WEBVTT

NOTE The History of Taxation

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And I was lucky they didn't lynch me, and the only reason is they didn't have a rope.

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Some guy in the front row up here, he was huffing and puffing and turned red in the face.

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I thought he was going to have a heart attack.

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And finally when he got up, they had to take him out of the room, and the lady stood up

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in tears.

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And she says, Lincoln's always been my idol?

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I can't believe these things, but it was an experience.

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I wasn't really expecting it because I thought that my book was factual.

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I thought that I laid out the research that I had found over the years and that having

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been educated in basically northern pro-Lincoln institutions and with lots of U.S. history

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Going out my ears, I thought that, well, when I got into this, I realized that maybe the

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title of the book should have been Lies My Professors Told Me.

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There was a movie on that subject.

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But what I want to talk about today, and Lou always gives me some great subjects and one

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that's dear to my heart, is the history of taxation.

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And I would like to take you back maybe 2,000 to 2,500 years.

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Let's go back to ancient Greece and maybe Rome and let's suppose that you were having

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the seminar on the history of liberty.

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Now the Egyptians wouldn't have shown up because they never had a word for liberty in their

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language so we don't worry about those guys.

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The Persians wouldn't have shown up, and of course the Assyrians and the Babylonians,

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but the Greeks and the Romans would have.

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And the one lecture I think they would have wanted to listen to was the history of taxation.

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Because to these people, the history of liberty and the history of taxation were one.

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And that comes maybe as a surprise to you, but let's go back a little farther and let's

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ask a question.

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What was the most important event in the history of Western civilization?

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No, it was the Battle of Marathon.

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Because in the Battle of Marathon, the Greeks defeated the Persians on the plains of Marathon.

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Now we remember the story of the guy who ran 26 miles and 385 yards and he said victory

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is ours and supposedly he died.

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But that battle was so critical because with that Greek civilization seized control of

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Western civilization and has perpetuated itself into our thinking and our lives even today.

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We still read the Greek scholars.

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We still read Plato.

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We still are mind-bottled at Aristotle, the father of medicine, the father of history,

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the father of taxation.

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These men were giants in the mind.

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And the thing that's impressive about them is that they were able to make extraordinary

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insights into nature and into civilization and into politics with a minimum amount of

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Information

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Now, we celebrated a few years ago the 500 year birth of Copernicus.

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Copernicus discovered the heliocentric universe, that the sun was the center of the universe

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and that the planets, including the earth, revolved around it.

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And that was a wonderful discovery, except the Greeks knew that.

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They knew that almost 2,000 years ago.

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Not only did they know about the heliocentric universe, Aristoteles in the third century

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B.C. measured the circumference of the earth.

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If Columbus would have had the correct measurements, he would never have started, because when

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he landed in the Bahamas, he thought it was in Japan.

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Now, Aristophanes measured it very simple, a little basic geometry, measured the angle of the sun at Athens, the angle of the sun at Alexandria, the distance between the two, the elementary geometry, figure in the arc, 25,000 miles, pretty accurate, right on the nose.

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So, it's okay to celebrate Copernicus, but the Greeks knew about that 2,000 years ago.

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And I think the most extraordinary thing of the ancient world,

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remember the seven wonders of the ancient world, the gardens of Babylon,

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the library of Alexandria, the colossus of Rhodes, the temple,

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I think really the great wonder of the ancient world was the great mind.

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And they took their genius and they applied it to politics,

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And Herodotus, for example, who was the father of history, he saw the conflict between the

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East and the West, and that the East was totalitarian, they used to like the word draconian, if you

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want to use it, another word that they used was tyrannical.

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And yet he saw Greece as having a democratic society which had substantial amounts of liberty.

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And so here's the conflict between liberty and totalitarianism.

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And the Greeks were the only civilization that was able to achieve liberty without a

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destruction of liberty, because all the other great nations at the time had no liberty.

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They didn't have it.

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And so Herodotus asked the question, and the Greeks asked the question, what, using this

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What was it that Greece had and that created a democratic and also a libertarian society

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that these other great empires did not have?

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And the conclusion was the tax system.

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The other ones had direct taxation against the individual.

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And that was destructive of liberty.

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Whereas the Greeks had no direct taxation, only indirect taxation, and that fostered

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liberty.

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And so this idea that liberty and taxes were one, that this was the big issue, this was

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the insight into how you have a free society.

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Now today you may not agree with that, but I think you should.

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Because we have come a long way from the Greeks.

