Notice
The Chapters below spell out The Lawlessness of Government as reported in 1950.
Today in 2017 the Cabal, Intrigue and Corruption is an order of magnitude greater!
The Chapters below spell out The Lawlessness of Government as reported in 1950.
Today in 2017 the Cabal, Intrigue and Corruption is an order of magnitude greater!
Undermining The Constitution
A HISTORY OF LAWLESS GOVERNMENT
By Thomas James Norton
III
IN FAVOR TO POLITICIANS AND TO LABOR UNIONS, CONGRESS PURSUED ANOTHER METHOD OF ATTACK ON THE COORDINATE JUDICIAL DEPARTMENT
Another form of attack by Congress on the courts of the Constitution was in legislation directing them how to try cases.
In 1910 it passed an act forbidding the issue of an injunction against the operation of a law of a State except in a specified way.
In 1913 it passed a similar law forbidding the restraint by injunction of an order of the Interstate Commerce Commission except on conditions laid down.
And in 1932 Congress enacted the Norris-LaGuardia Act for denying injunctive relief to an employer, except under annoying conditions which might deny relief, where a labor question is involved.
Those invasions of the rights of litigants and the liberties of the American will be examined.
"The following motion was disagreed to, to wit, to insert 'In all other cases before mentioned the Judicial power shall be exercised in such manner as the Legislature [The Congress] shall direct.'"
So the Constitutional Convention explicitly refused to authorize the Congress to "direct" the judicial power in any respect whatever. How Congress has lawlessly directed it, nevertheless, and how the courts have lawlessly submitted to the forbidden dictation, are to be seen.
The act of 1910 forbade the courts of the United States to grant an interlocutory injunction "restraining the enforcement ... of any statute law of a State," or of any order made there under by a board, "upon the ground of the unconstitutionality" of such statute, "unless the application" be "heard and determined by three judges, of whom at least one shall be a justice of the Supreme Court or a Circuit Judge, and the other two may be circuit or district judges, and unless a majority of the said three judges shall concur in granting such application."
Some of the States had felt wounds in their dignity when a citizen who believed a tax law, for example, was intended to effect what President Coolidge later termed "legalized larceny," went into a court of the United States asking a restraining order upon the officers executing the law until there could be a full hearing on evidence. In addition to that, those were field days for the alien minded who omitted no opportunity to "go after" the Judiciary, which Von Holst rightly called the keystone of the American arch.
Of course, the Fourteenth Amendment forbids the State to "deprive any person of life, liberty or property without due process of law." That is, he must have a hearing when he asks it before his property is taken by taxation or otherwise. It was the constitutional intent that the legislature should not take property by fiat. And that was embedded in the Constitution 46 years before the confiscation of private property was begun by Government through the "graduated" income taxes of Communism.
Article III, establishing the Judiciary, "extends" the "judicial power" to all cases arising under the Constitution, under the laws of the United States, under treaties; to cases affecting ambassadors, other public ministers, consuls; to controversies between two or more States, between a State and citizens of another State, between citizens of different States, between a State or the citizens thereof and foreign states, citizens or subjects.
Thus, ample provision was made for the States to use the courts of the Nation. But in the foregoing recital the States are ranked as litigants on the level with ambassadors, consuls, and citizens. No thought was entertained that a State as a litigant should be regarded as any higher than a man. Why should the creature, the State, be above the man, who created it?
Since the Constitution left the State as a litigant on a level with the man, as it clearly did, where did Congress get the power to change that arrangement of the Constitution and put the State above the man? Only the people, by amendment, could make that change. Yet the courts submitted to the lawless dictation. The first judge appealed to under the meddling act should have refused to call two other judges, should have heard the application, granted or denied a restraining order or injunction, and let the losing party make a test of the law in the Supreme Court of the United States, which would then be in a position to sustain the Judiciary "in all its dignity and vigor," as President Cleveland sustained the Executive Department against encroachment by the Senate, and as Hamilton said in The Federalist that each Department would take pride in maintaining its prerogatives against one or both of the others.
The act forbade that the application for a restraining order or injunction "be heard or determined before at least five days' notice of the hearing has been given to the Governor and to the Attorney General of the State, and such other persons as may be defendants in the suit." But if it should appear that irreparable loss or damage would result unless a temporary restraining order be granted, then one judge should give that relief.
As Article III set up the Supreme Court and then authorized Congress to "ordain and establish" such "inferior courts" as might be necessary, it was within the competence of the Legislative Department, probably, to establish a three-judge court. In 1891, to take from the Supreme Court part of its load, Congress established nine (now eleven) Circuit Courts of Appeals of three judges each. But to establish courts to meet the needs of the people is quite another thing from trying, or partially trying, cases in them.
"The judicial power of the United States" to try and adjudge cases, the Constitution put in "one Supreme Court and such inferior courts" as might be needed. That forever fixed judicial power until the people determine that it should be withdrawn from the courts and vested in the Congress or elsewhere.
Congress may prescribe the jurisdiction of a court which it establishes (like the Court of Claims and the Court of Customs and Patent Appeals), but not the power. "The judicial power," says section 2 of Article III, "shall extend to all cases in law and equity." This power is poured into the courts by the people through their Constitution. Congress has no judicial power to confer.
Apparently emboldened by the success -- or lack of opposition -- which attended the act of 1910, Congress again dictated to the Judicial Department, in 1913, setting up a three-judge court and laying down with the fullest particularity the steps which the court would be permitted to take in injunction proceedings arising out of orders entered against citizens by the Interstate Commerce Commission.
Again, why should the Interstate Commerce Commission, a bureau of Congress, have a court of three judges, when a court of one judge must meet the needs of the American, who created all that there is in and under government? This question is particularly pertinent in view of the fact that during the 63 years of the Commission no President has ever appointed to it a railroad man of standing in the field of transportation, finance or traffic, or a shipper of prominence, in the world of commerce. The body never has been what the President and the Senate should have made it -- what the commerce of the country and those engaged in it were entitled to have to serve them. Then, why should its decisions be made so nearly immutable by restrictions on judicial procedure withholding from the American his liberty to seek justice?
As a specimen of the work of the Commission which the Congress was so desirous of making nearly immune to attack by aggrieved citizens, the reorganization of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company will be stated.
Owing to the unemployment of 9,935,000 in the United States, there was a great shortage of production, which means that the railroads lacked freight tonnage and passenger travel, which means that many of them could not pay their way. In 1935, the Milwaukee Company filed a petition for reorganization with the Interstate Commerce Commission in pursuance of an act of Congress. Evidence was received in the year named and in 1936 and 1937. While the case was on trial the number of unemployed rose to 10,932,583, as reported by the American Federation of Labor.
The plan of reorganization approved by the Commission wiped out all the preferred and common stock. On March 15, 1943, the Supreme Court of the United States upheld the finding of the Commission.
A year before that, in 1942, the net profits of the Milwaukee after interest and taxes were $12,174,831. In 1943 the net profits were $29,413,623.
That shows that the railroad was in fit condition to handle traffic when the United States should be in condition to provide it. The United States needed reorganizing, not the railroads.
Shortly after the investments of the holders of preferred and common stock had been wiped out, the Company paid off a large volume of its old bonds. That is only one of many like cases of railroad reorganization in destruction of investments. The grossness of the injustice caused talk by members of Congress of impeachment.
It was decisions of that sort that Congress did not want the damaged American citizen to attack in court except under annoying difficulty and delay!
In 1932 Congress revamped a line of legislation respecting labor and told the Judicial Department of the Constitution just what it could do and what it could not do about the issuing of injunctions in cases affecting labor.
The minority report of the committee of Congress on the bill said that in practice it would amount to a denial of the rights of the employer. He was virtually outlawed. To be sure, that was the intention -- that is what a powerful voting group demanded that Congress give it. And Congress responded to the demand, just as it bowed to the same group five years later and passed the National Labor Relations Act, to the appalling hurt of the States whose Congressmen enacted it.[1]
Those three acts of Congress were definitely lawless and against the liberty of the American. The courts were lawless when they submitted to the intimidation's, and the organized Bar maintained a masterful inactivity while the undermining of constitutional government was in open progress.
1. The Norris-LaGuardia Injunction Bill of 1932 passed the Senate by a vote of 75 to 5. The House passed it by 363 to 13. The employers of the country whose equipment for production and transportation had won the first World War were all but friendless in the Government which had been saved.
The "judicial power" which was poured into the courts by the Constitution was that inherent in the courts of England in 1787. It was brought to America by the colonists. What it was is plain.
