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The Power to Destroy
(Continued from page 13)
I
Rates of income tax in Great Britain
are higher, and exemptions are lower
than in the United States, although
there is no British equivalent of the
state income taxes which often add
substantially to the taxpayer's bill in
the United States. The German national income tax has been cut and is
not so steeply graduated in the upper
brackets as the American. However,
Germans who are not refugees and
who were not bombed out during the
war are obliged to pay a substantial
levy, the so-called Lastenausgleich,
for the benefit of those who were. This
probably at least equals the score.
Japanese rates of income tax, applied equally to foreigners, are so
heavy that many foreign newspapermen and businessmen cannot afford to
live in Japan and have moved to Hong
Kong. A recent report from Formosa
was to the effect that income tax rates
as high as 114 per cent had been
levied there, although the Finance
Minister was promising to look into
the matter.
Taxation Without Representation
The one exception to a crushing
load of direct taxation is found, curiously enough, in Communist countries
which started off with programs of
wholesale nationalization, confiscation, and robberization and still do not
tolerate private operation or ownership of industrial or commercial enterprises. But experience has taught the
Communist political bosses that unequal pay for work of unequal value
is good stimulating medicine for productivity. So one finds very sharp wage
and salary differentials, to say nothing
of extensive perquisites of office in the
shape of superior housing, cars, and
the like for top level officials and members of the managerial bureaucracy.
And in Tito's Yugoslavia, at least at
the time of my visit in the summer of
1955, there was no income tax. Lest
this should start a stampede of American expatriates to Yugoslavia, I hasten
to add that there are many features of
Tito's brand of communism in that
country even less pleasant than filling
out income tax blanks.
The power to tax has indeed proved
the power to destroy. The personal
income tax, growing like a Frankenstein's monster and showing little
Page 40
abatement from wartime heights, has
destroyed for American citizens,
among other desirable things:
(1) The precious sense of personal independence that comes from
being able to provide for their years
of old age and retirement. The difference between nineteenth century and
twentieth century rates of income tax
is the difference between independence and dependence, between the
ability of a man of reasonable thrift
and diligence to "save up" for his later
years and being dependent on some
state handout or some company pension scheme. Anyone with a medium
WIDE WORLD PHOTO
Alexander Hamilton was active and influential in
the Constitutional Convention of 1787, and was
second only to James Madison in securing ratification of the new Constitution. As Secretary of
the Treasury through George Washington's two
administrations, he worked constantly for a sound
financial system, and the development of industry.
middle-class income can take paper
and pencil, figure out how much he
has paid to satisfy the exactions of
federal, state, and sometimes also
municipal tax collectors, anel calculate
what he has lost in terms eif an annuity or retirement allowance.
In an age that prides itself on its
concern for security, exorbitant rates
of personal income tax are- a most
acute source of personal insecurity.
Money that otherwise would have
been saved for a rainy day is earned
only to be siphoned off by the insatiable demands of the- State-.
(2) The sense of economic free-
dom. The Uniteel States conquered
the wilderness, built great cities and
fertile farm areas on land once tenanted by a few nomadic savages, built up
a standard of living that made it, in
Shakespeare's phrase, the,envy of less
happier lands, because the individual
American was free to earn what he
could and to keep what he earned.
Now the government, like a racketeer,
"muscles in," demanding a large nrst
cut of everyone's earnings, a cut that
becomes progressively and rapidly
larger as the individual is presumably
more competent and efficient and able
to earn more money.
The federal government has a pn°r
claim on more than half (52 per cent,
to be exact) of the profits of every corporation. A reversion to serfelom under
modern conditions is suggested by the
fact that almost everyone must work a
certain amount of time for the government by surrendering a portion of his
earnings. This time varies from one to
two months for those in lower brackets, to three to six months as steep progression exerts a leveling influence on
those in middle and higher brackets.
In the case of the highest incomes,
where 91 per cent may go to the State,
the individual may reckon that he is
working only a few weeks for himsett,
the rest of the time for the government.
"A Reversion to Serfdom"
There can be only one end to the
prolonged operation of the kind ot
steeply progressive income tax system
which is in force in the United States
today. This is to transform what was
once a people of self-reliant individualists, accustomed to relying oV
themselves in emergencies, into a»
amorphous mass of wards and serfs ot
the State. These would be- neatly ticketed with social security numbers, conditioned to giving up to the State a
larger and larger share of what they
earn, and leioking to the State to satisfy more and more of their needs. On
of the most insidious consequences or
the present burden of personal income
tax is that it strips many middle-el"*'?
families of financial reserves, a"
seems to lend support to campaiiP"
for socialized medicine, socialize
housing, socialized food, anel seicia1'
ized everything.
(3) The spark plug of incentive
is brought to a sputtering halt by a
taxation system that treats wealth as
a crime- anel makes almost impossible
the building up, without inherited
Facts Fohum News, December, 1956
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