalists can the average laborer produce the tiniest fraction of what he is today accustomed to producing. The central ingredient in a laborer’s physical productivity is the equipment and machinery at his disposal. There is nothing natural or inevitable about the availability of this productivity-enhancing capital equipment.  It comes from the wicked capitalists’ abstention from consumption, and the allocation of the unconsumed resources in capital investment. This process is the only way the general standard of living can possibly rise.  Hartmann thinks it’s just swell to tax it.

The increases in the productivity of labor that additional capital makes possible, by increasing the overall amount of output and thereby increasing the ratio of consumers’ goods to the supply of labor, make prices lower relative to wage rates and thereby raise real wages.  That’s why, in order to earn the money necessary to acquire a wide range of necessities, far fewer labor hours are necessary today than in the past—say, 1950 or 1900. Thanks to capital investment, which is what businesses engage in when their profits aren’t seized from them, our economy is far more physically productive than it used to be, and therefore consumer goods exist in far greater abundance and are correspondingly less dear than before……

Hartmann’s argument runs, in effect: “Citizen, you need to be looted in order to stabilize the system [a nonsensical idea Hartmann came across in the popular Keynesianism that forms the entirety of his economic knowledge].  Let us hear no more anti-social talk about your so-called rights. All hail The System!  Wherever would we be without the stabilizing power of violence!”

As for the nonsense about FDR’s New Deal “stabilizing us”—and the perverse argument that our economy will never be stable unless the people are violently expropriated—check out economist Robert P. Murphy’s new book The Politically Incorrect Guide to the Great Depression and the New Deal.  Its playful title notwithstanding, this book mercilessly bludgeons thoughtless clichés like this.

At least the mafia has the decency not to put such transparently phony claims over on you. They’re honest: we’re taking your money because we have power, and you don’t.

What it all boils down to is this: one side of our political spectrum favors the central planning of Iraq, while the other favors the central planning of Americans. We can only hope for the continued growth of a third side, one that rejects as unworthy of a free people all the superstitious nonsense about the magical powers of our overlords, whether that power is exercised at home or abroad.”