Blackstone, whose lectures were taught in the College of William and Mary to Virginians who helped write the Constitution, told the youth at the University of Oxford a quarter of a century or more before 1787 just what were the inherent powers of a court of equity with respect to the restraining order, or the temporary injunction, and the permanent injunction:
"But if an injunction be wanted to stay waste, or other injuries of an equally urgent nature, then upon the filing of the bill [called application in the acts of Congress reviewed], and a proper case supported by affidavits, the court will grant an injunction immediately, to continue until the defendant has put in his answer, and till the court shall make some further order concerning it; and when the answer comes in, whether it shall then be dissolved or continued till the hearing of the case, is determined by the court upon argument, drawn from considering the answer and the affidavit together." -- 4 "Commentaries on the Laws of England," 443.
That language defined the power of a court of equity with respect to the injunction when the Constitution was written. Consequently that is what the Convention put into the Constitution when it provided:
"The judicial power shall extend to all cases in law and equity."
What a court of equity could do then it can do now. That is constitutional. Being constitutional, it can be taken out of the Constitution only by amendment. Congress can no more change or control the judicial power than it could wipe away the Bill of Rights. Indeed, this provision extending the judicial power to cases in equity is one of the many bills of right written in the body of the Constitution.
The court of equity established by the Constitution having had the power, as Blackstone shows, "to grant an injunction immediately," without notice, upon the filing of an application with affidavits proving that, if it be not granted without delay, irreparable damage will be sustained by the applicant, that power cannot be withdrawn or modified by Congress.
By Equity Rule 73 of the Supreme Court of the United States, governing the lower courts also, long in effect, meticulous care was taken to prescribe procedure in injunction cases -- not alone in cases affecting the powerful group unconstitutionally favored by the Act of 1932, known as the Norris-LaGuardia Act, but in suits of all Americans.
The Rule directs (1) that no preliminary injunction issue without notice; (2) that no temporary restraining order be granted without notice unless it clearly appear from specific facts presented, under oath, that immediate and irreparable damage will otherwise result, and (3) that the temporary restraining order mentioned be brought to hearing "at the earliest possible time, and in no event later than 10 days."
That rule required notice to interested persons and parties -- to States and to the Interstate Commerce Commission. It required the oath for the temporary restraining order, as described by Blackstone. It required speedy hearing. It gave to defendants complete protection, and the acts of Congress were as needless as they were invalid.
On the Judiciary's being the weakest of the three Departments to defend itself, and on the need therefore of its receiving protection, Hamilton wrote in No. 78 of The Federalist:
"The Judiciary, from the nature of its functions, will always be the least dangerous to the political rights of the Constitution, because it will be least in capacity to annoy or injure them. The Executive not only dispenses the honors, but holds the sword of the community. The Legislature [Congress] not only commands the purse, but prescribes the rules by which the duties and rights of every citizen are to be regulated. The Judiciary, on the contrary, has no influence over either the sword or the purse; no direction either of the strength or of the wealth of the society; and can take no active resolution whatever. It may be truly said to have neither force nor will, but only judgment; and must ultimately depend upon the aid of the Executive arm even for the efficacy of its judgments. ... It can never attack with success either of the other two; and all possible care is requisite to enable it to defend itself against their attacks."
In June, 1947, the Governor of Missouri signed a bill to require the teaching of the Constitution in all schools from the Seventh Grade up and in colleges and universities, and to forbid a degree of graduation to be given to any student until a rigid examination in the Constitution has been passed.
In the same month the dispatches reported that a similar step had been taken by the Legislature of California.
When the legislatures of all the other States follow those wise examples it will soon be impossible to draw from the population weak Congresses or Courts or Legislatures or Executives.
In 1913 it passed a similar law forbidding the restraint by injunction of an order of the Interstate Commerce Commission except on conditions laid down.
And in 1932 Congress enacted the Norris-LaGuardia Act for denying injunctive relief to an employer, except under annoying conditions which might deny relief, where a labor question is involved.
Those invasions of the rights of litigants and the liberties of the American will be examined.
Constitutional Convention forbade Congressional dictation to courts
Prefatory to a discussion of the three intrusive acts of Congress mentioned, a quotation should be made from the record of the Constitutional Convention (Formation of the Union, p. 625) of August 27, 1787, only twenty-three days before the signing, when there was under consideration "the Judicial power": The act of 1910 forbade the courts of the United States to grant an interlocutory injunction "restraining the enforcement ... of any statute law of a State," or of any order made there under by a board, "upon the ground of the unconstitutionality" of such statute, "unless the application" be "heard and determined by three judges, of whom at least one shall be a justice of the Supreme Court or a Circuit Judge, and the other two may be circuit or district judges, and unless a majority of the said three judges shall concur in granting such application."
States objected to constitutional restraints
Article III, establishing the Judiciary, "extends" the "judicial power" to all cases arising under the Constitution, under the laws of the United States, under treaties; to cases affecting ambassadors, other public ministers, consuls; to controversies between two or more States, between a State and citizens of another State, between citizens of different States, between a State or the citizens thereof and foreign states, citizens or subjects.
Thus, ample provision was made for the States to use the courts of the Nation. But in the foregoing recital the States are ranked as litigants on the level with ambassadors, consuls, and citizens. No thought was entertained that a State as a litigant should be regarded as any higher than a man. Why should the creature, the State, be above the man, who created it?
Preference of State against Man not authorized
Act of Congress interference with procedure
The act forbade that the application for a restraining order or injunction "be heard or determined before at least five days' notice of the hearing has been given to the Governor and to the Attorney General of the State, and such other persons as may be defendants in the suit." But if it should appear that irreparable loss or damage would result unless a temporary restraining order be granted, then one judge should give that relief.
As Article III set up the Supreme Court and then authorized Congress to "ordain and establish" such "inferior courts" as might be necessary, it was within the competence of the Legislative Department, probably, to establish a three-judge court. In 1891, to take from the Supreme Court part of its load, Congress established nine (now eleven) Circuit Courts of Appeals of three judges each. But to establish courts to meet the needs of the people is quite another thing from trying, or partially trying, cases in them.
"The judicial power of the United States" to try and adjudge cases, the Constitution put in "one Supreme Court and such inferior courts" as might be needed. That forever fixed judicial power until the people determine that it should be withdrawn from the courts and vested in the Congress or elsewhere.
No judicial power possessed by Congress
Congress may prescribe the jurisdiction of a court which it establishes (like the Court of Claims and the Court of Customs and Patent Appeals), but not the power. "The judicial power," says section 2 of Article III, "shall extend to all cases in law and equity." This power is poured into the courts by the people through their Constitution. Congress has no judicial power to confer.
Apparently emboldened by the success -- or lack of opposition -- which attended the act of 1910, Congress again dictated to the Judicial Department, in 1913, setting up a three-judge court and laying down with the fullest particularity the steps which the court would be permitted to take in injunction proceedings arising out of orders entered against citizens by the Interstate Commerce Commission.
Congress unduly magnified
Interstate Commerce Commission
Again, why should the Interstate Commerce Commission, a bureau of Congress, have a court of three judges, when a court of one judge must meet the needs of the American, who created all that there is in and under government? This question is particularly pertinent in view of the fact that during the 63 years of the Commission no President has ever appointed to it a railroad man of standing in the field of transportation, finance or traffic, or a shipper of prominence, in the world of commerce. The body never has been what the President and the Senate should have made it -- what the commerce of the country and those engaged in it were entitled to have to serve them. Then, why should its decisions be made so nearly immutable by restrictions on judicial procedure withholding from the American his liberty to seek justice?
Why put Interstate Commerce Commission above American?
As a specimen of the work of the Commission which the Congress was so desirous of making nearly immune to attack by aggrieved citizens, the reorganization of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company will be stated.
Owing to the unemployment of 9,935,000 in the United States, there was a great shortage of production, which means that the railroads lacked freight tonnage and passenger travel, which means that many of them could not pay their way. In 1935, the Milwaukee Company filed a petition for reorganization with the Interstate Commerce Commission in pursuance of an act of Congress. Evidence was received in the year named and in 1936 and 1937. While the case was on trial the number of unemployed rose to 10,932,583, as reported by the American Federation of Labor.
The plan of reorganization approved by the Commission wiped out all the preferred and common stock. On March 15, 1943, the Supreme Court of the United States upheld the finding of the Commission.
A year before that, in 1942, the net profits of the Milwaukee after interest and taxes were $12,174,831. In 1943 the net profits were $29,413,623.
Interstate Commerce Commission
failed to see point
That shows that the railroad was in fit condition to handle traffic when the United States should be in condition to provide it. The United States needed reorganizing, not the railroads.
Shortly after the investments of the holders of preferred and common stock had been wiped out, the Company paid off a large volume of its old bonds. That is only one of many like cases of railroad reorganization in destruction of investments. The grossness of the injustice caused talk by members of Congress of impeachment.
It was decisions of that sort that Congress did not want the damaged American citizen to attack in court except under annoying difficulty and delay!
