WEBVTT NOTE Tax Revolt in the Netherlands 1 00:00:00.000 --> 00:00:04.000 Well, good afternoon. 2 00:00:04.000 --> 00:00:06.000 We're going to talk about the Enlightenment. 3 00:00:06.000 --> 00:00:10.000 And I think that could well be the best chapter in the book. 4 00:00:10.000 --> 00:00:14.000 Probably worth the price of it. 5 00:00:14.000 --> 00:00:20.000 Tell me, what was the Enlightenment? 6 00:00:20.000 --> 00:00:26.000 Yes? That's good. 7 00:00:26.000 --> 00:00:28.000 Yeah, that's right. Yeah. 8 00:00:28.000 --> 00:00:46.000 When they kind of tried to sweep away all of the baloney about things and they tried to figure things out for themselves, it was followed the Renaissance, it was a wonderful period, and the American country was formed in that period, and so I think it's a great period. 9 00:00:46.000 --> 00:00:56.440 I might as well give it a charge here. 10 00:00:56.440 --> 00:01:04.320 I think that for purposes of taxa, the Enlightenment was a high watermark of man's thinking in 11 00:01:04.320 --> 00:01:06.360 terms of taxes. 12 00:01:06.360 --> 00:01:13.160 We seem to, when you read back at what these men wrote, you say, well, how could we have 13 00:01:13.160 --> 00:01:22.720 There were a number of principles that I put in the book and I have the title that the 14 00:01:22.720 --> 00:01:27.480 Enlightenment had the word on taxation, I seem to really know what it was. 15 00:01:27.480 --> 00:01:33.220 And we wonder why they were so wise and we're not. 16 00:01:33.220 --> 00:01:39.800 And I had suggested that the reason for that was because the tax philosophy of this time 17 00:01:39.800 --> 00:01:44.920 Time grew out of the terrible tax tragedies of the 17th and 16th century. 18 00:01:44.920 --> 00:01:51.480 I mean, England had its king beheaded, France was filled with murderous tax revolts of all 19 00:01:51.480 --> 00:01:58.760 sizes, Germany had the terrible peasant revolts where they almost depopulated the country. 20 00:01:58.760 --> 00:02:04.760 It was a time when if you looked around, Spain of course had been destroyed by six major 21 00:02:04.760 --> 00:02:20.760 Tax Revolts, you know, so if you ponder the wreckage, then it wasn't too hard for them to figure out what would be the best form of taxation that we could avoid all these terrible calamities that have fallen upon Western civilization. 22 00:02:20.760 --> 00:02:30.760 So I think they had a pretty good motivation to think, and if the Enlightenment, as you say, was a time for reason, for thinking, they had a lot of thinking to do. 23 00:02:30.760 --> 00:02:38.760 It wasn't going to solve the problem by looking back at some ancient sage of 2,000 years ago or some particular. 24 00:02:38.760 --> 00:02:42.760 They really had to think, and they did think. 25 00:02:42.760 --> 00:02:48.760 That thing impresses me so much that they came up with such terrific wisdom. 26 00:02:48.760 --> 00:03:00.760 and the one that, there were so many of them, you know, Jefferson himself would be a child of the Enlightenment, although we don't use him particularly in here. 27 00:03:00.760 --> 00:03:11.760 But the one first principle that I like was the principle that government is at best a necessary evil. 28 00:03:11.760 --> 00:03:16.760 How many of you have pondered on that problem? 29 00:03:16.760 --> 00:03:44.760 Well, the argument is, if you need government, how much government? And if you do need government, how much government do you need? And that's the debate that lasts right up until today, and we continue to talk about it. You need some sort of a coercive force to make sure that human beings are doing the right thing. 30 00:03:46.760 --> 00:03:50.760 If you need government, then where do you stop? 31 00:03:50.760 --> 00:03:53.760 Isn't that the next question? 32 00:03:53.760 --> 00:04:00.760 I mean, do you stop with a police power to protect you from common crimes and a few things like that? 33 00:04:00.760 --> 00:04:03.760 Or do you go a whole hog like the Soviet Union did? 34 00:04:03.760 --> 00:04:08.760 And you figure that the government owns everything, including your socks. 35 00:04:08.760 --> 00:04:10.760 I always like that expression. 36 00:04:10.760 --> 00:04:15.760 But it was certainly a society of slavery. 37 00:04:15.760 --> 00:04:26.640 And my father-in-law, who was a Russian, and I met him before he died, and he just said, 38 00:04:26.640 --> 00:04:28.640 We're nothing but slaves. 39 00:04:28.640 --> 00:04:30.720 You're referring to life in the Soviet Union. 40 00:04:30.720 --> 00:04:32.680 He died before the Soviet Union. 41 00:04:32.680 --> 00:04:33.680 And he was quite right. 42 00:04:33.680 --> 00:04:35.920 We're nothing but slaves here. 43 00:04:35.920 --> 00:04:44.880 And the interesting thing about him is that he made some derogatory remark about Stalin 44 00:04:44.880 --> 00:04:49.160 and then about communism and they picked him up in the middle of the night and he disappeared 45 00:04:49.160 --> 00:04:53.120 for two years and he probably never would have got out of it, it hadn't been for his 46 00:04:53.120 --> 00:04:58.140 brother who was a communist and in the party. 47 00:04:58.140 --> 00:05:05.440 And when I talked to him before he died, a couple of years ago, at that particular time 48 00:05:05.440 --> 00:05:10.760 if you went to the Soviet Union there was pictures of Lenin all over the place, they 49 00:05:10.760 --> 00:05:17.760 We see that in a lot of totalitarian regimes. Certainly Saddam Hussein was there, he was, and so forth. 50 00:05:17.760 --> 00:05:26.760 So I asked him, I said, what do you think of Lenin? Because there was kind of a feeling at times from my education that maybe he wasn't so bad. 51 00:05:26.760 --> 00:05:30.760 You know, maybe Lenin wasn't so bad. You know what his answer was? 52 00:05:30.760 --> 00:05:35.760 When I look at him it makes me want to vomit. That was his answer. 53 00:05:35.760 --> 00:05:53.760 And then he said something that is so wise and probably, I guess, would come as a great surprise to our sovietologist, or whatever we call those so-called experts in the State Department, in the Communist Party, and so forth. 54 00:05:53.760 --> 00:05:59.760 He said that communism will not last to the end of the century. 55 00:05:59.760 --> 00:06:05.760 I will not live to see it, but you will, mark my words. 56 00:06:05.760 --> 00:06:09.760 Now, nobody would have believed that. 57 00:06:09.760 --> 00:06:14.760 This would have been 1971 when I saw him last. 58 00:06:14.760 --> 00:06:16.760 Nobody would have believed that. 59 00:06:16.760 --> 00:06:18.760 Communism was going to last a thousand years. 60 00:06:18.760 --> 00:06:20.760 You know, Hitler's right. 61 00:06:20.760 --> 00:06:23.760 And it was a powerful state, you know. 62 00:06:23.760 --> 00:06:28.760 As you came in from the outside, I remember the first time I visited the Soviet Union, 63 00:06:28.760 --> 00:06:34.760 In the Soviet Union, I thought I was checking in San Quentin or something. I mean, boy, it was really sobering. 64 00:06:34.760 --> 00:06:37.760 And then when you left, you also thought you were... 65 00:06:37.760 --> 00:06:47.760 The interesting thing, the two times I was in the Soviet Union, when the plane took off from Moscow, everybody clapped. 66 00:06:47.760 --> 00:06:49.760 No, really, it was spontaneous. 67 00:06:49.760 --> 00:06:51.760 It didn't when I went out. 68 00:06:51.760 --> 00:06:52.760 Isn't that true? 69 00:06:52.760 --> 00:06:55.160 I asked him in the flight, and he says, 70 00:06:55.160 --> 00:06:57.160 Oh yeah, probably nine down at 10. 71 00:06:57.160 --> 00:06:59.860 And I said, no, there was nothing arranged. 72 00:06:59.860 --> 00:07:02.060 No, no, a lot of times you might clap 73 00:07:02.060 --> 00:07:04.060 because you make a bad landing or something. 74 00:07:04.060 --> 00:07:07.160 We all clap because it's a tremendous relief. 75 00:07:07.160 --> 00:07:08.860 When the plane took off, he said, 76 00:07:08.860 --> 00:07:10.460 Oh my God, we made it. 77 00:07:10.460 --> 00:07:12.160 You know, this was sort of your feeling. 78 00:07:12.160 --> 00:07:13.860 That's amazing, I've never talked about it. 79 00:07:13.860 --> 00:07:15.060 No, I did it twice. 80 00:07:15.060 --> 00:07:16.660 Both times it collapsed. 81 00:07:16.660 --> 00:07:19.460 And the funny thing about my poor wife, you know, 82 00:07:19.460 --> 00:07:26.040 She went to the Ottawa embassy and they said, 83 00:07:26.040 --> 00:07:30.300 We know all about you. You know, we have a file on you. 84 00:07:30.300 --> 00:07:34.700 Yeah, yeah. So when the plane flew, as you may not have noticed, 85 00:07:34.700 --> 00:07:39.540 but after you go a while, the plane makes a turn because of the corridors it has to fly over. 86 00:07:39.540 --> 00:07:43.940 And as soon as the plane turned, they were going back to take her. 87 00:07:43.940 --> 00:07:57.940 But he was okay. I asked about his experiences in prison, and having been sent there because of what he said, and he said, 88 00:07:57.940 --> 00:08:05.940 if I had to do it over, I'd do it over. I mean, he was a real anti-communist in a sense, but he was very successful, 89 00:08:05.940 --> 00:08:14.940 Well, he lived very high. He was an electrician. He traveled around in some of the big power units and was a very smart guy, but, boy, he said, don't... 90 00:08:14.940 --> 00:08:25.940 When I sent an article in on this many years ago, I guess to the American Scholar, because some guy had written an article, why didn't we know about the Soviet Union falling apart? 