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In fact, we've come a long way from the founders because they believed in the Greeks.

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They believed that direct taxation led to slavery.

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They even said that.

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They believed that indirect taxation was consistent with liberty because it's not directed at

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the person.

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And when you have direct taxation, you have to develop all these powerful totalitarian

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controls for the system to work.

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Now the Romans picked up on the Greeks and they agreed with the Greeks.

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The early Romans, Cicero for example, a marvelous mind, he said that you shouldn't have direct

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Direct Taxation you should not have unless you make it clear to the people that there's

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no other alternative other than complete national collapse.

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So that shows you the strong feeling against direct taxation, which again we have today.

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Well, the Romans also were great admirers of the Greeks.

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They usually had Greeks in their homes in the very institution teaching the people,

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In these early days of Rome, of Rome's greatness, there are a couple of statements.

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Liberty is a possession on which no evaluation can be placed.

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Freedom is beloved above all things.

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And they had gods, as you know, and one of the gods was the goddess of liberty.

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And you've seen her many times.

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She sits in New York Harbor as the Statue of Liberty.

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We say, well, she was a gift from the French, no, no.

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I would say study Roman history. You've got a thousand years of history of a nation that began with a republic and with a great love of freedom, and ended up a terrible despotism. And how did it get there? What happened to all these wonderful beliefs of the

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This wonderful belief they had about liberty and about freedom, again, the study of liberty.

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They destroyed it to make the tax system work.

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And Diocletian in the fourth century was faced with a terrible problem that the economic

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system and the tax system was falling apart.

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They essentially had a census every five years and they created the tax rolls.

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And that's what Joseph and Mary were doing when they were going to Bethlehem to register

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for taxes.

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And then, of course, it provided a very easy out.

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You'd register for taxes, you'd sign up, you know, here you are, you'd send in your

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1040, so to speak, and then you'd leave town.

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You see, then you'd go someplace else where you weren't on the tax rolls.

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And so this became a tremendous failure of the system, a way that people could avoid

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by Debate of Taxes.

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So Diocletian said, and I love the decree, he says, glad tidings to all taxpayers, as

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we said.

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And he goes on and on about all the wonderful things we're going to do.

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We're going to just enslave you to the system, that's all.

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You can't move.

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See, now you see you've got a tax-identified number so the government can keep track of

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Diocletian never thought of that. If he had thought of it, maybe he wouldn't have done

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what he did. But what he simply did is everybody got to stay where they are. If you're a cobbler,

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you're going to be a cobbler forever. Your kids are going to be cobblers. If you're farming

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black agar, then you're going to farm black agar. And so your kids are going to farm black

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agar. And the result was he enslaved the system. And the great Russian, he's a great Russian

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He wrote some beautiful books on the history of the Roman Republic, the economic history,

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the history of the Hellenistic world.

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He said the emperors of the fourth century, and especially Diocletian, were motivated

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by the Sincerest Love of the Country.

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And they set out to save the Roman Empire, and they saved it.

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But they never asked, it was worth saving to make an empire with scores of millions

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of enslaved men.

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So that's what the tax system produced.

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Now today we're not that far along, but we're getting there.

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And I think we don't realize it. We have moved in my life from an honor system to a spy system.

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When I was a young lawyer, in the first case I had with the IRS, these old guys came in

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and he looked me over and he called me son, you know, and I looked pretty young. Anyway,

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And he said, you know son, he says, our tax system is an honor system.

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And that's the only way it will work in a free society.

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Now you know that isn't true anymore.

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I don't know why the rest of the agent would dare say that because it's stupid because

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it is an honor system.

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We know everything about you.

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We've got your bank accounts all photographed if you want to see them and if you look at

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a person's bank account you can tell just about everything about him.

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We know what your money is, we know how much dividends you got, we know your stockbroker,

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we know if you buy real estate, we even almost know if you go to the bathroom.

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And that is essentially, isn't it, in its own shadow what Dahl-Kleshen did?

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He tabs on a taxpayer, and that way you know that the revenue will flow.

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And so the question maybe is, is it worth perpetuating the American Empire by making

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a vast prison for the scores of millions of taxpayers that we've created?

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Now the reason that you're not too concerned about this, you know, Adams is a rabble rouser.

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When I say, maybe, I don't think you really think that way, but you might say, well, I

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I don't quite feel enslaved, so the IRS watches me, you know, so they know where I go.

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So they keep track of me. They have to pay taxes.