In 1932 Congress revamped a line of legislation respecting labor and told the Judicial Department of the Constitution just what it could do and what it could not do about the issuing of injunctions in cases affecting labor.
Norris-LaGuardia Act denial of justice
The minority report of the committee of Congress on the bill said that in practice it would amount to a denial of the rights of the employer. He was virtually outlawed. To be sure, that was the intention -- that is what a powerful voting group demanded that Congress give it. And Congress responded to the demand, just as it bowed to the same group five years later and passed the National Labor Relations Act, to the appalling hurt of the States whose Congressmen enacted it.[1]
Those three acts of Congress were definitely lawless and against the liberty of the American. The courts were lawless when they submitted to the intimidation's, and the organized Bar maintained a masterful inactivity while the undermining of constitutional government was in open progress.
1. The Norris-LaGuardia Injunction Bill of 1932 passed the Senate by a vote of 75 to 5. The House passed it by 363 to 13. The employers of the country whose equipment for production and transportation had won the first World War were all but friendless in the Government which had been saved.
Historic relief by injunction made clear
Blackstone, whose lectures were taught in the College of William and Mary to Virginians who helped write the Constitution, told the youth at the University of Oxford a quarter of a century or more before 1787 just what were the inherent powers of a court of equity with respect to the restraining order, or the temporary injunction, and the permanent injunction:
"But if an injunction be wanted to stay waste, or other injuries of an equally urgent nature, then upon the filing of the bill [called application in the acts of Congress reviewed], and a proper case supported by affidavits, the court will grant an injunction immediately, to continue until the defendant has put in his answer, and till the court shall make some further order concerning it; and when the answer comes in, whether it shall then be dissolved or continued till the hearing of the case, is determined by the court upon argument, drawn from considering the answer and the affidavit together." -- 4 "Commentaries on the Laws of England," 443.
That language defined the power of a court of equity with respect to the injunction when the Constitution was written. Consequently that is what the Convention put into the Constitution when it provided:
"The judicial power shall extend to all cases in law and equity."
Congress powerless to
defeat constitutional injunction
What a court of equity could do then it can do now. That is constitutional. Being constitutional, it can be taken out of the Constitution only by amendment. Congress can no more change or control the judicial power than it could wipe away the Bill of Rights. Indeed, this provision extending the judicial power to cases in equity is one of the many bills of right written in the body of the Constitution.
The court of equity established by the Constitution having had the power, as Blackstone shows, "to grant an injunction immediately," without notice, upon the filing of an application with affidavits proving that, if it be not granted without delay, irreparable damage will be sustained by the applicant, that power cannot be withdrawn or modified by Congress.
By Equity Rule 73 of the Supreme Court of the United States, governing the lower courts also, long in effect, meticulous care was taken to prescribe procedure in injunction cases -- not alone in cases affecting the powerful group unconstitutionally favored by the Act of 1932, known as the Norris-LaGuardia Act, but in suits of all Americans.
The Rule directs (1) that no preliminary injunction issue without notice; (2) that no temporary restraining order be granted without notice unless it clearly appear from specific facts presented, under oath, that immediate and irreparable damage will otherwise result, and (3) that the temporary restraining order mentioned be brought to hearing "at the earliest possible time, and in no event later than 10 days."
That rule required notice to interested persons and parties -- to States and to the Interstate Commerce Commission. It required the oath for the temporary restraining order, as described by Blackstone. It required speedy hearing. It gave to defendants complete protection, and the acts of Congress were as needless as they were invalid.
Judiciary in need of protection
"The Judiciary, from the nature of its functions, will always be the least dangerous to the political rights of the Constitution, because it will be least in capacity to annoy or injure them. The Executive not only dispenses the honors, but holds the sword of the community. The Legislature [Congress] not only commands the purse, but prescribes the rules by which the duties and rights of every citizen are to be regulated. The Judiciary, on the contrary, has no influence over either the sword or the purse; no direction either of the strength or of the wealth of the society; and can take no active resolution whatever. It may be truly said to have neither force nor will, but only judgment; and must ultimately depend upon the aid of the Executive arm even for the efficacy of its judgments. ... It can never attack with success either of the other two; and all possible care is requisite to enable it to defend itself against their attacks."
But government by the
educated is in prospect
In June, 1947, the Governor of Missouri signed a bill to require the teaching of the Constitution in all schools from the Seventh Grade up and in colleges and universities, and to forbid a degree of graduation to be given to any student until a rigid examination in the Constitution has been passed.
In the same month the dispatches reported that a similar step had been taken by the Legislature of California.
When the legislatures of all the other States follow those wise examples it will soon be impossible to draw from the population weak Congresses or Courts or Legislatures or Executives.
IV
THE SIXTEENTH OR INCOME-TAX AMENDMENT, HAVING OPERATED IN VIOLENCE TO AMERICAN PRINCIPLES RESPECTING PROPERTY AND JUSTICE, SHOULD BE REPEALED
As the panic of 1893 and the failures of crops which contributed to the insolvency of railroads and the closing of banks brought upon the theater of government alien-minded philosophers advocating the imported Initiative, the Referendum, and the Recall as panaceas for whatever it was that was ailing them, so, after the panic of 1907, out came another group of politicians and "universitaires" and demanded an income tax to cure the sickness of the Nation.
For a time the panic of 1907 was worse than that of 1893, as in parts of the country the circulating medium disappeared and cities and various bodies issued "scrip" to be used as money.
It also called for nearly all of the "uplifts" brought into play a quarter of a century later and unctuously baptized as the "New Deal" -- employment by the United States for the unemployed, help from the Federal Treasury for the needy, public improvements to provide work, nationalization of utilities and some industries, "development" of many fields not before thought to be within the competence of government, insurance for health, accident, old age, death, and other things insurable, and practically anything else that anybody wanted.
1. Socialists have been charged with disagreement as to what they really stand for. From the platform of the National Socialist Party of 1908, following the very severe panic of the year before, a definition may be drawn. The writers of the platform betrayed a most comprehensive misunderstanding of the powers and obligations of our National Government. They called for:
1. Relief works through building schools and canals, by reforesting, by reclamation, and by extending all other public works;
2. Loans of money by the United States to States, municipalities, and for public works;
3. Ownership by the United States of railroads, telegraph and telephone lines, steamships, all land, and all industries;
4. Extension of the public domain to take over mines, quarries, oil wells, forests, and water power;
5. Extension of the graduated income tax and inheritance tax;
6. Abolition of the power of the Supreme Court to hold an act of Congress unconstitutional;
7. Creation of a Department of Health and a Department of Education;
8. Insurance against unemployment, illness, accident, invalidism, old age, and death;
9. Funds for the unemployed.
Some of those matters are within the police power of the States, but none lies within the jurisdiction of the Nation. The proposed taking over of property by taxation and by seizure is Communistic.
The reader should be profited by considering carefully how far we have already gone into that unconstitutionalism. How much of the "New Deal" and the "Fair Deal" comes from that -- from the junk piles of futile expedients with which wretched governments have strewn the highway of history?
The fallacies of the "New Deal" were old even when Karl Marx demanded in 1848 "progressive," or graduated, income taxes -- together with the abolition of the right to pass estates at death -- to enable confiscation of private property and the rise thereby of the proletariat to political control. For they were employed by the several experimenters who tried to mitigate the conditions which brought on the French Revolution of 1789. And in the 300's the Roman Emperor Diocletian, in the interest of his soldiers, fixed maximum prices for provisions and other articles of commerce and set maximum rates of wages, with severe penalties for disregard of the edict. For the purposes of this regulation he issued a special copper coin of the value of one oyster. In 1950, the "New Deal" is operating in the United States without even that much for a standard of money.
After the close of the war in 1945 a new government in England undertook the acquisition of private property by what it termed "nationalization."
The "New Deal" is a very ancient subterfuge for statecraft.
Knowing the type very well, the historians who wrote the Constitution gave nothing that is in the "New Deal" any recognition whatever. Life, liberty, and property they left with men, to whom they belong, and for whom and by whom the Constitution was conceived for self-protection.
The "New Deal" is thoroughly unconstitutional.
Yet the persistence through the centuries of the idea that Government can do the business of man better than he can, which showed up in this land of liberty in 1933 with the effrontery of a Stuart king or a Bourbon, is a fact that must keep Americans on guard.
The Sixteenth Amendment to the Constitution of the United States wrought an unintelligent relinquishment by the States of the first power of governmental sovereignty -- that of raising revenue for self-maintenance.
Hamilton failed to foresee that in time the States, instead of defending their sovereignty in local affairs, would, through their representatives in Congress, undermine themselves (The Federalist, No. 28):
"State governments will, in all possible contingencies, offer complete security against invasions of the public liberty by the National authority."