91 00:08:25.940 --> 00:08:33.940 And I wrote back and said, well, my father-in-law knew. He said it wouldn't last until the end of the century. Boy, he sure pegged that right, didn't he? 92 00:08:33.940 --> 00:08:38.940 Yeah, but he didn't have much use for Communism as a whole system. 93 00:08:38.940 --> 00:08:39.940 Yes? 94 00:08:39.940 --> 00:08:44.940 Question, on both those planes, was it mainly about Westerners? 95 00:08:44.940 --> 00:08:47.940 We were all Westerners. 96 00:08:47.940 --> 00:08:54.940 Yeah, yeah, mine was KLM and the other one, but it was all the same. 97 00:08:54.940 --> 00:08:56.940 You always clapped when the plane took off. 98 00:08:56.940 --> 00:09:12.940 Well, the funny thing is, my wife, being a Russian soul, when we first flew over from 99 00:09:12.940 --> 00:09:19.340 we got Aeroflot out of Montreal to Moscow, and she wanted to fly a Russian airline and 100 00:09:19.340 --> 00:09:23.660 got to talk about a piece of junk, you know. 101 00:09:23.660 --> 00:09:30.340 And then when night came and we needed a blanket or something and we asked for a blanket, the 102 00:09:30.340 --> 00:09:35.100 stewardess looked like, you know, she looked like Kate Robin University on the football 103 00:09:35.100 --> 00:09:36.100 team. 104 00:09:36.100 --> 00:09:38.780 And she was a real battle axe type, yeah. 105 00:09:38.780 --> 00:09:45.420 Anyway, she said, in the back, meaning we have to get up, go in the back and get it. 106 00:09:45.420 --> 00:09:51.020 And the coffee, I think the coffee is something that was held over from World War II. 107 00:09:51.020 --> 00:10:01.020 Jesus! Was it awful? And when we landed in Paris, the first thing we wanted was a good cup of coffee. Of course, the French have, you know, the greatest there is. 108 00:10:01.020 --> 00:10:17.020 But I think that the view of the Enlightenment, that government is a necessary evil, and when it's not a... at best, and at worst, it's an intolerable one. 109 00:10:17.020 --> 00:10:24.020 We have a bureaucratized society, and I think we just never realized that thing. 110 00:10:24.020 --> 00:10:29.020 And his point was, and this Thomas Paine, when government gets too big, 111 00:10:29.020 --> 00:10:34.020 when government gets big, excessive revenues are obtained. 112 00:10:34.020 --> 00:10:41.020 You go back to taxes here, and when that is done, the country is ruined, were expressions. 113 00:10:41.020 --> 00:10:45.020 And then he also says, I like Thomas Paine, he says that they say 114 00:10:45.020 --> 00:10:54.020 They say the government is some wonderful mysterious thing, and then he says when you say that, excessive revenues are obtained. 115 00:10:54.020 --> 00:11:10.020 So he was a great one for nailing things down. I think that, I'm just trying to think who was, maybe it was Franklin, who said without the pen of pain, Washington would have wielded his sword in vain. 116 00:11:10.020 --> 00:11:28.020 So, Paine was a great writer for the American Revolution, and he believed that America was a wonderful country because, he said, it's a land of low taxes, and it is a land of liberty because it's a land of low taxes. 117 00:11:28.020 --> 00:11:33.020 So we keep coming back to this from these great thinkers of the Enlightenment. 118 00:11:33.020 --> 00:11:46.020 He talked about revolution. He said revolution was necessary to bring in a government that is less expensive and more productive. We keep getting this less expensive stuff in here. 119 00:11:46.020 --> 00:12:02.020 And he said that government is just when taxes are few. So when you read this stuff and you look at our own society today, you say, boy, how come none of that ever rubbed off on anybody around here? 120 00:12:02.020 --> 00:12:04.700 That was certainly the philosophy of Paine. 121 00:12:04.700 --> 00:12:15.540 I like Paine too because he thought that he had such great hopes for America because we 122 00:12:15.540 --> 00:12:20.460 were a land of low taxes and it always boiled down to that because the moment the government 123 00:12:20.460 --> 00:12:25.300 got big, you had too much taxes, then we had too much taxes, then of course you had excessive 124 00:12:25.300 --> 00:12:28.500 revenues and you lost your freedoms and your liberty. 125 00:12:28.500 --> 00:12:32.980 Europe was certainly more of an example, you know, for them to look at. 126 00:12:32.980 --> 00:12:39.220 So that's the first principle, that those of you who have the book, it's on page 282. 127 00:12:39.220 --> 00:12:46.980 The second principle, which I have focused on, is the imaginary wants of the state. 128 00:12:46.980 --> 00:12:49.920 It's an interesting concept. 129 00:12:49.920 --> 00:12:55.160 And this is for Montesquieu in his wonderful book, The Spirit of the Laws, and he talks 130 00:12:55.160 --> 00:13:07.160 He talks about, he said, the revenues of the state are a portion of each subject gives of his property in order to secure the enjoyment of the remainder. 131 00:13:07.160 --> 00:13:15.160 Now that's always been a basic rule of why we have tax, so you give up some of your property in order to have the protection of the remainder. 132 00:13:15.160 --> 00:13:19.160 And that's old stuff, you know, in terms of tax philosophy. 133 00:13:19.160 --> 00:13:30.160 Then he says, to fix these revenues in a proper manner, regards should be had both to the necessities of the state and those of the subject. 134 00:13:30.160 --> 00:13:38.160 And then it says, the real wants of the people ought never to give way to the imaginary wants of the state. 135 00:13:38.160 --> 00:13:43.160 A little interesting idea. And then he talks about the imaginary wants of the state. 136 00:13:43.160 --> 00:13:53.160 The imaginary wants of the state are those that flow from the passions and from the weakness of the governors. 137 00:13:53.160 --> 00:14:01.160 Your men in Congress and your men in the state legislature are from the charms of an extraordinary project, 138 00:14:01.160 --> 00:14:12.160 from the distemper of vain glory, and from certain impotency of mind incapable of understanding a tax of fancy. 139 00:14:12.160 --> 00:14:22.640 Often it happens that the ministers of a restless disposition have imagined that the wants of 140 00:14:22.640 --> 00:14:29.280 the state are those of their own little ignoble souls. 141 00:14:29.280 --> 00:14:39.840 In my book I made an application of this and I made it to Vietnam. 142 00:14:39.840 --> 00:14:45.520 I saw in Vietnam a perfect example of what was said here, and it was such a great tragedy 143 00:14:45.520 --> 00:14:48.600 in our history, it would be worth thinking. 144 00:14:48.600 --> 00:14:58.080 I said, the charms of an extraordinary project, which was America's hegemony over Southeast 145 00:14:58.080 --> 00:15:01.080 Asia. 146 00:15:01.080 --> 00:15:07.740 The distemper of vainglory, what we might call manifest destiny over the Orient, attacks 147 00:15:07.740 --> 00:15:18.580 It's all here except the real wants of the people. 148 00:15:18.580 --> 00:15:21.980 I don't think the American people want to get involved in Vietnam. 149 00:15:21.980 --> 00:15:22.980 Yes? 150 00:15:22.980 --> 00:15:52.940 Maybe it's, you can tell me your take on this, different people's worldview, where they're coming from, but I have a leftist younger brother who always brings up the example of, well, in London at a certain time period, they were dying like flies from disease, well, the government put in a sewer system, of course they had to collect taxes to put in the sewer system, 151 00:15:52.980 --> 00:16:09.980 So that makes government a good force, and people like him would say, well, a private man would never have looked out after the general welfare. 152 00:16:09.980 --> 00:16:14.980 What kind of things would you throw back at somebody like that at that point? 153 00:16:14.980 --> 00:16:20.980 The state should only do that which the people cannot do for themselves. 154 00:16:20.980 --> 00:16:30.980 Some company would be very happy to build that sewer system and charge the householders for the use of it. 155 00:16:44.980 --> 00:16:59.980 One of the people that wrote in and said, as I mentioned her tax policy, well she should have charged more taxes, though they could pick up the garbage and not have the plague, so forth. 156 00:16:59.980 --> 00:17:05.980 Now there's a couple of things wrong with that. It wasn't the garbage that caused the plague. 157 00:17:05.980 --> 00:17:14.980 In the 19th century, the British made some studies and they noticed that the plague and the deaths of the plague were along the Thames. 158 00:17:14.980 --> 00:17:18.980 And as you got away from the Thames, the plague disappeared. 159 00:17:18.980 --> 00:17:23.980 And the reason was because they were throwing all of the human refuge into the river. 