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But for 200 years, the American people were the most anti-tax people on earth.

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I mean, we hated, I'm saying we, meaning our ancestors, we hated taxes with a passion.

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And the question is, whatever became of that anti-tax character that formed the Americans?

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I mean, you say, well, they revolted because taxation without representation, baloney.

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It wasn't that. They hated taxes. And then when they got representation,

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presentation, four years later they had a revolt. It was called the Whiskey Rebellion.

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People died. Four more years later they had another revolt. It was called Freese Rebellion.

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I know John Freese was an auctioneer and his guys were out tarring and feathering and running

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the tax collectors out of town, federal tax collectors. This was John Adams and Alexander

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Hamilton's little baby. It was one of the first direct tackles we ever had.

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And anyway, poor old John Fries was sent to die, and the cabinet of John Adams was unanimous

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to put him to death, and John Adams pardoned him.

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And he said, hell, it was just a little tax riot, and that the Federalists were so determined

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to enforce taxes that they really wanted to hang this guy.

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And I felt sorry for old John Fries, but anyway, he got out and he was lucky, and so when you

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When you think about the pardoning power, just be glad that John Adams was who he was, or that man would have been hung.

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Then the next great revolution was Jefferson, except this was peaceful, and he got rid of all the Federalist taxes.

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And did you know the Federalist Party died in America? Never came back to power?

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Because the people were fed up and hated the taxes that the Federalists tried to put on,

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The Americans were anti-tax people, they did not like taxes, and they detested taxes, and

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they were against taxes, period.

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And that perpetuated the American society way up in through.

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Now when the Civil War came, the war between the states, Lincoln was blasted that he imposed

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a tax that would never be tolerated to anything but a conquered people, I'm quoting newspapers.

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He encoded an income tax.

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And Jefferson Davis was blasted even worse.

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I mean he was just absolutely, you know, the Richmond government degenerated into an absolute

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despotism because of what?

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An income tax.

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So because of war, obviously these were the necessities of it.

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But the Americans were hated taxes.

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And then I discovered in a magazine article in The Nation, have you heard of The Nation,

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the magazine?

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It's a real way out to the left group.

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Anyway, this is a wonderful article, it was published in September of 1865, and the editor

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was kind of complimenting the American people for paying the income tax, even though the

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war was over, because they had to require the debt.

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And he said, and this is a tax which is oppressive, that is unjust, that is abusive, and that

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is administered by tax gatherers who are the most loathsome people on earth, through the

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ages.

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So, again, this is the way the American people thought.

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Now we come a little later when there was attempts to adopt an income tax, and what

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did they do?

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and then Brooks Adams who was the last great leader of the Adams family, the great-great-grandson

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of the John Quincy and of John Adams and his father was Charles Francis, he wrote an article

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in the Atlantic Magazine in 1878, and he said all taxation is an evil, not some, all taxation

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is an evil, and heavy taxation is the worst calamity that can befall a people.

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Again, this Atlantic Magazine, could you imagine Atlantic Magazine today publishing something

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like that?

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And since he was the leader of the dominant party in Massachusetts, today that would be

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Who would have thought it would be like Edward Kennedy?

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Could you imagine him saying something like that?

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All the taxation is unqualified.

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So we have this powerful, for 200 year character, anti-tax, hate-taxes, against-taxes.

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What happened?

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Well, I spoke some time ago and I forgot to answer the question.

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I got so involved in other things, not that I have the answer, but the answer has to lie in education, in our educational system.

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And one of the little clues that I think answers the question, I was reading the life and about the life of Edmund Burke.

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Now Edmund Burke was one of the great champions in the House of Commons at the time of the American Revolution for the Americans.

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He wrote an article trying to bring about a freneminess, trying to check the revolution that was in the making.

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And in that article, he made some statements about taxes.

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And then I discovered that that article, that those things that he said were studied in the American schools, in the grammar schools in the 19th century, and the kids memorized what he said.

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Now, they don't memorize what he, but what did he say?

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Here is, it's gone to the guts of what Burke wrote, and this is 1775, and it's a speech

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called Reconciliation with the Colonies.

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He said the spirit, the fair spirit of liberty is stronger in the English colonies than in

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any country on earth.

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They are therefore devoted to liberty.

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But liberty according to English ideas and English principles.

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Abstract liberty does not exist.

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Liberty has to adhere to some object.