There is no objection to an income tax when legally laid -- when not made confiscatory by graduation -- but it should be levied by the States for use at home -- not gathered by the Nation and then redistributed as doles or donatives toward the weakening of the States and the enlargement of the central power.
It should probably not be laid on the income of manufacture or production.
Since graduation was contrary to constitutional principle, it should have been foreseen by statesmen that the Income Tax Amendment as applied by Congress would work badly. It enabled the central Government, like an octopus, to thrust a tentacle into the revenue supply of each State and drain it, leaving the State partially helpless to perform its essential functions and making it a beggar at the Capital for a share of its own money.
It put in the hands of the National Government a power of money -- in every hand the worst power there is -- never seen in the world before, in comparison with which that employed by the Imperial City for the plunder of the Roman provinces was an evil of small consequence.
Money in excess at Washington has covered the country with a thoroughly disreputable organization of politics -- the begging States having been to a degree forced to aid in carrying out, as baronies, the "objectives" of the superior authority from which they now hold their place on earth and to which they render most humble fealty.
In the President's message to Congress and the country on April 27,1942, the first and most important of his seven specifics for keeping the costs of living from "spiraling upward" and for winning the war was "to tax heavily, and in that process keep personal and corporate profits at a reasonable rate."
"Through tax processes," he said, excess profits can be kept down, and at the same time "further large sums" can be raised for the financing of the war.
The plain import of that language is that "tax processes" may be employed -- as they certainly have been illegally for nearly three decades -- for other purposes than the raising of necessary revenue for the support of strictly governmental functions.
When law was scientific, care was exercised to levy no more taxes than would meet the needs of government economically administered. President Coolidge said that taxation beyond that need is "legalized larceny." President Cleveland denounced almost as severely the taking by taxation of revenue not required.
Those two understood clearly the American meaning of the word "tax," as applied for upwards of 300 years. Neither to them nor to those before them was a tax a weapon. It was not an instrument for taking from those with possessions and bestowing, either directly or indirectly, upon those without.
The use of "tax processes" for transferring the property of the individual to the Government is the fundamental doctrine in the Communist Manifesto of 1848, promulgated by Karl Marx. By the "graduated" income tax, plus the abolition of the rights of inheritance, Marx would seize by government for the proletariat all private property.
"They [the proletariat] have nothing of their own to secure and fortify," wrote Marx; "their mission is to destroy all previous securities for, and insurance of, individual property."
The instrument to accomplish that destruction would be "a heavy progressive [graduated] income tax."
"The abolition of all rights of inheritance" would be used by Marx and his followers toward putting an end to private property.
Communism, belief in which has been held by many in our Government, was made clear by Marx as follows:
"The distinguishing feature of Communism is not the abolition of property generally, but of the bourgeois [capitalistic] property. But modem bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonisms, on the exploitation of the many by the few.
"In this sense the theory of Communism may be summed up in the single sentence: Abolition of private property."
The "heavy progressive" taxes which he proposed would transfer property from the bourgeoisie to Government, and Government would be in the proletariat.
Marx again:
"The immediate aim of Communism is the same as that of all the other proletarian parties: formation of the proletariat into a class, overthrow of the bourgeois supremacy, and conquest of political power by the proletariat."[2]
2. Social and Political Doctrines of Contemporary Europe, Oakeshaft, pp. 88 to 101.
Perhaps the best way to define Communism is to present an abstract of the Communist Manifesto of 1848:
1. Abolition of property in land, and application of all rents of land to public purposes;
2. A heavy progressive income tax;
3. Abolition of all rights of inheritance; (cont. from 57)
4. Confiscation of property of all emigrants and rebels;
5. Centralization of credit in the hands of the state by means of a national bank with state capital and exclusive monopoly;
6. Centralization in the hands of the state of the means of communication and transport;
7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan;
8. Equal obligation of all to work. Establishment of industrial units, especially for agriculture;
9. Combination of agriculture with manufacturing industries, and gradual abolition of the distinction between town and country by a more equable distribution of the population;
10. Free education of all children in public schools, abolition of children's factory labor in its present form, and the combination of education with industrial production.
And men teaching and preaching that sedition have been permitted to run for the Presidency of the United States!
Communism was the first -- and quickly rejected -- American way of life. The Communism expounded by Lenin in The Teachings of Karl Marx had been the earliest experiment in America in living. It was tried in Virginia and in the Plymouth Colony in Massachusetts. It was a failure in both places, as it failed in several later attempts in the United States when supported by abundant funds and by men and women of the highest learning.
Lenin wrote that the worker receives under Communism "a certificate from society" for the amount of work done. He gets in return from the public warehouse "a corresponding quantity of products," after there has been deducted "that proportion of labor which goes to the public fund." In the main that is the method in Soviet Russia today, according to Gen. Walter Bedell Smith, former ambassador to that country, in My Three Years in Moscow.
In A History of Plymouth Plantation, 1606 to 1646, it is related by Governor Bradford (p. 147) that at first the land was tilled and other work done in common and that the product of toil went into general storage. From the warehouse those in charge of the colony made distribution according to service given. The undertaking failed from lack of incentive "even among the best settlers." After grave consideration by the officers of the colony a "parcel" of land was assigned to each family and the members of the family lived together. Immediately "corn" was much more widely planted.
"For the young men," wrote Bradford, "that were most able and fit for labor and service did repine that they should spend time and strength to work for other men's wives and children without any recompense. The strong, or men of parts, had no more division of victails and cloths than he that was weak and not able to do a quarter the other could. This was thought injustice."
Of course, it was unjust, an affront to reason, a burden at which human nature rebels.
Thus the communal life was rejected at the beginning for American private enterprise.
That spirit of self-reliance was regarded by Alexander Hamilton (The Federalist, No. 11) as a considerable proportion of the capital which would build the United States:
"The unequaled spirit of enterprise which signalizes the genius of American merchants and navigators, and which is in itself an inexhaustible mine of national wealth."
Government has been undermining that self-reliance until a critic has said that the people are more fearful of life than of death. And in 1949, so much had American spirit deteriorated (in places) that the Vice President could say in an address to an association of businessmen:
"As much as we wish for the good old simple days, the complexities of our lives have created an interdependence among all of our citizens. This has created a necessity for the guidance of the Government in the problems that beset our people."
Most of the worst "problems" have been created by men in Government who had never, before taking public office, exhibited any notable talent in the world of affairs. They have been incompetent "guides." Our constitutional system has been turned by them into a manufactory of problems and emergencies.
Those problems cannot be solved by Communism.
In 1909 President Taft, who succeeded to an empty treasury, asked Congress to propose an amendment to the Constitution authorizing an income -- but not "graduated" -- tax. Congress made the proposal and it became the Sixteenth Amendment in 1913, just before President Taft went out. By a tax on corporations he had filled the Treasury, thus demonstrating that the income tax was not needed.
The purpose of the proposed Amendment was to take out of the Constitution, as it would affect an income-tax law, the provision (section 2 of Article I) on which the Income Tax Act of 1894 foundered, namely:
"Direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective numbers."
That is, according to population. The Supreme Court had held (157 U. S. 429) the taxes stated to be direct taxes, and that as they had not been apportioned by Congress among the several States, the act was unconstitutional. Hence, the Amendment:
"Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Hamilton did not dream that the provision for uniformity in taxation which he was extolling would be stricken out (emphasis his):
"The abuse of this power of taxation seems to have been provided against with guarded circumspection. In addition to the precaution just mentioned, there is a provision that 'all duties, imposts and excises shall be UNIFORM throughout the United States.'"
That did not give Congress the power to tax incomes. It had that power before. All the Amendment did was to remove the need for apportionment among the several States.
Especially it did not authorize Congress to take leave of the rule and practice of uniformity and equality of treatment which had always governed in every field of taxation and employ a method without rule, without reason, for the taking of money of the Americans for other purposes than the actual needs of government economically administered. It did not authorize Congress to confiscate the income of a man until it would not be what President Franklin D. Roosevelt called "too high." It did not empower Congress to drain the States of their resources and subject them to bureaucratic domination. Nor did it give authority to government to enter the fields of production, manufacture, agriculture, world saving and others, and to spend money for purposes not within the only area laid out in the Constitution, that is, "the common Defense and general Welfare of the United States."
But those are among the many unconstitutional activities in which Government has been enabled to engage by use of the limitless funds gathered by the confiscatory income tax. Having mismanaged agriculture, manufacture, medicine, charity, and other nongovernmental activities at home, it took up direction of the affairs of the world by the worse than lavish use of money produced by the erroneous application of the Sixteenth Amendment.
For if what has been taking place in our land and other lands during the last third of a century had been intended by President Taft when he asked Congress to propose an amendment, he would have made specifications to that effect. He would have asked for a "graduated" tax.