160 00:17:23.980 --> 00:17:27.980 And then people were drinking it and they would get these terrible diseases. 161 00:17:27.980 --> 00:17:29.980 So in that sense, it wasn't the garbage. 162 00:17:29.980 --> 00:17:35.980 The second thing wrong with that was that the city of London was richer than she was. 163 00:17:35.980 --> 00:17:40.980 And if anybody had picked up the garbage, the city of London should have picked up the garbage. 164 00:17:40.980 --> 00:17:45.980 It was their problem, not hers. She was the Queen of England, but she wasn't the ruler of London. 165 00:17:45.980 --> 00:17:50.980 But it just shows you how people would go after something, you know. 166 00:17:50.980 --> 00:17:56.980 But I think he answered the question right there. We do need government for all kinds of things. 167 00:17:56.980 --> 00:18:01.980 And the thing is we've learned that every time they do something that they tend to screw it up. 168 00:18:01.980 --> 00:18:04.980 They're not good at it. 169 00:18:04.980 --> 00:18:09.980 Well, the other side will make hay with things like, 170 00:18:09.980 --> 00:18:19.980 now the British rail system, they're giving people a tale about how the services decline terribly because of privatization. 171 00:18:19.980 --> 00:18:23.980 Would you say most of the time privatization works better than... 172 00:18:23.980 --> 00:18:25.980 Yeah, it usually does. 173 00:18:25.980 --> 00:18:36.980 I always point out the minor number of failures as a reason not to go ahead and continue more and more from what it seems like. 174 00:18:55.980 --> 00:19:19.980 I can't help but also say that the famous study which involved the contamination of the water in London because of cholera was a position by the name of John Snow. 175 00:19:19.980 --> 00:19:29.980 John Snow was totally independent of the government and I think the real irony is that his legacy is manifest in the John Snow Foundation, 176 00:19:29.980 --> 00:19:37.980 which is now very involved in combatting HIV AIDS in Africa and they have always been ruthless. 177 00:19:37.980 --> 00:19:41.980 They will not take a penny from any government for that very reason. 178 00:19:41.980 --> 00:19:44.980 Give that to your brother. 179 00:19:44.980 --> 00:19:52.980 Well, I think that you can think of so many examples of where the state does stuff and it turns out to be such a mess. 180 00:19:52.980 --> 00:20:05.980 At least we have, in America, been pretty good about keeping the government out of businesses, about airlines and things like that. 181 00:20:05.980 --> 00:20:08.980 We've done a pretty good job in that department. 182 00:20:08.980 --> 00:20:14.980 And a lot of countries, you know, the first thing you want is a national airline, you know, and then the second thing is you never want to fly it. 183 00:20:14.980 --> 00:20:16.980 Well, they've all failed. 184 00:20:16.980 --> 00:20:18.980 I know. I remember that. 185 00:20:18.980 --> 00:20:20.980 Oh, yeah. 186 00:20:20.980 --> 00:20:28.980 Even Air Canada, which was supposed to be the darling of Canada, is a big mess, and they're trying to sell it out to some guy from Hong Kong. 187 00:20:28.980 --> 00:20:30.980 You know, they can't make it work. 188 00:20:30.980 --> 00:20:36.980 I remember flying on, what is the airline that goes out of Columbia? 189 00:20:36.980 --> 00:20:49.300 Columbia, Venezuelan, not very, no, anyway we were lying there once and my wife looks 190 00:20:49.300 --> 00:20:53.740 out the window and the guy is hammering on the cowling with a hammer to try to get the 191 00:20:53.740 --> 00:21:00.220 cowling on, you know, of course she's afraid of flying, of course anyway it didn't fall 192 00:21:00.220 --> 00:21:29.720 The government has all these wild, unhealthy ideas that we get sucked into and I think Vietnam was probably one of the worst ones because of the terrible tragedy it was to the American people and to our country and our faith in ourselves and our young men. 193 00:21:29.720 --> 00:21:47.720 I lost some friends over there, they were killed, and even in the Korean War, I lost two of my high school buddies over there, they were killed there, and that was a senseless war, and in many ways it took. 194 00:21:47.720 --> 00:21:54.720 But anyway, so that's the imaginary wants of the state, and I think that makes good sense. 195 00:21:54.720 --> 00:22:07.720 The third point I make is the government should stay out of business, and that's what we've been touching upon, because every time they do, you know, you go to the Soviet Union, nothing worked. 196 00:22:07.720 --> 00:22:20.720 You know, the washing machines were a joke, and the cars were a joke, and the whole thing was a disaster. The Soviets couldn't make anything, and I went over there back in 70 and 71, 197 00:22:20.720 --> 00:22:27.400 In 1971, we went to this famous department store in Moscow, a big, huge thing, and you 198 00:22:27.400 --> 00:22:34.120 started seeing what they had to sell, you know, it was just awesome, terrible, I mean, 199 00:22:34.120 --> 00:22:40.840 they had very different colors, you know, today it would just be junk, even then nobody 200 00:22:40.840 --> 00:22:45.840 would have bought it, but it's the government getting involved in business, and the way 201 00:22:45.840 --> 00:23:03.340 Adam Smith explains why government should get out of business and it's a pretty good quotation because he says that the agents of the prince, he uses the prince being here, 202 00:23:03.340 --> 00:23:06.940 regard the wealth of the master as inexhaustible, 203 00:23:06.940 --> 00:23:09.140 are careless in what price they pay, 204 00:23:09.140 --> 00:23:11.100 are careless in what price they sell, 205 00:23:11.100 --> 00:23:13.620 and are careless in what expenses. 206 00:23:13.620 --> 00:23:18.620 And so when we see governments start to do stuff, 207 00:23:18.620 --> 00:23:19.740 they don't do it very well. 208 00:23:19.740 --> 00:23:24.220 I've often wondered about this latest thing at the airports 209 00:23:24.220 --> 00:23:26.380 where we turned it over to, you know, 210 00:23:26.380 --> 00:23:27.900 created a new government grant 211 00:23:27.900 --> 00:23:29.980 with the searches and stuff like that. 212 00:23:29.980 --> 00:23:31.900 I don't know what was wrong with the older ones. 213 00:23:31.900 --> 00:23:39.100 And I've been in Europe where they're pretty thorough, I thought. 214 00:23:39.100 --> 00:23:47.820 I remember once they had some Arab guy in Amsterdam, and they nailed him as he was getting 215 00:23:47.820 --> 00:23:52.940 on the plane, and he's yelling and screaming as they're hauling him down the hall, and 216 00:23:52.940 --> 00:23:54.380 he kept saying, kaput, kaput, kaput. 217 00:23:54.380 --> 00:24:00.460 I don't know what he was being accomplished by that, but they were pretty—the Swiss 218 00:24:00.460 --> 00:24:08.460 The U.S. was pretty sensitive to it. They did a very good job of protecting the safety of the airplanes. 219 00:24:08.460 --> 00:24:15.460 They had one blow up once, and the pilot radio, you can do nothing for us now, but they never do that again. 220 00:24:15.460 --> 00:24:28.460 In that sense, you're right. We have to have government do, but we don't want to have them do any more than they have to do. 221 00:24:28.460 --> 00:24:40.460 And look at the, well look at the Concorde, that was the British government and the French government, and they made this airplane that used jet fuel like it was water, you know. 222 00:24:40.460 --> 00:24:47.460 And America's Boeing and Douglas looked into it and they said, well it can't pay. 223 00:24:47.460 --> 00:24:54.460 And that was when oil was three bucks a barrel or whatever it was in those days, and they just figured that it couldn't pay. 224 00:25:24.460 --> 00:25:39.460 Canada is a wonderful example of where the government ought to stay out. Everything the Canadian government does is just stupid. It's just unbelievably stupid. 225 00:25:39.460 --> 00:25:52.460 They wanted to improve the quality of life out in the Maritimes, out in Nova Scotia, and so forth. So they said, well, we'll build a steel mill, and we'll have all these wonderful jobs. 226 00:25:52.460 --> 00:25:57.460 So they built a steel mill. You can go see it today. Just sitting there empty. 227 00:25:57.460 --> 00:26:04.460 It was not economical to produce steel there and distribute it. It's a very competitive world with steel. 228 00:26:04.460 --> 00:26:09.460 But that's just one example. They built an airplane called the Arrow. 229 00:26:09.460 --> 00:26:12.460 After the war, it was a jet fighter plane. 