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It happens, you know, sir, that the great contest for freedom in this country from the

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The question of money has only been an English and now an American idea, but colonists draw

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are from you, as with your lifeblood, these ideas and principles, their love of liberty,

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as with you, fixed and attached on the specific point of taxing. Liberty might be safe or

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might be endangered in twenty other particulars without anybody being pleased or distressed.

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Here they felt the pulse, as they found the beat they thought themselves sick or sound,

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This is what the American school children were learning in the 19th century.

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And this explains why they were anti-tax.

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Man, that's about as anti-tax as you can get.

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And so, why did we lose this?

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I don't know why.

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The only thing I can suggest is that in the turn of the century,

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we became seduced by socialism.

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Seduced.

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Communism comes by rape.

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But socialism is a seduction, and with socialism goes high taxes, goes big government, gives all the things that you folks believe in.

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And so I think that's the answer, is that education that they were taught, and our great-great-grandparents and on that were taught,

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the very essence of what the revolution was about, and it was a revolution against taxes.

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So the history of taxes, so say the Greeks, and so say the Romans, is also the history of liberty.

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And I think, notice what Edmund Burke said, he says, you might have liberty endangered in 20 different ways and not be concerned.

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If liberty focuses on some object, and to the Americans it focused on taxes.

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And today, it doesn't. That's why we tolerate all this kind of stuff.

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We have learned to accept it. It's just part of the way the Soviet people learned to accept communism.

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It was just the way of life that they grew up in.

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I don't think that the future is all that likely that we will end the oppressive system of taxes that we have.

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I testified to the House Ways and Means Committee a few years ago, and I had some of the people read my book,

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and they wanted me to give the history of the income tax, which I did to the Congress.

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And then afterwards, Charlie Rangel wanted to talk to me.

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Well, a lot of them are pretty good, but Charlie Rangel, he said,

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Well, Mr. Adams, he said, don't we have the fairest and best tax system in the world?

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And he said, isn't our country really a kind of a tax haven?

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When I hear that, I think of Dan Rastinkowski.

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Now, Dan, as you probably know, was the chairman of the House Ways and Means Committee.

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Incidentally, if the Democrats get in, Charlie Rangel is going to be the chairman of the House Ways and Ways Committee.

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He's in line.

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But when Rostinkowski was caught dipping into the money that he shouldn't have, you notice he was never charged with a tax crime.

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And why?

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Because he was the IRS's man in the Congress.

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When it came out for the Taxpayers Bill of Rights,

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who was against it?

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The IRS and Rostinkowski.

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When it came out for Taxpayers Bill of Rights,

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number two, who was against it?

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The IRS and Rostinkowski.

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Now, Rostinkowski wanted to make sure

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that he had some IOUs out there with the service.

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So when he gets in trouble dipping into the till,

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Now, when he shouldn't have, he's pretty well assured he won't be charged with tax evasion, which it clearly was.

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Now, I suspect that it may have some relevance with Charlie Rangel.

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I'm not sure. Maybe we should sit around and watch, because for him to make comments like that,

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and particularly since the purpose of the hearing that I testified to, was on the income tax.

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and they wanted me to tell about the income tax and how we got involved in it.

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And I think it's one of the great interesting stories of tax history.

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It began back with the British.

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And the income tax has been called the tax that beat Napoleon.

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And the income tax was invented by the British, the modern income tax.

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You can almost take the schedules and use them.

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Not so much today, but maybe 40 or so years later, pretty interesting schedules.

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And the British paid the income tax, the rates were graduated eventually.

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And then Napoleon is defeated, and then the British government comes before the House

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of Commons and wants to extend the income tax, and the motion is made to extend the

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the Income Tax by the Chancellor and the members, and it's turned down, and the records say

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there was the loudest noise from the House of Commons that it was ever heard since the

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Middle Ages. That's how mad and how angry and how much the British people hated the

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income tax, and they killed it. And then after that motion was killed, another motion was

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in the House of Commons were going to burn all the records. And they did. They burned all the records, at least so we thought.

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In fact, the Chancellor of the Czech Republic was stoking the fires while they were bringing out the records and burning them.

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And we know 30 or 40 years later, he had a secret duplicate copy of the records kept in the basement of the Czech Republic.

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Well, anyway, so that's our first income tax.

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And then at the time the British government in 1834 was freeing the slaves in the British

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Empire, this is a reformed parliament, the question came up about renewing the income

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tax.

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And that generation hadn't died out yet.

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And they said, if ever inquisitorial powers were ever in force in England, it was then

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and we want no part of it.

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So it was killed.