The Amendment proposed and ratified carried nothing on its face but the common tax levied on lands, buildings, livestock, machinery, and personal property from the beginning. The constitution of every State commands the legislature to make taxes uniform, or by valuation, or in proportion to value, or by some other method of "equality of treatment." All property of a class must be taxed at the same rate. If one man in a class has ten times as much property as another, he will pay ten times as much tax, the levy for both being on one rate. He cannot be made to pay twelve times as much by the use of a higher rate.
Without the clearest specifications in the Sixteenth Amendment for "graduated" rates, showing a purpose to bring about, by radical departure from American method, what we have witnessed with consternation, Congress had no power to pass the act of October 3, 1913, and subsequent income-tax laws levying graduated taxes.
As it took the Socialists and Communists fourteen years after the decision of the Supreme Court holding the tax act of 1894 unconstitutional to get the proposal to amend, and four years more to secure its ratification, it is reasonable to assume that had the proposal plainly called for the "graduated" or confiscatory tax of Communism, it never would have been ratified. Indeed, had the people dreamed that the money of the States would be drained away, leaving them mendicants at Washington, the proposal as it was would have been defeated.
Article V of the Bill of Bights forbids that "private property be taken for public use without just compensation." When the United States wants the land of an American as the site of a post office, or for any other purpose, it must bring a condemnation proceeding in the exercise of its eminent domain, when the need for taking the property will be proved and its value ascertained. That value the United States must pay.
The law or doctrine of eminent domain applies in principle, and by sound authority, to property "taken for public use" by taxation, as it does to all other takings. The American whose money is thus taken by taxation must receive from government an equivalent value in return. That, he gets in protection to his "life, liberty, and property," for which purpose he established his constitutional system.
That principle was laid down as to taxation in a single, clear, short sentence by Judge Cooley in Constitutional Limitations, 2nd edition, p. 495 (italics inserted):
"As all are alike protected, so all should share the burden, in proportion to the interest secured."
A man with an income of $100,000 should pay ten times more in taxes than the one worth $10,000, because he has ten times as much value needing the protection of the government which he established. But he should not, at the caprice of the spirit of Communism, pay fifteen or twenty times as much. Nor does he so pay in any field of taxation except in that where taxes on incomes, and on estates passing at death, are levied.
In every other field all men have paid one tax rate, which in itself is proof that the "graduated" -- the arbitrary -- tax rate is obnoxious to the "due process of law" (its fair play and procedural regularity) and to "the equal protection of the laws," which are the gist of all American constitutions.
As the statement of President Roosevelt was the most absolute assertion of an unlimited power in government to take property by taxation for other purposes than revenue, a belief which has for years been expressed in unscholarly seats of learning, in sections of the Press, and elsewhere, it is plain that at last we have "entered a boundless field of power," to use Jefferson's warning language, "no longer susceptible of any definition."
In his radio address on September 7, 1942, President Roosevelt expressed this wholly unsound theory of the governmental power of taxation, which has been let pass without critical examination:
"Taxation is the only practical way of preventing the incomes and profits of individuals and corporations from getting too high. I have told the Congress once more that all net individual incomes, after payment of all taxes, should be limited effectively by further taxation to a maximum net income of $25,000 a year."
That idea of the President, that he or his Government could limit the income of an American, is one phase of a fatuous belief which the schools have made common, namely, that rights to property are conferred upon him by law. Whereas, the Declaration of Independence says that he set up this Government himself "to secure these rights" which come to him from the Creator, "among which are life, liberty and the pursuit of happiness," that pursuit including the acquisition of property. Necessarily his rights and property preceded the Government which he set up for the purpose of protecting them.
In Commentaries on the Constitution (page 329), Justice Story of the Supreme Court wrote that a tax for neither of the purposes stated in the Constitution -- "to pay the Debts and provide for the common Defense and general Welfare of the United States" -- would be "an excess of legislative authority."
When members of Congress returned to Washington from their homes after the election in November, 1946, and undertook to draw a tax bill to meet the wishes of the country for a 20-per-cent reduction of the levies on incomes, they were astonished to find that it is the small incomes that are supporting the extravagances and illegal spending of the Government, and that the cut indicated would leave the Treasury without sufficient funds. The big boys, who were to be "soaked" when the Sixteenth Amendment was proposed, by levies on vast properties hitherto un-taxed, are paying comparatively little.
Taxpayers receiving a net income under $2,500 (small money now), who numbered 35,625,683 persons, paid $4,693,000,000 in income taxes in 1946.
Those with net incomes from $2,500 to $5,000 (also small money), numbering 15,157,265 persons, paid $5,444,000,000.
In the group from $5,000 to $10,000 net income there were only 1,314,457 taxpayers, and they contributed $1,509,000,000.
The group having from $10,000 to $25,000 numbered only 551,267, and they contributed in taxes $2,181,000,000.
There were only 143,725 taxpayers with incomes from $25,000 to $100,000 and they paid $2,673,000,000.
In the group with incomes above $100,000 there were only 9,599 taxpayers, who took a burden of $1,100,000,000.
The two low-income groups paid $10,000,000,000 and the four higher-income groups paid $7,000,000,000.
The foregoing figures are from the United States News of February 14, 1947, page 30, which commented that "in trying to give the big break to the little taxpayer, Congress runs up against those facts," and that "taxing the rich is not enough," although 86 per cent is taken from the income of those in "the highest income levels."
The report of the Secretary of the Treasury for 1946 shows receipts of more than 30 billion from "income taxes," but that amount includes "profit taxes" on transactions in business, as distinguished from wages, salaries, and other forms of personal income.
Who really got "soaked" when Congress passed a "graduated" income-tax bill which was not authorized by the Sixteenth Amendment of 1913, and which was therefore unconstitutional?[3]
The very rich forsook the risks of industry and trade, forgot the troubles with employees over wages and working conditions, and retired to the velvet comforts of that most stupendous American business, the National Debt, largely tax exempt.
By beginning in time of peace (1913) the borrowing of money from the people of the country and securing, through the enticement of exemption from taxation, a high price in the market for its bonds issued therefor, Congress gathered away from taxable enterprises millions which rose to billions and are in 1950 headed for trillions -- all cleared of the taxes which had before gone to the support of government.
Necessarily those not owning bonds had to take a larger load of taxes to compensate for the exemption.
How much will the depletion thus caused of this country's powers of production and transportation, which won both wars, imperil the future of the United States?
How much did the corroding debt of England, attended by widespread poverty, for 125 years before World War I contribute to the debilitation of industry resulting in its "nationalization"?
3. Whatever talk there may have been in the streets about "soaking the rich" by a graduated tax, or whatever may have been said by some in Congress on that point, the rule of interpretation is that the enactment must be taken at its face value. A radical change in the existing order -- like the introduction of a form of taxation not used against any other kind of property -- can be accepted only on a purpose most clearly expressed. The amendment proposed by Congress and ratified by the legislatures did not use "graduated" to describe the tax. Therefore, a graduated tax was not proposed.
"Where the language of an enactment is clear," said the Supreme Court of the United States (278 U.S. 269) ". . . . the words employed are to be taken as the final expression of the meaning intended. And in such cases legislative history may not be used to support a construction that adds to or takes from the significance of the words employed."
That is to say, authority "to lay and collect taxes on incomes" was authority to lay taxes as they are laid on all other kinds of property -- one rate on all property of the same kind, money in the case of incomes. In going beyond that, Congress violated the Constitution.
The talk about soaking the rich might have related to the fact that the big incomes (along with the little) never had paid any tax at all. It was quite proper to tax them -- but only constitutionally.
Before the Government at Washington entered upon this coup d'état, the supreme courts of several States had put legislatures right on the principles here under discussion.
In 1882 the Supreme Court of New Hampshire held a "graduated" tax on estates void for conflict with the command of the Constitution of the State, that taxes be proportional and reasonable."
In 1889 the Supreme Court of Minnesota held likewise.
In 1894 the Supreme Court of Ohio said:
"The rate per cent must be the same on all estates. There can be no discrimination in favor of the rich or poor. All stand on an equality under the provisions of the Constitution, and it is this equality that is the pride and safeguard of us all."
In 1898 the Supreme Court of Missouri, eighteen years before the Supreme Court of the United States sanctioned the graduated or confiscatory tax, expressed (143 Mo. 287) the like view, saying that it was "without rhyme or reason."
The next year the Supreme Court of Pennsylvania held (191 Pa. 1) that classification of different amounts of money as different kinds of property, and therefore subject to different rates of tax, is a fallacy and "necessarily unjust, arbitrary and illegal."
In short, the graduated tax is Communistic.
While in the income-tax laws of the Civil War there had been both graduations and exemptions, the levies were so light and the graduations so undiscriminative that the legislation could not be taken as a precedent to support what the people have been bearing since the Act of 1913 in violation of the Income Tax Amendment.