230 00:26:12.460 --> 00:26:16.460 And to this day, they moan and groan about the fact that it was a flop. 231 00:26:16.460 --> 00:26:23.460 The Federal Reserve, fiat money, fractional reserve banking, Human Action, Man Economy and State, The Theory of Money and Credit 232 00:26:46.460 --> 00:27:16.460 Choo-choo-choo as the train came in but nobody was in it. Finally they shut it down and again that's Canadian government doing things but the Canadians are kind of socialist people they don't have a great love for capitalism and they think the government should do everything we have a wonderful system of medicine the important thing is don't get sick and don't try to use it but it's all free you know really you'd be surprised at the thought 233 00:27:16.460 --> 00:27:46.460 The throwbacks we got up there, I remember years ago, I was in government medicine in the Cayman Islands, because that was government medicine, and I had a sore shoulder, and they kept sticking with cortisone, and finally one day when I was changing planes in Jamaica, I got the taxi to take me down to anybody, because I had this chronic pain in my shoulder, and I got a black doctor down there who was educated in the state, 234 00:27:46.460 --> 00:27:54.460 And he asked me if I'd change my habits at all, athletic habits, and I said, well, yeah, I haven't played golf. 235 00:27:54.460 --> 00:28:02.460 He says, that's your problem. It's your left shoulder. You swing the golf club. He says you just build up a lot of rust in there, to use a word. 236 00:28:02.460 --> 00:28:09.460 But he said, that's your problem. If you just exercise that shoulder, it'll go away. And he said, don't let anybody stick cortisone in it. 237 00:28:09.460 --> 00:28:39.460 and so there's a good example of a government medicine guy and I was going in there all the time and I was getting worse and worse and all I needed to do was move my shelter and I think you know I kind of give medicine a bad time but I think in Canada we have government medicine and I don't know I don't think I'd want to be too sick and go in to see those guys I think that the quality is really bad 238 00:28:39.460 --> 00:28:46.460 Well, there's one advantage to your medicine. It keeps the hospitals in Detroit and Mayo Clinic full, so they can't get the surgery in campus. 239 00:29:09.460 --> 00:29:39.460 That's right. In fact, I was on a plane once flying from Washington to, I guess it was Detroit, and then it went on, or maybe it was Erie, and then it went on, and I sat next to a doctor, and he was the doctor that was dealing with admitting children with these terrible heart problems, and that needed these terrible operations, and I say terrible, it was lifesaving operations, and he said 240 00:29:39.460 --> 00:29:46.700 The hardest thing he has to do is when Canadians come down with their children, with their 241 00:29:46.700 --> 00:29:52.700 little children and have these heart problems, and I have to tell them whether or not they 242 00:29:52.700 --> 00:30:01.500 should pay and do it now or wait for their turn up in Canada because they may wait too 243 00:30:01.500 --> 00:30:02.740 long. 244 00:30:02.740 --> 00:30:06.980 And he said, that's the hardest thing I have to do. 245 00:30:06.980 --> 00:30:11.980 Yes, it is because he had the way to turn up there in order to get an operation. 246 00:30:11.980 --> 00:30:16.980 So, and that's true with the medicine, but see, Britain has a little better system. 247 00:30:16.980 --> 00:30:22.980 They have a dual system. They have the public medical system and then they have the private. 248 00:30:22.980 --> 00:30:30.980 So you can go to one or the other. The problem with Canada is that they made it illegal for doctors to get out of the system. 249 00:30:30.980 --> 00:31:00.980 So, you're stuck with them. I could tell you someone in the medical profession, and one of them told me he had cancer and needed an operation, and another one said, yeah, you've got to have an operation, and so I was told that the best place to go was down in Buffalo, the Roswell Park, and the guy went down there and he said, no, he doesn't have cancer, he said, you just have an infection, he said, come back a couple of months and he'll be gone. And when I talked to the druggists, they knew, he says, you were lucky, they were going to put you under the 250 00:31:00.980 --> 00:31:20.980 There's a faction here that's going to be clamoring desperately over the next few months to switch to that very system. 251 00:31:20.980 --> 00:31:36.980 One thing that kind of killed it was when Thatcher sent her husband to Texas to get a heart operation. 252 00:31:36.980 --> 00:31:38.980 Say again? 253 00:31:38.980 --> 00:31:47.980 When Hillary was warning us to copy the English system, Thatcher sent her husband to Texas to get a heart operation. 254 00:31:47.980 --> 00:31:55.980 Oh, yeah. In fact, in Canada, a number of the big shots in the government that have had medical problems, where do they go? They go south. 255 00:31:55.980 --> 00:32:01.980 They go to the United States. That's where the best doctors are and the best... 256 00:32:01.980 --> 00:32:07.980 And also, I think there's a compassion that's totally missing in government medicine. 257 00:32:07.980 --> 00:32:16.980 And that's really interesting. When I had this problem, when I called up a specialist in America, he never knew me from anybody. 258 00:32:16.980 --> 00:32:26.980 And he only knew one of his patients, and he spent 15 minutes on the phone talking to me about what we might do, you know, if not what. 259 00:32:26.980 --> 00:32:31.980 I couldn't call up a Canadian specialist and talk to him on the phone. He wouldn't even think about it. 260 00:32:31.980 --> 00:32:41.980 The first thing is I couldn't even see him without getting a reference from a general doctor, so I hope you guys don't throw in the towel on your medical system. 261 00:32:41.980 --> 00:33:00.220 Adam Smith said, Princes, however, have frequently engaged in many mercantile projects and have 262 00:33:00.220 --> 00:33:04.620 been willing, like private persons, to mend their fortunes by becoming adventurers in 263 00:33:04.620 --> 00:33:07.380 the common branches of trade. 264 00:33:07.380 --> 00:33:12.480 They have scarce ever succeeded. 265 00:33:12.480 --> 00:33:16.340 The next point on the Enlightenment that I have here is that liberty carries the seeds 266 00:33:16.340 --> 00:33:20.580 of its own destruction. 267 00:33:20.580 --> 00:33:26.180 Why do you think that is so? 268 00:33:26.180 --> 00:33:28.180 You wouldn't think so, would you? 269 00:33:28.180 --> 00:33:32.140 Why would it carry the seeds of its own destruction? 270 00:33:32.140 --> 00:33:40.220 The Enlightenment people, they studied things, and they said that liberty produces excessive 271 00:33:40.220 --> 00:33:41.220 taxation. 272 00:33:41.220 --> 00:33:48.100 You're nice and free, you have low taxes, so let's have high taxes. 273 00:33:48.100 --> 00:33:54.940 And when you produce high taxes, then of course you end up, and they said, here's the way 274 00:33:54.940 --> 00:33:56.620 they put it. 275 00:33:56.620 --> 00:34:01.620 Abuse of Liberty, which is in Montesquieu, he said, 276 00:34:01.620 --> 00:34:07.620 Men living in a state of liberty tend to let their guard down and tolerate great taxes, 277 00:34:07.620 --> 00:34:12.620 but once granted, they discover that they cannot take a backward step. 278 00:34:12.620 --> 00:34:21.620 Isn't that what we've done? You know, on the income tax rates, we thought they were great, 279 00:34:21.620 --> 00:34:34.620 Liberty Produces Excessive Taxes and Excessive Taxes Lead to Slavery 280 00:34:51.620 --> 00:34:56.640 Do you see that he has given a proportion at least of your working life to someone else? 281 00:34:57.640 --> 00:34:59.640 Yeah, you are on the right track. 282 00:34:59.640 --> 00:35:03.640 He felt that we are talking here about, I think, tax slavery. 283 00:35:04.640 --> 00:35:10.640 And tax slavery is what you guys are struggling with when you find that you work for the government 284 00:35:10.640 --> 00:35:16.640 up until May of every year, and for the first four or five months you are a slave to the tax system. 285 00:35:16.640 --> 00:35:18.640 I think that is all he is talking about. 286 00:35:18.640 --> 00:35:36.640 Men living in a state of liberty full-heartedly grant their government the right to heavy taxes, and this in turn fosters evasion, and this in turn requires great punitive measures, and this is the consequences of these punitive measures that the country is wrong. 287 00:35:36.640 --> 00:35:48.640 See, here's what they're saying. They're saying, okay, you're living with a liberty, you have low taxes, things are great, so you grant the government the right to tax and you get the heavy taxes. Then you want to back off. 288 00:35:48.640 --> 00:35:56.640 And then that's when the government has to come in with the police powers to force the collection and force your obedience. 289 00:35:56.640 --> 00:36:11.640 Somewhere in my files at home, I have one sheet of paper, and it would say, I'm not sure if it was Roosevelt or one of his cabinet people or treasurer or something, 290 00:36:11.640 --> 00:36:31.760 Well, didn't McGovern propose that way back in the days of Nixon? McGovern, wasn't that 291 00:36:31.760 --> 00:36:37.880 one of his principles, 100% tax at a certain level? Yeah, it was. I'm pretty sure it was. 292 00:36:37.880 --> 00:36:44.880 I think it was at ninety, I don't know about when the government reached ninety at one time. 293 00:36:46.880 --> 00:36:56.880 It was 91 when I was in law school and then Kennedy brought it down to 70 and then it 294 00:36:56.880 --> 00:36:58.880 went down to 50 and then to 28. 