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Now, after that generation died, then in 1853, Sir Robert Peel, because they were having a little war going, a little late of the Crimean War, he reintroduced the income tax.

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Now those guys are dead, so you've got a new generation of dummies. They don't remember what it was like under that first income tax.

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And so he introduces the tax, and he says it's going to be, I think he said 3%, 3 years, and then we'll balance the budget, and then it'll be fine.

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Did you know it never was repealed? Never. It went from 3%, to 4%, to 5%, to 6%, to 10%, and on through.

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The one great champion opposing the income tax was William Gladstone.

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And Gladstone hated the tax because he said that the frauds that it produces, the inequities

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it produces, the dishonesty it produces, it's the worst tax in the world, but we need the

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money.

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Basically, that's it.

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So anyway, the income tax then continued on, and then in the United States, we got the

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income tax fever.

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So in 1894, we passed the first income tax law. It was a tax of 2%. It exempted 98% of

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the people. And it was challenged and went to the United States Supreme Court. The United

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States Supreme Court ruled it was a direct tax. And a direct tax under the Constitution

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The opinion has to be apportioned among the states by population, and it wasn't, and

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thence the tax is no good.

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Now there's an interesting concurring opinion by Justice Field, and he complained that the

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thing that was wrong with the tax is it lacked the principle of uniformity and equality.

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You cannot have a tax that exempts 98% of the people in a democratic society with our

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Our Constitution, which says that taxes have to be uniform throughout the United States,

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and that wasn't uniform.

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It was an interesting concurring opinion in the sense that the tax was bad, not upon the

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direct concept, but upon the concept that it lacked equality and uniformity.

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So the income tax dies, everybody's happy, and of course then we get into the need for

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pleasing the socialist philosophy.

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The income tax became a big national issue, and so we had the 16th Amendment.

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And the 16th Amendment said that Congress can tax income without regards to apportionment.

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And that's where we are today.

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There have been some interesting arguments that the 16th Amendment wasn't ratified properly

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and stuff like that, but that's a lot of nonsense.

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I mean, that isn't going to win any arguments, so we're still stuck with the income tax.

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Some efforts that maybe want to repeal it.

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I don't know. But if the Greeks were right, then when it comes to liberty, we're in trouble.

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And I understand that, because some years ago I went and lived in a country where they

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had no income tax, and nobody snooped in your bank account. It was a wonderful feeling of

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freedom. It really was. And I said, gee, this is the way it was in my grandfather's day.

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When you think of the history of liberty, what you're here for, I suspect that if you focus

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on taxes, you're going to be pretty disgusted with the state of liberty in this country.

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A couple of interesting stories that I have in my book, one of them, one of the ones that

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I like, and I read it one day in an in-flight magazine. They picked it out of my book, and

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it's a story of Frederick the Great, and he noticed how his people were taxed pretty heavily.

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So in the council meeting with his ministers, he asked the finance minister, he says, where

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is the money gone? And the finance minister might think he was in trouble, and so he went

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So he took the ice cube, and he handed it to the guy farthest from the king, and he

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says, pass it to the king.

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All he got was a wet hand.

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It's one of the great stories, I like.

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It tells you a little bit about where your tax money goes, and of course, you know, I

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One of my other stories that I enjoy is one in the Civil War when they were debating the

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income tax in the House of Representatives, and one of the members of the Congress said,

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well, he said the tax is sort of like a boil that a man has on his nose, and he keeps complaining

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about the boil on his nose.

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So one of his friends who's tired of hearing the story says, well, where else would you

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rather have it?

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And he said, well, I'd rather have it on somebody else's back.

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That, of course, is the essence of tax making, putting it on somebody else's back.

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Let's see what we got for time.

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Do you want to, do you want me to go on, do you want some more questions, or would you

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like to?

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In your opinion, is the tax system today becoming so complex that even the government cannot collect what they should be collecting?

361
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I've heard a lot of these published policy people saying that they really truly do have to go for the national sales tax or some kind of black tax in order to be able to really collect all the things.

362
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No, I don't realize that.

363
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They're paying a hell of a lot of tax. I mean, you're paying an enormous amount of tax.

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In fact, the death tax in America, no matter how you cut it, any country in the world, we far exceed them in taxes.

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I tell you, the tax harvest is enormous in America because of the spy system.

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I mean, just don't report on your income tax, your interest, your dividends, and so forth.

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And then you're going to get a little letter, and you'll pay.