The Act of 1861 levied 5 per cent flat on incomes over $800.
The Act of 1862 levied 3 per cent on $600 to $10,000; 5 per cent above $10,000.
The Act of 1864 levied 5 per cent on $600 to $5,000; 7½ per cent on $5,000 to $10,000; 10 per cent on more than $10,000.
The Act of 1867 levied 5 per cent flat on more than $10,000.
The Act of 1870 levied 2½ per cent flat for 1870 and 1871, "and no longer," quoting the words of the law.
Of the five levies, two were "graduated" and three were flat.
Congress recognized that such taxes could be justified only by the peril of war and through the exertion of the war powers, and it wiped them away as soon as it could. It never returned to nonuniform taxes until the doctrine of Communism had been taken up by our "intellectuals."
In 1864 Congress called for the prayers of the country "to implore Him as the Supreme Ruler of the world not to destroy us as a people, nor suffer us to be destroyed by the hostility or connivance of other nations" -- referring to the unneutral conduct in our Civil War of England and France. In such circumstances of national alarm no American would question in a lawsuit the validity of taxes of whatsoever sort.
Congress itself, by repealing the Civil War taxes, declared in effect such levies to be unjustifiable in time of peace.
The most striking example of the fatuous condition of affairs in our country is in the call of States for an amendment to prevent their representatives in Congress from weakening them by the income tax and the estate tax of more than 25 per cent. Article V authorizes the States to apply to Congress "to call a Convention for proposing Amendments," and during 1949 many States made the application.
First, as a practical matter, the action is objectionable, because if Congress should get authority to take 25 per cent of incomes and estates, it will do so forever -- whereas, our history for 130 years demonstrated that Congress can get along without either of those taxes.
Second, the needed amendment -- if the States fear (as they may have reason to) that their representatives in Congress will not refrain from exhausting them by taxation -- is one forbidding income and estate taxes by Congress except in time of war. As elsewhere shown herein, the Civil War income tax was promptly rejected by Congress as a tax justifiable in time of peace.
That definition of the tax should stand forever.
But the spectacle of citizens petitioning for protection from the men they elect to Congress! Can you believe it?
And the exemptions granted in connection with the income tax and bonds, and in other relations, are just as obnoxious to the Constitution as is the graduation. The Supreme Courts of the States just cited condemned exemptions along with graduations.
During a housing and building shortage caused by World War I the legislature of New Jersey, to encourage construction, enacted a law exempting from taxation for five years all new structures. It was held (116 Atlantic 328) void for disregard of the command of the Constitution of the State for uniformity of taxation upon all.
Cooley, the great authority of his time, said in his work Taxation (2d ed., p. 215) that "it is difficult to conceive of a justifiable exemption law which would select single individuals or corporations, or single articles of property, and, taking them out of the class to which they belong, make them the subject of capricious legislative favor. . . . It would lack the semblance of legitimate legislation."[4]
4. The constitutions of the States generally authorize the exemption from taxation of church property, of school property, of public property and buildings, and of other property not used for profit. Such properties are not in competition with those employed in providing a livelihood for men, who secure through taxes the protection of government in their endeavors. Further, by teaching and other work they give service to society equal to or above a yield in taxes. They are not really "properties" within the class for taxation.
The Income Tax Law of 1894 exempted all incomes below $4,000. Although the law was held void for failing to "apportion" the burden among the States according to population, as directed by the Constitution, Justice Field took occasion to denounce the exemption of all incomes below $4,000.
"The present assault upon capital is but the beginning," he wrote. "Unless the rule of the Constitution governs, a majority may fix the limitation at such a rate as will not include any of their number."
Yet Congress, being ignorant of or indifferent to these fundamentals, has been tossing tax-free salaries to favored persons with unrestrained prodigality. In 1947 it so favored officers of the World Bank, making the $22,500 salary of the vice president equal to $38,000, the salary of the executive director of $17,500 equal to $26,000; and two employees of the State Department who had been working for $10,000 were given exempt salaries of $17,500, equal to $26,000. Frequently since then the dispatches from Washington have told of similar favors to those specially beloved.[5]
5. Section 1 of Article II of the Constitution commands that the "compensation" of the President "shall neither be encreased nor diminished during the Period for which he shall have been elected." In January, 1949, just before the President entered upon the term for which he was elected in November, 1948, Congress increased his salary from $75,000 a year to $100,000.
In January, 1949, Congress granted to the President $50,000 a year to cover his expenses, which theretofore had been carried in the budget in support of the White House. This grant was made exempt from the income tax. If it was for expenses, it was not taxable as salary, and the exemption was superfluous. If it was in truth salary -- for the usual report on expenses was waived -- then it could not be legally exempted. And, more important still, it could not be enjoyed by a President before the next term, beginning in January, 1953.
It may interest the taxpayer to study those cards as played.
The whole White House force of 225 (53 under Roosevelt and 87 under Hoover) received increases from the taxpayers. (Cont. on 74)(Note 5 cont.) Special counsel was advanced from $12,000 to $20,000 a year. President's aide (labor) from $15,000 to $20,000 a year. 3 secretaries, each from $10,830 to $18,000 a year. 5 administrative assistants from $10,330 to $15,000 a year. 10 Cabinet members from $15,000 to $22,000 a year.
A number of lesser functionaries were favored with increases of pay, 900,000 classified workers receiving advances aggregating $130,000,000 yearly.
In 1931, before the saving of mankind from want and fear by Government became known to Government as the first of its expanding duties, there were outstanding $22,536,000,000 of bonds wholly exempt from (1) the property tax, from (2) the normal tax, and from (3) the surtax of the United States, as shown by the Report of the Secretary of the Treasury for 1932, page 439.
That property, paying no taxes as property and not taxable on its income, was greater than the aggregate value of Class I railroads in the United States (95 per cent of mileage and 97 per cent of total earnings) as found by the Interstate Commerce Commission in 1945, namely, $19,571,000,000.
The railroads paid over a billion in taxes that year.
What would the average man say if word were to be given out that Government (National and State) had determined to exempt the railroads from that burden and put the billion load on other taxpayers!
While at first the common man was to be very kindly treated under income-tax laws as Government would proceed with the new weapon to "soak the rich," it has come to pass that a person with an income of $600 a year (which takes in practically all wage earners) must report his earnings. Yet banks, many of them living largely on the Public (National and State) Debt, trust companies holding vast estates resting on exempt bonds, universities and other institutions with exempt bonds a considerable part of their endowments, are released from support of Government to the extent of their property in bonds and on the income of some of them.
The States, by proposal in Congress or by action of their legislatures under Article V, should amend the Constitution again by repealing the Sixteenth Amendment and resuming police Jurisdiction of the wealth of their people, as they repealed the Eighteenth Amendment after becoming convinced that they had made a mistake in giving to the Nation a burden of police which it was not -- and could not be -- organized to carry.
Congress would then still have power to tax incomes, as it had before the Amendment, but it would be obliged to do so Justly -- for revenue only, not for the distribution of property, for leveling down possessions, for punitive purposes, or for stripping Americans for the help of Europeans who are antagonistic to our Government and our beliefs.
And it would be unable to bleed the States to financial helplessness, where the Supreme Court thought them to be when it gave sanction to the Social Security Law chiefly on that error. For if the representatives of the people of the States in Congress at that critical juncture had repealed the Income Tax Law, as they should have done, the States would have the money properly belonging to them and far more than enough to meet the needs of the people.
Washington preferred to treat the States as bankrupt, and execute a coup d'état. The police power thus exercised by Congress over the "health, safety, morals, education and general well-being of the people" was withheld from it by the Constitution and -- for double security -- denied to it by the Tenth Amendment. Its conduct was twice wrongful.
The States must return to the Constitution and resume control of their Union, their property, and their prerogatives.
The fallacy on which "graduated" (or what Karl Marx named "progressive") or discriminative -- and therefore unconstitutional -- taxes are based was expressed by the Supreme Court of the United States in 1898 in a case (170 U. S. 283) arising under a law of Illinois and involving estate or inheritance taxes.
Probably the success of that litigation for the tax gatherer induced Congress -- which had failed with its Income Tax Law of 1894 -- to step in and enact (1898) a Federal Estate Tax Law with a "graduated" scale and thereby get some funds of a new sort. In 1900 that Act of Congress was upheld (178 U. S. 41) on the "principle" laid down in the case from Illinois, to be quoted presently.
Then came the Income Tax Amendment of 1913, which made no mention of "graduation." Congress immediately enacted, in October of that year, a "graduated" tax levy, which was upheld (240 U. S. 1) by the Supreme Court in 1916 on the "principle" of the two preceding decisions respecting estates passing at death.