295 00:36:58.880 --> 00:37:03.880 It was in the over 90 percent in the late 1930s. 296 00:37:03.880 --> 00:37:15.880 The reason I remember that is that it was in Pennsylvania, because at that time, I think the state of Pennsylvania had income tax of about 60%. 297 00:37:15.880 --> 00:37:26.880 And for the first time, they added an income tax to the state of Philadelphia. And when they tried to add that, it went to over 100% if you had to readjust. 298 00:37:26.880 --> 00:37:34.880 Yeah, so if they had to readjust some of it, it would not go above 100%. 299 00:37:34.880 --> 00:37:43.880 Actually, Sweden had 102% at one time, and not too long ago. 300 00:37:43.880 --> 00:37:52.880 Because they had, on top of the normal tax, then they had this tax which was like unemployment insurance, that kind of stuff. 301 00:37:52.880 --> 00:38:15.880 This wonderful Swedish writer who wrote these books for children, she wrote to the government in a public letter that this is ridiculous and that the Swedes are becoming alcoholics because they got so much stress over taxes that they're drinking themselves to death and a few things like that. 302 00:38:15.880 --> 00:38:38.880 What was the level of income to be taxed at 90% and up? Maybe not many people earn that much money anyway. 303 00:38:45.880 --> 00:38:48.940 and the Convert Ordinary Income to Capital Gains. 304 00:38:48.940 --> 00:39:00.940 Capital Gains had a maximum of 25 percent, so this became the gain and they started creating more and more capital gain structures within the economy 305 00:39:00.940 --> 00:39:06.940 so that you could make a lot of money, but you would have to switch in the capital gains, but you could do it in many ways. 306 00:39:06.940 --> 00:39:30.940 I get the most interesting one was L.B. Mayer, the metragolden mayor. He wanted to retire, and he wanted to get this huge lump sum, and he lobbied through Congress an amendment to the code that a retirement income distribution was capital gain. 307 00:39:30.940 --> 00:39:37.940 And, sure enough, then he got his thing, and then that particular law disappeared. 308 00:39:37.940 --> 00:39:43.940 But that's all I can tell you, is that the name of the game was to convert ordinary income into capital gain. 309 00:39:43.940 --> 00:39:47.940 That was kind of fun, actually. I thought you could do all kinds of interesting things. 310 00:39:47.940 --> 00:39:50.940 Very few people paint that name. 311 00:39:50.940 --> 00:39:57.940 Yeah, yeah. Well, just like Ronald Reagan, you know, he started playing golf, you know, and a lot of people did that. 312 00:39:57.940 --> 00:40:10.940 And in Canada, even recently, I have known, because our rates are so much higher than American rates, that a lot of physicians come August, September, they quit. 313 00:40:10.940 --> 00:40:11.940 They quit. 314 00:40:11.940 --> 00:40:16.940 They quit. They don't pay, and then next January they can start, maybe you know, because you're in the business. 315 00:40:16.940 --> 00:40:25.940 In fact, you know, they aren't, well, they could continue, but they can't pay anything through the provincial ceiling. 316 00:40:25.940 --> 00:40:28.940 So once you get that ceiling, you paid your employees on it. 317 00:40:28.940 --> 00:40:31.940 Yeah, so that's it. 318 00:40:31.940 --> 00:40:41.940 And that's the thing about it. One of the other principles is that heavy taxation is such an impediment to the economy and to the growth. 319 00:40:41.940 --> 00:40:45.940 It's just a sad situation. 320 00:40:45.940 --> 00:40:57.940 Direct Taxation or a Badge of Slavery and Indirect Taxes or a Badge of Liberty 321 00:41:15.940 --> 00:41:36.940 And the reason is, here's Montesquieu's words are, capitation as direct taxes on the individual is more natural to slavery, a duty on merchandise is more natural to liberty because it has no direct relationship to the person. 322 00:41:36.940 --> 00:41:44.940 In other words, if you tax a thing and not a person, then that's an indirect tax and they seem to think that was a good deal. 323 00:41:44.940 --> 00:41:52.740 The other thing that I thought was quite interesting among the three great minds that wrote on 324 00:41:52.740 --> 00:41:57.460 this subject is that tax evasion was not a criminal act. 325 00:41:57.460 --> 00:42:02.540 It kind of bothered them that they made a crime out of tax evasion. 326 00:42:02.540 --> 00:42:12.420 Montesquieu wrote about it, Adam Smith wrote about it, and Locke wrote about it. 327 00:42:12.420 --> 00:42:18.720 seems a little interesting because we really made tax evasion bad, you know, you made your 328 00:42:18.720 --> 00:42:24.340 taxes and you're a bad guy, you know, this is a real lot of, but with these great minds 329 00:42:24.340 --> 00:42:30.520 what they say is just a positive offense and they express it in rather strong words. 330 00:42:30.520 --> 00:42:38.980 He says, this is Blackstone, the great four volumes of English Liberty that everybody 331 00:42:38.980 --> 00:42:41.240 read in those days. 332 00:42:41.240 --> 00:42:47.200 He said, recourse must therefore be had to extraordinary punishments for tax evaders 333 00:42:47.200 --> 00:42:56.160 to prevent it and perhaps even capital ones, which destroy all proportion of punishment 334 00:42:56.160 --> 00:43:03.640 and puts murderers upon an equal footing with such as are only guilty of a positive offense. 335 00:43:03.640 --> 00:43:10.160 and yes it's kind of interesting because I've seen the evolution in the bar 336 00:43:10.160 --> 00:43:14.320 association if you're convicted detective agent and that's deemed to be 337 00:43:14.320 --> 00:43:20.160 a moral thing and you can be disbarred and all that kind of stuff but it wasn't 338 00:43:20.160 --> 00:43:23.920 that way years and years ago it's only been recently and I think the government 339 00:43:23.920 --> 00:43:43.920 In any socialist system, the ability to evade taxes is viewed as immoral, an enemy to the state, an enemy to the common good. 340 00:43:43.920 --> 00:44:04.920 And I just, one of the earliest things I can remember of the Soviet Union, a guy who was killed, was he was a manager, they were making these meat pies, and apparently they were taking a bit of the fat out and selling it on the side, and he was probably, and they killed him for it. 341 00:44:04.920 --> 00:44:10.920 So, I think the more socialism you get, the more you see this happening. 342 00:44:10.920 --> 00:44:21.920 I had another example, I guess, of liberty, but I think that attitude toward tax evasion now is quite different because it's becoming increasingly a control dependent. 343 00:44:34.920 --> 00:44:42.120 such as those inflicted for capital crimes. All proportion then of punishment ceases. 344 00:44:42.120 --> 00:44:47.520 People that cannot really be considered as bad men are punished as villains, 345 00:44:47.520 --> 00:44:53.400 which of all the things in the world is most contrary to the spirit of moderate government. 346 00:44:53.400 --> 00:45:06.400 But we do it. It's always fascinated me that we don't know, when we make laws, don't these guys know what these guys said? 347 00:45:06.400 --> 00:45:15.400 This is always wondering, how come they're so dumb? How come our taxpayers are unaware of what these great men wrote and said? 348 00:45:15.400 --> 00:45:17.400 And all three of them said that. 349 00:45:17.400 --> 00:45:46.400 And Adam Smith defines a tax evader, he said, In every respect is an excellent citizen, had it not been for the laws of the country that made that a crime which nature never meant to be. 350 00:45:46.400 --> 00:45:57.900 And then some of the analysis you can have is like Henry VIII, he manufactured over 200 felonies as regulatory matters, punishable by death. 351 00:45:57.900 --> 00:46:04.400 One was begging. He didn't like to see beggars around, so he made it a felony and you could go to the gallows for begging. 352 00:46:04.400 --> 00:46:12.400 It was part of that zeal on government to create crimes that nature never meant to be. 353 00:46:12.400 --> 00:46:23.340 The next point among the Enlightenment, and this is an interesting one. I had some trouble with this. In that trouble I had some fun with it. 354 00:46:23.340 --> 00:46:36.340 The liberty most dangerous enemy is arbitrary taxation. Now, what is arbitrary taxation? We read Hamilton wrote about it. 355 00:46:36.340 --> 00:46:47.340 And he mentions it as, as Hans-Leo Hamilton said, he's one of our better boys, he wrote this in 1782 in New York, 356 00:46:47.340 --> 00:46:56.340 wherever a discretionary power is lodged in any set of men over the property of their neighbors, they will abuse it. 357 00:46:56.340 --> 00:47:05.340 Their passions, prejudices, personalities, delights and dislikes will have the principal lead in measuring the ability of those to be taxed. 