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Do you know any of the brackets or, I've always heard this fact or read these things, that like, the bottom 50% of the wage earners pay 5% of the taxes, the top 5%, do you know where all those brackets are and how all those things fit together?

369
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Money is you know the John Dillinger system why do you rob banks so that's

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what the money is why do we zero in on the rents that's where the money is so

371
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yes

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Yeah, we can disagree with the Romans and the early Greeks in that sense, that any tax that's too high can be terribly oppressive.

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And it was always considered that the worst tax in the world was a poll tax.

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That was on every individual mail.

375
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Now, I lived in a country where we had a poll tax.

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Man, it was peanuts. I loved it.

377
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You know, that's for me.

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If the rates are low enough, any tax will be tolerated.

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And any tax will not require abusive, totalitarian methods

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because tax evasion isn't worth the trouble.

381
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If the rates are reasonable. Yes?

382
00:36:53.660 --> 00:37:03.660
When you were talking about the 16th Amendment, did you say there was a claim that it was ratified, that it was basically wrong, or that they were pursuing something that would eventually be true?

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You made a comment about schooling. It doesn't teach it anymore. It teaches taxes are banned. Quite contrary. As a matter of fact, in the Florida Sunshine Standards, the teaching standards, they say that you've got to teach, that it's a duty of each citizen to do so.

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They're teaching it not the way they should have taught it, if they want to teach it the way the history of the American people and the founders, they would say, well our founders hated taxes, they were rebellious over taxes, they thought taxes were a horrible thing, and that's what created the country, they won't tell you that, no, they'll tell you the first duty of a citizen is to pay his taxes, well tell that to the American people in 1776, and it was only a little tea.

385
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On that point, there's an expression that people would say for civic pride. As an American taxpayer, you know, I demand so and so and so and so. And one of the things we call that, I think, is that the Roman Republicans agreed to identify themselves as taxpayers.

386
00:38:38.660 --> 00:39:07.660
I was just wondering if you could clarify, so the Constitution doesn't say that you can't have a direct income tax, it says something about apportionment tax, what does that mean?

387
00:39:07.660 --> 00:39:20.660
Well, apportionment was also the principle for the House of Representatives on how you were represented because the slaves were only counted as three-fourths of a person or two-thirds of a person, remember.

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Apportionment simply meant that you took the population of the country and of the states and you took the tax bill and you divided it up by population and you sent it to them to collect it.

389
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That was what the principle was. It was the state would go forward, the state didn't have to, the federal government could have done it, but again it was a portion by population.

390
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That was the basis upon which the dollars were collected and the inequity...

391
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Not according to your income?

392
00:39:49.660 --> 00:39:55.660
No, it was based on that, yes, you'll see it wasn't on the income. So it was based on the people.

393
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So one state that has twice as many people as another state pays twice as much tax and that's what the Constitution said.

394
00:40:01.660 --> 00:40:10.960
The point is that the founders and the drafters are just very much concerned about direct

395
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taxes.

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They had read Montesquieu, and Montesquieu was the great sage of the Enlightenment that

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inspired the Constitution.

398
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And Montesquieu said that direct taxation leads to slavery.

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This exact quote.

400
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And indirect taxation is more compatible with liberty.

401
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And they all read Montesquieu and they all believed in him.

402
00:40:33.240 --> 00:40:38.400
And when they went to Philadelphia, you know, they went there to give the Congress the taxing

403
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power to amend the Articles of Confederation.

404
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And so when it came to taxes, they had some tremendous debates.

405
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And the one thing that was there is the taxes had to be uniform and equal.

406
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And then it went to the Committee on Style, and for some dumb reason eventually came out

407
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not just uniform, but the principle of uniform and equality was fundamental to a just tax.

408
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And so when you have a progressive rate of tax, you violate the principle of uniformity

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and equality. And the Supreme Court justices had saw that. In a case that came out right

410
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And after the Spanish-American War, we adopted an inheritance tax, and it varied, graduated.

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And one of the Supreme Court justices, David Brewer, he wrote the opinion saying, this

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can't be, a tax deliberately and intentionally made unequal?

413
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Under the Constitution, there must be uniform and equal, the same rate for the same object

414
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of tax, period.

415
00:41:50.400 --> 00:42:05.400
Period. So if you've got a guy getting $1,000 worth of interest on his bank account, and another guy getting $100,000 of interest on his bank account, the rate has to be the same for taxing the same object, and that's the fundamental principle.

416
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And that came up before the Supreme Court in 1916, after the income tax was adopted, and the Supreme Court one-liner.