Justice Brewer dissented from the doctrine established because "equality in right, equality in protection, and equality in burden is the thought which runs through the life of this Nation and its constitutional enactments from the Declaration of Independence to the present hour."
Before those decisions, half a dozen of the Supreme Courts of the States had held, as previously shown, graduation to be repugnant to protective clauses in all American constitutions, and especially to the clause commanding "equal protection." The Supreme Court of the United States made no reference to those decisions.
The "philosophy" enunciated by the Supreme Court in 1898 and repeated in 1900 and 1916 was in this language, practically a copy of the erroneous holding of the Supreme Court of Illinois:
"The right to take property by devise [will] or descent [by statute in absence of will] is the creature of the law, and not a natural right -- a privilege, and, therefore, the authority which confers it may impose conditions upon it."
That is, the law may say to the transmitter or the taker (or to both as it has come to pass) that this property will not descend unless you accept a graduated scale of taxation on the "privilege" which a gracious government extends to you.
That is at once historically erroneous and contrary to the first fundamental of American Government, as stated by Justice Brewer. The Americans set up Government "to secure" (the Declaration of Independence says) preexisting rights to life, liberty, and the pursuit of happiness -- the pursuit being largely the pursuit of property and the comforts and cultures which it brings. And as his Constitution twice puts property in the class with liberty and life, how can it be contended that law (which he writes himself) gives to him his property any more than it gives him his life?
In the earliest of English charters (1101) we find recognition by King Henry I of the preexisting right of a subject to dispose of property at death. By that charter, which Henry was compelled to sign as a condition of being crowned, he was restoring to the people rights which had been usurped by William the Conqueror (1066) and his son, William II. Section 7 of the charter reads:
"If any of my barons or feudal dependents shall fall sick, according as he shall give away his money, I concede that it shall be given. But if, prevented by unlikely chance of physical infirmities, he shall not give away his money or arrange to give it, his wife and children or relations and lawful heirs shall divide it up for the good of his soul as shall seem best to them."
That is, in no circumstances could the King any longer take the property of a subject at his death. When an Englishman "arranged" to give away his money, that was a will (which need not have been in writing); when he failed to arrange, his property went by custom (now in the United States by his own Statute of Descent) to his widow and other heirs.Of that right, which did not come from the King of England (and does not come from Government or "law" in the United States), Blackstone wrote in 2 Commentaries, page 491:
"With us in England this power of bequeathing is coeval with the first rudiments of the law: for we have no trace or memorials of a time when it did not exist."
That is, the right to distribute property at death is a natural right. Feudalism in England denied it for a time. A recent English writer on the law says that the estate tax is a recrudescence of Feudalism.[6]
Hallam, the constitutional historian, tells us (Middle Ages, p. 445) that, in early England, man passed lands and other property at death by his own right, not by governmental permission, but by the custom of which he was, of course, the maker:
"The descent of lands before the Conquest [1066] was according to the custom of gavilkind, or equal partition among the children."
Thus, the history of the law is that the English-speaking man does not get from government the "privilege" of transmitting property at death, or of taking it by bequest or inheritance upon the death of another.
6. On December 23, 1949, the Associated Press reported that a 9-million dollar oil company in Pennsylvania had sold its property to a larger company because "the higher and higher inheritance taxes, as well as income taxes, have meant that a business developed by an individual, or by a small group of individuals, cannot be passed on to a second generation."
William the Conqueror (1066), who rooted Feudalism in England, and his sons took the estate at death until stopped by the Charter of 1101.
So many properties in this country had been unable to marshal the cash to meet the estate tax levied upon the death of an owner or part owner that the practice became common to carry life insurance on the members and thereby with ready money prevent the destruction of the company.
In reporting to 1,000 employees the sale of the property first mentioned, the two men owning most of the stock said: "In the event of the death of one of our principals, a sale of the company would be almost inevitable."
The history of tyrannical governments does not disclose many cases to beat that, of a common sort in our land of supposedly independent men.
The foundation of the decision of the Supreme Court of the United States upholding the "graduated" -- capricious and confiscatory -- tax of Communism was laid in sand.
From that developed the most cruel fleecing by taxation of a great people by the Government which they established to protect them and their property that the world has known.
From the money, almost beyond measurement, came the intoxication of Government with power.
The theory applied by the Supreme Court in the case of the "graduated" inheritance law of Illinois, namely, that as transmission of property is by permission of government, conditions can be added, should not have been employed to justify "graduated" taxes on incomes. For certainly the living man does not require permission of government to engage in income-yielding activities!
Historically and legally untenable as the first decision was, the last was worse.
Where have we been brought with the money yielded by the unconstitutional application of the Income Tax Amendment?
In 1949, the National Government spent $6 for every $5 collected. For 15 weeks of the fiscal year beginning July 1, expenditures were 12 billion and collections were 10 billion. That proportion for the full year would bring a deficit of more than 7 billion.
For a time the panic of 1907 was worse than that of 1893, as in parts of the country the circulating medium disappeared and cities and various bodies issued "scrip" to be used as money.
in full effect
The platform of 1908 of the National Socialistic Party, speaking of that panic, demanded a "graduated" income tax and a graduated inheritance tax as a means of distributing wealth.[1]
1. Socialists have been charged with disagreement as to what they really stand for. From the platform of the National Socialist Party of 1908, following the very severe panic of the year before, a definition may be drawn. The writers of the platform betrayed a most comprehensive misunderstanding of the powers and obligations of our National Government. They called for:
1. Relief works through building schools and canals, by reforesting, by reclamation, and by extending all other public works;
2. Loans of money by the United States to States, municipalities, and for public works;
3. Ownership by the United States of railroads, telegraph and telephone lines, steamships, all land, and all industries;
4. Extension of the public domain to take over mines, quarries, oil wells, forests, and water power;
5. Extension of the graduated income tax and inheritance tax;
6. Abolition of the power of the Supreme Court to hold an act of Congress unconstitutional;
7. Creation of a Department of Health and a Department of Education;
8. Insurance against unemployment, illness, accident, invalidism, old age, and death;
9. Funds for the unemployed.
Some of those matters are within the police power of the States, but none lies within the jurisdiction of the Nation. The proposed taking over of property by taxation and by seizure is Communistic.
The reader should be profited by considering carefully how far we have already gone into that unconstitutionalism. How much of the "New Deal" and the "Fair Deal" comes from that -- from the junk piles of futile expedients with which wretched governments have strewn the highway of history?
After the close of the war in 1945 a new government in England undertook the acquisition of private property by what it termed "nationalization."
"New Deal" a very ancient failure
Knowing the type very well, the historians who wrote the Constitution gave nothing that is in the "New Deal" any recognition whatever. Life, liberty, and property they left with men, to whom they belong, and for whom and by whom the Constitution was conceived for self-protection.
The "New Deal" is thoroughly unconstitutional.
Yet the persistence through the centuries of the idea that Government can do the business of man better than he can, which showed up in this land of liberty in 1933 with the effrontery of a Stuart king or a Bourbon, is a fact that must keep Americans on guard.
States deposed themselves from constitutional sovereignty
Hamilton failed to foresee that in time the States, instead of defending their sovereignty in local affairs, would, through their representatives in Congress, undermine themselves (The Federalist, No. 28):
"State governments will, in all possible contingencies, offer complete security against invasions of the public liberty by the National authority."
Plain income tax not objectionable
It should probably not be laid on the income of manufacture or production.
Since graduation was contrary to constitutional principle, it should have been foreseen by statesmen that the Income Tax Amendment as applied by Congress would work badly. It enabled the central Government, like an octopus, to thrust a tentacle into the revenue supply of each State and drain it, leaving the State partially helpless to perform its essential functions and making it a beggar at the Capital for a share of its own money.
Nation given worst form of power
Money in excess at Washington has covered the country with a thoroughly disreputable organization of politics -- the begging States having been to a degree forced to aid in carrying out, as baronies, the "objectives" of the superior authority from which they now hold their place on earth and to which they render most humble fealty.
Roosevelt totally lacking in
knowledge of taxation
"Through tax processes," he said, excess profits can be kept down, and at the same time "further large sums" can be raised for the financing of the war.
The plain import of that language is that "tax processes" may be employed -- as they certainly have been illegally for nearly three decades -- for other purposes than the raising of necessary revenue for the support of strictly governmental functions.
When law was scientific, care was exercised to levy no more taxes than would meet the needs of government economically administered. President Coolidge said that taxation beyond that need is "legalized larceny." President Cleveland denounced almost as severely the taking by taxation of revenue not required.
Those two understood clearly the American meaning of the word "tax," as applied for upwards of 300 years. Neither to them nor to those before them was a tax a weapon. It was not an instrument for taking from those with possessions and bestowing, either directly or indirectly, upon those without.