358 00:47:05.340 --> 00:47:11.180 be taxed. So we do that today. You know, the rich, you know, the filthy rich, you know, 359 00:47:11.180 --> 00:47:18.420 they should be taxed more than anybody else does. And arbitrary taxation seems to mean 360 00:47:18.420 --> 00:47:26.780 a lack of standards. It's arbitrary. And the tax making is in the hands of people who make 361 00:47:26.780 --> 00:47:30.620 it. They decide what it should be and who should be taxed and who shouldn't. And we 362 00:47:30.620 --> 00:47:37.220 We do that. Our tax code is full of all kinds of goodies for some people and abuses for others. 363 00:47:37.220 --> 00:47:47.020 Another principle, of course, at this period was taxation by consent, and the American Revolution was certainly founded on that. 364 00:47:47.020 --> 00:47:54.820 In the Declaration of Independence, they wrote that talking about King George, he taxed them without their consent. 365 00:47:54.820 --> 00:48:10.020 But consent had to be real and genuine, and that's another thing, going back into the Middle Ages, even the consent of the realm in Magna Carta was a real, honest, and goodness consent. 366 00:48:10.020 --> 00:48:23.460 It wasn't that you get together and you get outvoted, so I'm not quite sure just how that applies, but I know that one of the principles of arbitrary taxation, one is it lacks consent, 367 00:48:23.460 --> 00:48:31.460 And the other thing of arbitrary taxation is that taxes should be apportioned among the people by some definite standard. 368 00:48:31.460 --> 00:48:41.460 Because once you abandon the rule of apportionment, then there's no amount of injustice you can do. 369 00:48:41.460 --> 00:48:46.460 Because if you don't have a definite standard, which government has to follow. 370 00:48:46.460 --> 00:48:57.460 Is that what you were saying about courts have lost the notion of even handing this uniform across? 371 00:48:57.460 --> 00:49:03.460 Yes, same thing. That's really what these guys are talking about. 372 00:49:03.460 --> 00:49:19.460 One is when the tax agents can agree to bring down, for example, if you remember Muhammad Ali owned $2 million or something like that, and they let him offer a couple thousand. 373 00:49:19.460 --> 00:49:22.460 Muhammad Ali? The fighter? 374 00:49:22.460 --> 00:49:23.460 Yes. 375 00:49:23.460 --> 00:49:24.460 The tax matter? 376 00:49:24.460 --> 00:49:34.300 Yes, that was a tax matter and they arbitrarily reduced that to two thousand five hundred I believe. 377 00:49:34.300 --> 00:49:35.880 Yeah, you remember that. 378 00:49:35.880 --> 00:49:36.880 That's interesting. 379 00:49:36.880 --> 00:49:42.160 You remember Joe Lewis had nothing to do with tax problems too. 380 00:49:42.160 --> 00:49:46.960 I don't think it was a war back but I was, yeah but he, I don't think he got off so 381 00:49:46.960 --> 00:49:54.420 good but he had tax problems and I don't know the answer to all these things and they 382 00:49:54.420 --> 00:50:08.420 I know that there's some people or some firms that advertise they can solve your tax problems by, you know, they have the wherewithal to do it, and I'm not sure how they do it, and I'm not even sure that they do do it. 383 00:50:08.420 --> 00:50:21.420 But one of the writers of this period was, he was one of the early scholars at the University of Michigan Law School, his name was Cooley, and he wrote a wonderful book on constitutional law. 384 00:50:21.420 --> 00:50:24.520 And he says, and here's the way he designs this problem, he says, 385 00:50:24.520 --> 00:50:31.400 Taxes are distinguished from arbitrary levies in that they are laid according to some rule 386 00:50:31.400 --> 00:50:35.740 which apportioned the burden between the subjects thereof. 387 00:50:35.740 --> 00:50:42.140 An exaction which is made without regard to any rule of apportionment is therefore not 388 00:50:42.140 --> 00:50:44.900 a tax. 389 00:50:44.900 --> 00:50:48.780 So it's a form of stealing, you know, it's a form of stealing. 390 00:50:48.780 --> 00:50:56.780 This is kind of on the side, but you may have, in your practice, this would be of interest. 391 00:50:56.780 --> 00:51:02.780 On one of the news magazines on TV, it was about the case of this millionaire. 392 00:51:02.780 --> 00:51:15.780 He made a dot-com, several million, and he was encouraged by either his attorneys or like Merrill Lynch, let's say, 393 00:51:15.780 --> 00:51:33.780 They were selling these tax shelters where they'd go to Europe and the guy would put up $100 million and he would buy the sewer system and the city would lease it back from him. 394 00:51:33.780 --> 00:51:40.780 Well, it turned out to be bogus, and now he was suing his tax people. 395 00:51:40.780 --> 00:51:53.780 and the people that conceived it, and what's your comment on, of course, you have to come up with these schemes because of the stupid system that's in place. 396 00:52:40.780 --> 00:52:48.340 I had one of my clients call me up and he told me he was going to get in this scheme 397 00:52:48.340 --> 00:52:52.580 and he had to put up this and that and as it came into the company there was all this 398 00:52:52.580 --> 00:52:59.460 rigmarole and he asked me what I thought and I told him no, don't do it and I checked 399 00:52:59.460 --> 00:53:05.420 with some lawyers about it, besides myself, went back to him and told him no, don't do 400 00:53:05.420 --> 00:53:06.420 it. 401 00:53:06.420 --> 00:53:11.220 I didn't hear from him, and then about six, eight months later, he said that confession 402 00:53:11.220 --> 00:53:14.060 is good for the soul. 403 00:53:14.060 --> 00:53:19.900 He says, I went against your advice and I did it. 404 00:53:19.900 --> 00:53:26.700 And now the IRS is on my ass, is his answer. 405 00:53:26.700 --> 00:53:33.500 The thing was so silly, I mean the structure, it had a technical logic to it, but the result 406 00:53:33.500 --> 00:53:47.500 It lacked no economic substance and one of the simple rules for these tax shelter deals and has been on the books, you know, a law for a long time, is that it must have an economic substance to it. 407 00:53:47.500 --> 00:53:54.500 It must have a chance to make you some money or, you know, it has to have that and of course this didn't have any economic substance to it. 408 00:53:54.500 --> 00:53:59.500 But surely they had some other opinions. 409 00:53:59.500 --> 00:54:28.500 Don't forget that every one of those partnerships was approved by SCC in advance. 410 00:54:28.500 --> 00:54:38.500 So that still has a good argument that they were legal because he took the plans to the SEC. 411 00:55:28.500 --> 00:55:34.500 and what they usually do, in this case of my client, they wanted a million bucks up front 412 00:55:34.500 --> 00:55:42.500 and he gave them a billion bucks. So after we got rid of the IRS, now he wants his million bucks back. 413 00:55:42.500 --> 00:55:48.500 It was Arthur Anderson, you're right, that's who was behind it. Apparently they must have been really manufacturing these things. 414 00:55:48.500 --> 00:56:18.260 One of the principles of taxation that Adam Smith came up with 415 00:56:18.260 --> 00:56:27.580 in his book on the Wealth of Nations and he talked about what would be a just tax or a 416 00:56:27.580 --> 00:56:37.620 proper form of tax and he says that the tax is like a great estate where the country is 417 00:56:37.620 --> 00:56:45.380 and you are a person that owns a little piece of it, a third, a fourth, a fifth, a common 418 00:56:45.380 --> 00:56:49.180 Ownership among many, many people. Now he's saying the great wealth of the 419 00:56:49.180 --> 00:56:53.240 nation is something that everybody owns a little piece of, and the tax would be 420 00:56:53.240 --> 00:56:59.260 your little proportionate piece, the same as everybody else. So if you own a 421 00:56:59.260 --> 00:57:03.300 thousandth, then you figure out what's the cost of the government, then your bill 422 00:57:03.300 --> 00:57:06.580 would be a thousandth, and if you're a big one, then it would be a larger chunk, 423 00:57:06.580 --> 00:57:11.600 and he thought, Adam Smith said, that this is equality in taxation. Good 424 00:57:11.600 --> 00:57:28.520 The expense of government to the individuals of a great nation is like the expense of management 425 00:57:28.520 --> 00:57:34.240 of a joint tenet of a great estate, and then you simply divide up the expenses. 426 00:57:34.240 --> 00:57:52.240 Adam Smith came up with the four signs of a bad tax system. 427 00:57:52.240 --> 00:57:56.240 You'll find this in his Wealth of Nations. 428 00:57:56.240 --> 00:58:02.240 The first tax is bad that requires a large bureaucracy to administer. 429 00:58:02.240 --> 00:58:07.240 You know how much the bill is for the IRS? It's billions, you know. 430 00:58:07.240 --> 00:58:13.240 A tax is bad, number two, which obstructs the industry of the people. 431 00:58:13.240 --> 00:58:18.240 In other words, it discourages your enterprise and so forth. 432 00:58:18.240 --> 00:58:23.240 Three, a tax is bad that encourages evasion. 433 00:58:23.240 --> 00:58:28.240 Once again, we're going back to tax evasion. 434 00:58:28.240 --> 00:58:35.840 Evasion is bad, said Smith, because it tends to put an end to the benefits that you can do in society. 435 00:58:35.840 --> 00:58:42.240 So if you're engaged in tax evasion of some sort, then you're no longer a productive citizen. 