417
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And Yale Law Review, Yale Law Journal wrote, and many of the great scholars couldn't believe it.

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They thought that the tax has to be the same rate for everything. That's what uniformity means.

419
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Look up the damn thing in the dictionary, it means the same.

420
00:42:33.440 --> 00:42:36.800
He goes to the question of what's happened to the Constitution.

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One of the great checks in the Constitution was the check on military expenditures.

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The Constitution says that tax money can be spent for the common defense.

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And even Alexander Hamilton, a Federalist, pointed this out.

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And he said, we are tying up the hands of government, preventing them from engaging

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in offensive wars, bounded upon reasons of state, because wars are expensive and they're

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and they're a burden to society and we don't want the government out on military adventures.

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00:43:17.080 --> 00:43:21.960
That's in the federal. That's what that says. You can only use tax monies for the common

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defense of the states. Hell, we go on aggressive wars every day. But the point is we have no

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checks on it. But when you understand the genius of the men that drafted the constitution,

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00:43:35.460 --> 00:43:40.680
you can see their wisdom. They wanted to keep us out of wars and they were going to do it

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00:43:40.680 --> 00:43:45.180
by preventing the use of tax money for military unless you're attacked.

432
00:43:45.180 --> 00:43:48.180
Pearl Harbor, you can go to war, you see.

433
00:43:48.180 --> 00:43:50.180
But anyway, yeah.

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00:43:50.180 --> 00:43:57.680
Has anybody, has any nation or country or civilization given back,

435
00:43:57.680 --> 00:44:03.180
given back the kind of tax money that we redistribute the way that

436
00:44:03.180 --> 00:44:06.680
we redistribute the taxes that we bring in,

437
00:44:06.680 --> 00:44:19.680
Well, the Greeks and the Romans gave it back. If a war was over and they had money left over, then they gave it back.

438
00:44:19.680 --> 00:44:22.680
In fact, Canadians just recently gave some money back.

439
00:44:22.680 --> 00:44:34.680
Reminds me of a wonderful story in my new book.

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00:44:34.680 --> 00:44:43.860
In my other book, I didn't discuss China, and I have a chapter now on the ancient Chinese

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00:44:43.860 --> 00:44:48.440
tax system, and there's a scholar in Japan that helped me write it, who's written it.

442
00:44:48.440 --> 00:44:49.440
And there was a...

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00:44:49.440 --> 00:44:58.100
After the emperor built the Great Wall, and at that time, under the mandate of heaven,

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00:44:58.100 --> 00:45:03.300
an emperor had to rule with the mandate of heaven, and the rates were 10%, which Confucius

445
00:45:03.300 --> 00:45:06.340
and Menchus had said was the ideal tax system.

446
00:45:06.340 --> 00:45:10.880
Well, in order to build a great wall, he jacked the rates up to 50 percent.

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00:45:10.880 --> 00:45:14.980
And he lost the mandate of heaven and he was deposed.

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00:45:14.980 --> 00:45:24.000
And then a good emperor comes after him, and the translation in Chinese is, governing by

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00:45:24.000 --> 00:45:27.020
doing nothing.

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00:45:27.020 --> 00:45:32.060
And he was one of the great emperors and he had so much tax, he reduced it to 3 percent.

451
00:45:32.060 --> 00:45:35.460
This big problem is spoilage.

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00:45:35.460 --> 00:45:41.060
And so if you read the Chinese sages over taxes, it might leave you with one little

453
00:45:41.060 --> 00:45:43.940
story from the Bible.

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00:45:43.940 --> 00:45:46.360
The Bible is filled with tax stories.

455
00:45:46.360 --> 00:45:51.420
It is one tax story after another from end to end, although we don't quite learn them

456
00:45:51.420 --> 00:45:52.420
now.

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00:45:52.420 --> 00:45:53.420
We should.

458
00:45:53.420 --> 00:45:58.060
But when the children of Israel came out, and when Joshua captured the promised land

459
00:45:58.060 --> 00:46:12.940
We read that for about 300 years they were ruled by judges.

460
00:46:12.940 --> 00:46:20.140
And the Bible says there were no kings in Israel, and every man did that which was right

461
00:46:20.140 --> 00:46:21.140
in his own eyes.

462
00:46:21.140 --> 00:46:22.140
Now, there's libertarianism.

463
00:46:22.140 --> 00:46:31.140
Is Libertarianism. I'm beautiful. Every man did that with his own... And that's similar to the Chinese emperor, who was known governing by doing nothing.