436 00:58:42.240 --> 00:58:53.440 And a tax is bad, and it's the best one of all, fourth, that puts people through odious examinations of the tax gatherer, the audit, you know, 437 00:58:53.440 --> 00:58:58.840 which, you know, every word trembles at the IR, at the audit, at the tax side. 438 00:58:58.840 --> 00:59:02.040 So those are the four principles of a bad tax system. 439 00:59:02.040 --> 00:59:03.140 I'll go over them again. 440 00:59:03.140 --> 00:59:05.140 A large bureaucracy. 441 00:59:05.140 --> 00:59:10.740 It obstructs, discourages your enterprise. 442 00:59:10.740 --> 00:59:13.140 It encourages evasion. 443 00:59:13.140 --> 00:59:15.040 Temptation is there. 444 00:59:15.040 --> 00:59:19.840 And finally, it puts you through odious examinations of the tax gatherer. 445 00:59:19.840 --> 00:59:27.340 And if you measure our system up against that, it looks like we qualify on all four points. 446 00:59:27.340 --> 00:59:32.940 Then there was another fellow that during this time, Lord Cames, and I was able to dig up his little book. 447 00:59:32.940 --> 00:59:38.640 And he wrote a book, The Principles of Moral and Political Philosophy. 448 00:59:38.640 --> 00:59:42.740 And in it he lists six things about taxation. 449 00:59:42.740 --> 00:59:44.540 These are the rules. 450 00:59:44.540 --> 00:59:57.340 1. When the opportunity for evasion exists, taxes must be moderate. It is unjust for the legislature to tempt and then punish for yielding to the temptation. 451 00:59:57.340 --> 01:00:08.840 So if you're in a 90% tax bracket, there's a lot of temptation, you know, to beat that in one way or another. And if it's illegal, you do it illegally. 452 01:00:08.840 --> 01:00:16.840 Taxes are bad that are expensive to levy, and it costs a lot of money to levy the taxes. 453 01:00:16.840 --> 01:00:20.900 Arbitrary taxes are disgustful to all. 454 01:00:20.900 --> 01:00:25.680 The amount paid is determined by the vague and conjectured opinions of others. 455 01:00:25.680 --> 01:00:29.120 Again, we come back to the term arbitrary. 456 01:00:29.120 --> 01:00:35.240 And to remedy the injustice of riches, the poor should be relieved of taxation. 457 01:00:35.240 --> 01:00:38.340 There's nothing wrong with that. 458 01:00:38.340 --> 01:00:43.960 And then he says, taxes which sap the strength of the nation should be avoided. 459 01:00:43.960 --> 01:00:50.800 Such taxes contradict the very nature of government, which is to protect, not oppress. 460 01:00:50.800 --> 01:00:55.980 And then, taxes are bad, which require an oath not to be avoided. 461 01:00:55.980 --> 01:01:01.140 I remember I mentioned Queen Elizabeth, you know, a good Queen Bess, she got rid of the 462 01:01:01.140 --> 01:01:07.940 oath and yet we had a Supreme Court case, I think it was the United States v. Boyd back 463 01:01:07.940 --> 01:01:33.540 in the, I think, 1870 or 80 or something and it talked about ordering a person to, it was a custom, you know, a duty to fill out a form on their importation and then force them to make an oath that this was true, because we do it all the time now. 464 01:01:33.540 --> 01:01:41.180 But his point was that requiring oaths for taxes is a very corrupting thing. 465 01:01:41.180 --> 01:01:48.780 An oath is a very sacred thing, and people who take an oath should take it very serious, 466 01:01:48.780 --> 01:01:53.620 because you're swearing to God, and the theory was that if you violate the oath, God will 467 01:01:53.620 --> 01:01:54.620 punish you. 468 01:01:54.620 --> 01:01:58.540 That was the theory when you took an oath. 469 01:01:58.540 --> 01:02:03.180 So the point that they make here is that it's very corrupting the society to start using 470 01:02:03.180 --> 01:02:08.140 alts for collection of taxes, because we got it every time you turn it around under penalty 471 01:02:08.140 --> 01:02:12.020 of perjury, you see them all the time. 472 01:02:12.020 --> 01:02:16.300 So these are what the Enlightenment stood for. 473 01:02:16.300 --> 01:02:28.500 I think that since then we've had some interesting concepts that come in, like social justice, 474 01:02:28.500 --> 01:02:34.900 Another one, which I love of course, is the communist states like Red China called the 475 01:02:34.900 --> 01:02:39.820 Democratic Republic. 476 01:02:39.820 --> 01:02:44.380 All these communist countries use the word Democratic Republic and hell, they don't even 477 01:02:44.380 --> 01:02:49.020 know what the word democracy means and yet they put it in their titles and the same thing 478 01:02:49.020 --> 01:02:52.020 is true with us. 479 01:02:52.020 --> 01:02:54.020 We at least don't do that. 480 01:02:54.020 --> 01:03:13.020 Do you know if the early tax forms, 1933, whatever year they had to file, do you know if they included them out back in the early days of our tax system? 481 01:03:24.020 --> 01:03:53.920 President Roosevelt hated some of the blue bloods in the East, maybe you know the story of them, and he hated them, and so he was one who was somewhat the author of some of these brutal attacks against the rich, and he went after Andrew Mellon, who had been the Secretary of the Treasury during the 20s, and charged him with tax evasion, and they just went after him. 482 01:03:53.920 --> 01:03:54.920 and the FDR. 483 01:03:54.920 --> 01:03:57.920 Yeah, this is the FDR. 484 01:03:57.920 --> 01:04:01.040 He didn't mind punishing his enemies. 485 01:04:01.040 --> 01:04:04.480 That's something that politicians like to do. 486 01:04:04.480 --> 01:04:08.160 Well, John F. Kennedy, you know, he went after those people. 487 01:04:08.160 --> 01:04:16.240 He had the IRS go after people who complained about his being a Catholic. 488 01:04:16.240 --> 01:04:21.720 Many of those who were the Protestants who didn't like the idea of the President of 489 01:04:21.720 --> 01:04:23.440 the United States being a Catholic. 490 01:04:23.440 --> 01:04:41.440 I read that every president since Hoover, and maybe even including Hoover, was known to have used the IRP to punch him. 491 01:04:41.440 --> 01:04:44.440 Yeah, I think that was... 492 01:04:44.440 --> 01:04:49.440 He played the current president before he was elected president. 493 01:04:49.440 --> 01:04:51.440 Sure enough, he could have seemed... 494 01:04:51.440 --> 01:04:52.440 Who knows? 495 01:04:52.440 --> 01:04:54.440 See, those things never... 496 01:04:54.440 --> 01:04:58.440 They do those things now real subtle, even on the QT. 497 01:04:58.440 --> 01:05:02.440 You know, it isn't done in the old days. 498 01:05:02.440 --> 01:05:09.440 I remember... was it Ehrlichman who called in the IRS commissioner, and she says, 499 01:05:09.440 --> 01:05:38.440 I think Clinton, he had more or less a continuous investigation audit of the NRA, something in excess of a million dollars a year. 500 01:05:38.440 --> 01:05:41.440 Yeah, they use it, and it's too bad. 501 01:05:41.440 --> 01:05:47.440 The problem, we have a lot of problems that they can get away with these things. 502 01:05:47.440 --> 01:05:53.200 And if you go back in the history, one of the principles of Roman law that I liked was 503 01:05:53.200 --> 01:06:03.240 the Romans took the position that if you lied in a criminal prosecution, that you would 504 01:06:03.240 --> 01:06:09.440 be punished with the same punishment that the defendant would have gotten. 505 01:06:09.440 --> 01:06:13.880 So if it was a capital case, you get a death penalty. 506 01:06:13.880 --> 01:06:20.760 And today, one of our biggest problems is lying, and particularly by police. 507 01:06:20.760 --> 01:06:25.240 It's really a tragedy because when I was a real young attorney, I was a public defender 508 01:06:25.240 --> 01:06:30.520 and I had a chance to see, and I was really shocked that cops would lie the way they did. 509 01:06:30.520 --> 01:06:34.520 You wouldn't see Roman wouldn't be doing that because they really went after them. 510 01:06:34.520 --> 01:06:39.520 And sometimes if we would look back in ancient law, we'd learn some pretty good principles. 511 01:06:39.520 --> 01:06:44.520 You want to say something or are you just scratching? 512 01:06:44.520 --> 01:06:52.520 Well, I cover the Enlightenment. I think it's a wonderful lesson of thinking. 513 01:06:52.520 --> 01:07:16.520 I don't know whether I've read it or whether I've formulated this idea on my own, but from that period of time it seemed like around the world there were different forms of government that took shape, like the American experience you said, and the forms of government in France and England and Austria and Russia and all these other places. 514 01:07:16.520 --> 01:07:27.520 Was there an outgrowth of the Enlightenment? Was it purposely set up by these people at that time to try these different experiments in government? 515 01:07:27.520 --> 01:07:31.520 It almost appears to me that there was, somehow, somebody that set up that. 516 01:07:31.520 --> 01:07:40.520 Well, the big leader was America. You know, this was the leader of government and society was the United States. 517 01:07:40.520 --> 01:08:10.520 The United States and the rest of Europe just looked upon them with great amazement and great admiration and one of the writers around 18th century said that the United States was this beacon to the world in terms of government and in which government was cheap, they used the word cheap, believe it or not, taxes were low and people came from Europe 518 01:08:10.520 --> 01:08:16.520 But were there other experiments going around and going on in other countries? 519 01:08:40.520 --> 01:08:46.520 and said, can it be right in the eyes of God or man? 520 01:08:46.520 --> 01:08:56.920 I'm talking about Lincoln's attempt to save the Union to have caused so much evil for such a silly end. 521 01:08:56.920 --> 01:09:00.020 They didn't use the word silly, but it's not so important an end. 522 01:09:00.020 --> 01:09:08.020 I mean, can you justify all the slaughter on the battlefields of America over just preserving a Union? 523 01:09:08.020 --> 01:09:11.620 Does it justify that kind of carnage? 524 01:09:11.620 --> 01:09:14.820 And we didn't seem to, I don't know, we had some, 525 01:09:14.820 --> 01:09:17.860 not some good thinkers there, but I think that 526 01:09:17.860 --> 01:09:21.700 we were the light of the world for a while, and 527 01:09:21.700 --> 01:09:25.180 I guess most of us, or many of us, we had immigrants that came here, 528 01:09:25.180 --> 01:09:28.580 my ancestors came here after the Civil War 529 01:09:28.580 --> 01:09:31.860 because of the opportunities that were here. 530 01:09:31.860 --> 01:09:36.060 My grandfather, Adams, for example, when he was 11 years old, 531 01:10:06.060 --> 01:10:20.060 and he did well and in England what would have been this in the working in this dumb factory all his life so it was a land of opportunity despite all our political idiocies that we have had. 532 01:10:20.060 --> 01:10:21.060 Yes? 533 01:10:50.060 --> 01:10:57.060 are going to control our taxation too, but do you have any comments on that? 534 01:11:20.060 --> 01:11:26.060 So what you have with a world economy, you've got to be competitive. 535 01:11:26.060 --> 01:11:30.060 That's all I can tell you. That's reality. 536 01:11:30.060 --> 01:11:35.060 And enemies are putting up trade barriers, and then you really make a mess out of it. 537 01:11:35.060 --> 01:11:39.060 So the free trade is an important thing. 538 01:11:39.060 --> 01:11:43.060 Although Lincoln didn't believe in it. 539 01:11:43.060 --> 01:11:46.060 But the British did, and the British did at the time of the Civil War. 540 01:11:46.060 --> 01:11:52.660 One of the great worries that was mentioned up in the North is that the South was going 541 01:11:52.660 --> 01:11:59.500 to make a deal with Britain and create a free trade zone between the Britain and the South, 542 01:11:59.500 --> 01:12:03.980 so that the South could send off its cotton and tobacco and its products to England and 543 01:12:03.980 --> 01:12:07.900 England could bring in all its manufacturing goods and take care of the needs of the South 544 01:12:07.900 --> 01:12:08.900 and not pay a dime. 545 01:12:08.900 --> 01:12:14.060 Well, that was just totally unacceptable to the Northerners and to Lincoln and all of 546 01:12:14.060 --> 01:12:17.060 Service, in one case, France. 547 01:12:17.060 --> 01:12:33.060 I'm sure they all had to be concerned about goods coming in at 10 percent and going up 548 01:12:33.060 --> 01:12:47.060 and going up rivers and so forth and rail and not being, because I'm sure it was hard to police once it was inside, I guess that was, did they have measures to try to prevent that? 549 01:13:03.060 --> 01:13:33.060 across the border, and that was one of the reasons that the impossibility of dealing with the South, one of the motives for striking the South down is because they had all this potential harm to the Northern economy, and of course they could also put trade barriers on the Mississippi and Ohio and Missouri rivers and so forth, now the South said they wouldn't do it, but you know, what they said doesn't mean that they would not do it, if they hadn't done it they probably would have done it, but yeah, those are all the economic factors 550 01:13:33.060 --> 01:13:37.060 I have written about in my Civil War book. 551 01:13:37.060 --> 01:13:40.060 I did buy it. 552 01:13:40.060 --> 01:13:41.060 Oh, you did? 553 01:13:41.060 --> 01:13:45.060 Well, I think you'll enjoy it. 554 01:13:45.060 --> 01:13:55.060 One of the interesting things in that book is the Lincoln signed an arrest warrant to arrest the Chief Justice of the United States. 555 01:13:55.060 --> 01:14:02.060 And that brought a lot of anger from the Northerners. 556 01:14:02.060 --> 01:14:30.060 and when they discovered that one of my references in there was not accurate, I mean a guy who was a very famous professor at Rice, one of the best civil war historians, he corroborates the arrest story, but he made a mistake, I got in touch with him, he said, well I'm 78 and I'm entitled to make a mistake, that's what he told me. 557 01:14:30.060 --> 01:14:48.060 The only problem is that then the only source we had to prove that was the private papers of Ward Hill Lyman who was the marshal, the federal marshal that he and Lincoln gave him the rest warrant. 558 01:14:48.060 --> 01:14:56.060 And he had been Lincoln's law partner, so he was a pretty responsible guy, although they started to say, well, he was a boozer. 559 01:14:56.060 --> 01:15:03.060 and he liked his booze and so therefore he made this up. 560 01:15:03.060 --> 01:15:07.860 And since he's the only one, boy they were just so happy to go after me on that. 561 01:15:07.860 --> 01:15:11.380 Well that means you've got to do some more research. 562 01:15:11.380 --> 01:15:14.260 So I did some more research. 563 01:15:14.260 --> 01:15:20.460 And I came across the memoirs of Justice Curtis. 564 01:15:20.460 --> 01:15:25.820 And Justice Curtis was a Supreme Court Justice who wrote the descending opinion in Dred Scott. 565 01:15:25.820 --> 01:15:29.940 And he got in such an argument with the Chief Justice that he quit the court. 566 01:15:29.940 --> 01:15:37.980 But in his memoirs, he talks about this great crime of the attempt and the plan to arrest 567 01:15:37.980 --> 01:15:40.640 the Chief Justice of the United States. 568 01:15:40.640 --> 01:15:44.120 And he says, even though it never happened, it set the pattern. 569 01:15:44.120 --> 01:15:52.780 And then I ran into the memoirs of the Mayor of Baltimore. 570 01:15:52.780 --> 01:15:59.460 And he mentions the same thing in his book, that there was this great crime, deciding 571 01:15:59.460 --> 01:16:04.700 this warrant to arrest the Chief Justice of the United States, which he said never happened, 572 01:16:04.700 --> 01:16:08.900 but he said they planned on it, so I nailed him in research. 573 01:16:08.900 --> 01:16:10.340 But you know, sometimes you have to research. 574 01:16:10.340 --> 01:16:14.340 I sent him copies that never answered and I said, and they had a great time with that. 575 01:16:14.340 --> 01:16:24.340 Did you, I've read about the Justice Curtis who corroborated the story of the, I forget the, the marshal story. 576 01:16:24.340 --> 01:16:26.340 Yeah, that was, you got it from me. 577 01:16:26.340 --> 01:16:29.340 Yeah, it was, wasn't it on, it was on Lew Rockwell? 578 01:16:29.340 --> 01:16:33.340 Yeah, yeah, yeah, that was where it was, yeah. 579 01:16:33.340 --> 01:16:36.340 Research is really great when you come up with something. 580 01:16:36.340 --> 01:16:40.340 And if you have a great library, you can run into those things. 581 01:16:40.340 --> 01:16:48.820 The head librarian at the Huntington Library in California, which is a great library for 582 01:16:48.820 --> 01:16:58.940 documents and old stuff, he was very much against the story of Marshall Lehmann, of 583 01:16:58.940 --> 01:17:04.540 the arrest, and he said, well, the guy was a drinker, which he wasn't, but I sent the 584 01:17:04.540 --> 01:17:34.340 One question that you mentioned this morning that I forgot to ask, when you were talking 585 01:17:34.340 --> 01:18:02.340 about the property taxes regarding houses. When I was in France, and I know the same thing is the case in England, the buildings in towns were up one story, and then the second story, they extend outwards. 586 01:18:02.340 --> 01:18:14.340 and I thought maybe it was just for architectural reasons, and they said, oh no, said the property taxes there was based on the footprint of the house and the square puts there. 587 01:18:14.340 --> 01:18:23.340 So what you did, you put a house on the main floor and then the next story, had you ever been able to confirm that or was it just that? 588 01:18:23.340 --> 01:18:25.340 Well, I wouldn't doubt it at all. 589 01:18:25.340 --> 01:18:37.340 There's a picture in your books, and it shows a typical house, you can see the street, and then by the second story it goes out again, as so many of them did. 590 01:18:55.340 --> 01:19:02.340 In New Orleans, the reason you had no closet is the closet was considered a second home and they just counted the number of homes and if you had a closet then they had a second home. 591 01:19:25.340 --> 01:19:32.340 The boardrooms, the piece of furniture there, they didn't get that. 592 01:19:55.340 --> 01:19:57.340 Thank you very much.