464
00:46:31.140 --> 00:46:39.140
We don't adhere to that, but at least those are two wonderful examples. And that was a very prosperous time in China.

465
00:46:39.140 --> 00:46:45.140
Very prosperous in that. Anyway, I think... I've got a couple of minutes. Yes?

466
00:46:45.140 --> 00:46:51.140
Are you presently engaged in the debate over flat versus failed or any of that?

467
00:46:51.140 --> 00:47:01.140
Well, I was. I mean, I got kind of sucked into it a little bit, and I was on C-SPAN talking about it.

468
00:47:01.140 --> 00:47:07.140
But the problem I have with a flat tax is, again, it's the amount of money you need.

469
00:47:07.140 --> 00:47:11.140
And you need so damn much money, any tax is bad.

470
00:47:11.140 --> 00:47:29.140
You just, like I say, I was a poll tax for peanuts, it was great, but a poll tax for $20,000 would be brutal, you see, a sales tax, which you pay 5% or 6%, that's not too bad, but if you had a 25% sales tax on top of your domestic sales taxes, you know what would happen?

471
00:47:29.140 --> 00:47:40.140
What's happened in Canada? Canadians were really very compliant taxpayers. Did you know that the Canadian government, for every dollar spent on tax enforcement,

472
00:47:40.140 --> 00:47:48.140
The government enforcement collected twice as much revenue as the Internal Revenue Service does, and they had higher taxes.

473
00:47:48.140 --> 00:47:57.140
It says a lot about the Canadian people until they introduced the goods and services tax on top of the income tax.

474
00:47:57.140 --> 00:48:01.140
And then there's a massive tax evasion out there.

475
00:48:01.140 --> 00:48:05.140
Nobody wants a check anymore, cash, cash.

476
00:48:05.140 --> 00:48:15.260
And one thing that happened which was so interesting is that the present progressive conservative

477
00:48:15.260 --> 00:48:23.660
party, and Mulroney was his name, I want to say Andy Mulroney, but Mulroney, when they

478
00:48:23.660 --> 00:48:30.180
went for the election, it was the worst defeat in the history of parliamentary government

479
00:48:30.180 --> 00:48:31.780
in the world.

480
00:48:31.780 --> 00:48:39.020
They had 300 seats in the House of Commons, and when the election was over, they had two.

481
00:48:39.020 --> 00:48:41.140
And they're dead.

482
00:48:41.140 --> 00:48:46.460
And the Liberal Party promised that they would get rid of the goods and services tax.

483
00:48:46.460 --> 00:48:49.440
You believe that, you believe in the good fairy.

484
00:48:49.440 --> 00:48:54.180
You believe the moon's a piece of green cheese.

485
00:48:54.180 --> 00:49:00.980
In fact, you know, it was too bad, but too bad only in the sense that it's like politics.

486
00:49:00.980 --> 00:49:07.980
You don't want to believe politicians, like, you know, that the era of big government is over. Remember that?

487
00:49:07.980 --> 00:49:13.980
You guys believe that? Nobody, but Clinton didn't believe it either, but anyway.

488
00:49:13.980 --> 00:49:15.980
Anyway, that's what I'd say about the national...

489
00:49:15.980 --> 00:49:27.980
So the only thing the national sales tax would do over the income tax is it would be a tax on sales transaction which would focus on the vendors.

490
00:49:27.980 --> 00:49:31.680
and the individual would not be involved in the tax system.

491
00:49:31.680 --> 00:49:34.180
So it would then become an indirect tax,

492
00:49:34.180 --> 00:49:38.780
which is what the Greeks thought was consistent with liberty and so did Montesquieu.

493
00:49:38.780 --> 00:49:40.880
So that's the other side.

494
00:49:40.880 --> 00:49:46.780
When the rates get that high, as the rates increase, evasion increases.

495
00:49:46.780 --> 00:49:49.580
And you might say this about the underground economy,

496
00:49:49.580 --> 00:49:53.580
which is very popular in America and everything else.

497
00:49:53.580 --> 00:49:57.180
Why is the underground economy growing?

498
00:49:57.180 --> 00:50:02.780
and Why is it Successful? I think three reasons. One is that people find the tax system is

499
00:50:02.780 --> 00:50:08.800
unfair, people think it's too complicated, and people think that the government spends

500
00:50:08.800 --> 00:50:17.800
its money on things that they disapprove of. And that is a recipe for evasion.