President Roosevelt for the
confiscation of Communism
"They [the proletariat] have nothing of their own to secure and fortify," wrote Marx; "their mission is to destroy all previous securities for, and insurance of, individual property."
The instrument to accomplish that destruction would be "a heavy progressive [graduated] income tax."
"The abolition of all rights of inheritance" would be used by Marx and his followers toward putting an end to private property.
Karl Marx elucidates his idea
"The distinguishing feature of Communism is not the abolition of property generally, but of the bourgeois [capitalistic] property. But modem bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based on class antagonisms, on the exploitation of the many by the few.
"In this sense the theory of Communism may be summed up in the single sentence: Abolition of private property."
The "heavy progressive" taxes which he proposed would transfer property from the bourgeoisie to Government, and Government would be in the proletariat.
Marx again:
"The immediate aim of Communism is the same as that of all the other proletarian parties: formation of the proletariat into a class, overthrow of the bourgeois supremacy, and conquest of political power by the proletariat."[2]
2. Social and Political Doctrines of Contemporary Europe, Oakeshaft, pp. 88 to 101.
Perhaps the best way to define Communism is to present an abstract of the Communist Manifesto of 1848:
1. Abolition of property in land, and application of all rents of land to public purposes;
2. A heavy progressive income tax;
3. Abolition of all rights of inheritance; (cont. from 57)
4. Confiscation of property of all emigrants and rebels;
5. Centralization of credit in the hands of the state by means of a national bank with state capital and exclusive monopoly;
6. Centralization in the hands of the state of the means of communication and transport;
7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan;
8. Equal obligation of all to work. Establishment of industrial units, especially for agriculture;
9. Combination of agriculture with manufacturing industries, and gradual abolition of the distinction between town and country by a more equable distribution of the population;
10. Free education of all children in public schools, abolition of children's factory labor in its present form, and the combination of education with industrial production.
And men teaching and preaching that sedition have been permitted to run for the Presidency of the United States!
Communism the first "American way of life"
Lenin wrote that the worker receives under Communism "a certificate from society" for the amount of work done. He gets in return from the public warehouse "a corresponding quantity of products," after there has been deducted "that proportion of labor which goes to the public fund." In the main that is the method in Soviet Russia today, according to Gen. Walter Bedell Smith, former ambassador to that country, in My Three Years in Moscow.
Governor Bradford on failure
of Communism at Plymouth
"For the young men," wrote Bradford, "that were most able and fit for labor and service did repine that they should spend time and strength to work for other men's wives and children without any recompense. The strong, or men of parts, had no more division of victails and cloths than he that was weak and not able to do a quarter the other could. This was thought injustice."
Of course, it was unjust, an affront to reason, a burden at which human nature rebels.
Thus the communal life was rejected at the beginning for American private enterprise.
American spirit called "wealth" by Hamilton
"The unequaled spirit of enterprise which signalizes the genius of American merchants and navigators, and which is in itself an inexhaustible mine of national wealth."
Government has been undermining that self-reliance until a critic has said that the people are more fearful of life than of death. And in 1949, so much had American spirit deteriorated (in places) that the Vice President could say in an address to an association of businessmen:
"As much as we wish for the good old simple days, the complexities of our lives have created an interdependence among all of our citizens. This has created a necessity for the guidance of the Government in the problems that beset our people."
Most of the worst "problems" have been created by men in Government who had never, before taking public office, exhibited any notable talent in the world of affairs. They have been incompetent "guides." Our constitutional system has been turned by them into a manufactory of problems and emergencies.
Those problems cannot be solved by Communism.
"Graduated" tax of Communism
never proposed by Congress
The purpose of the proposed Amendment was to take out of the Constitution, as it would affect an income-tax law, the provision (section 2 of Article I) on which the Income Tax Act of 1894 foundered, namely:
"Direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective numbers."
That is, according to population. The Supreme Court had held (157 U. S. 429) the taxes stated to be direct taxes, and that as they had not been apportioned by Congress among the several States, the act was unconstitutional. Hence, the Amendment:
"Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Hamilton did not dream that the provision for uniformity in taxation which he was extolling would be stricken out (emphasis his):
"The abuse of this power of taxation seems to have been provided against with guarded circumspection. In addition to the precaution just mentioned, there is a provision that 'all duties, imposts and excises shall be UNIFORM throughout the United States.'"
Sixteenth Amendment gave
Congress no power to tax
Especially it did not authorize Congress to take leave of the rule and practice of uniformity and equality of treatment which had always governed in every field of taxation and employ a method without rule, without reason, for the taking of money of the Americans for other purposes than the actual needs of government economically administered. It did not authorize Congress to confiscate the income of a man until it would not be what President Franklin D. Roosevelt called "too high." It did not empower Congress to drain the States of their resources and subject them to bureaucratic domination. Nor did it give authority to government to enter the fields of production, manufacture, agriculture, world saving and others, and to spend money for purposes not within the only area laid out in the Constitution, that is, "the common Defense and general Welfare of the United States."
Lawless government caused
by money in excess
For if what has been taking place in our land and other lands during the last third of a century had been intended by President Taft when he asked Congress to propose an amendment, he would have made specifications to that effect. He would have asked for a "graduated" tax.
"Graduated" tax not proposed by Congress
Without the clearest specifications in the Sixteenth Amendment for "graduated" rates, showing a purpose to bring about, by radical departure from American method, what we have witnessed with consternation, Congress had no power to pass the act of October 3, 1913, and subsequent income-tax laws levying graduated taxes.
People had shown no
enthusiasm for income tax
Article V of the Bill of Bights forbids that "private property be taken for public use without just compensation." When the United States wants the land of an American as the site of a post office, or for any other purpose, it must bring a condemnation proceeding in the exercise of its eminent domain, when the need for taking the property will be proved and its value ascertained. That value the United States must pay.
Taxpayer entitled to benefit
equivalent to tax
That principle was laid down as to taxation in a single, clear, short sentence by Judge Cooley in Constitutional Limitations, 2nd edition, p. 495 (italics inserted):
"As all are alike protected, so all should share the burden, in proportion to the interest secured."
A man with an income of $100,000 should pay ten times more in taxes than the one worth $10,000, because he has ten times as much value needing the protection of the government which he established. But he should not, at the caprice of the spirit of Communism, pay fifteen or twenty times as much. Nor does he so pay in any field of taxation except in that where taxes on incomes, and on estates passing at death, are levied.
"Graduated" tax not applied
to other property
As the statement of President Roosevelt was the most absolute assertion of an unlimited power in government to take property by taxation for other purposes than revenue, a belief which has for years been expressed in unscholarly seats of learning, in sections of the Press, and elsewhere, it is plain that at last we have "entered a boundless field of power," to use Jefferson's warning language, "no longer susceptible of any definition."
President Roosevelt for
Marxist confiscation
"Taxation is the only practical way of preventing the incomes and profits of individuals and corporations from getting too high. I have told the Congress once more that all net individual incomes, after payment of all taxes, should be limited effectively by further taxation to a maximum net income of $25,000 a year."
That idea of the President, that he or his Government could limit the income of an American, is one phase of a fatuous belief which the schools have made common, namely, that rights to property are conferred upon him by law. Whereas, the Declaration of Independence says that he set up this Government himself "to secure these rights" which come to him from the Creator, "among which are life, liberty and the pursuit of happiness," that pursuit including the acquisition of property. Necessarily his rights and property preceded the Government which he set up for the purpose of protecting them.
Tax must be for revenue,
not punishment
When members of Congress returned to Washington from their homes after the election in November, 1946, and undertook to draw a tax bill to meet the wishes of the country for a 20-per-cent reduction of the levies on incomes, they were astonished to find that it is the small incomes that are supporting the extravagances and illegal spending of the Government, and that the cut indicated would leave the Treasury without sufficient funds. The big boys, who were to be "soaked" when the Sixteenth Amendment was proposed, by levies on vast properties hitherto un-taxed, are paying comparatively little.
How the tax load was divided
Those with net incomes from $2,500 to $5,000 (also small money), numbering 15,157,265 persons, paid $5,444,000,000.
In the group from $5,000 to $10,000 net income there were only 1,314,457 taxpayers, and they contributed $1,509,000,000.
The group having from $10,000 to $25,000 numbered only 551,267, and they contributed in taxes $2,181,000,000.
There were only 143,725 taxpayers with incomes from $25,000 to $100,000 and they paid $2,673,000,000.
In the group with incomes above $100,000 there were only 9,599 taxpayers, who took a burden of $1,100,000,000.
Low incomes carry
big load of government
The foregoing figures are from the United States News of February 14, 1947, page 30, which commented that "in trying to give the big break to the little taxpayer, Congress runs up against those facts," and that "taxing the rich is not enough," although 86 per cent is taken from the income of those in "the highest income levels."
The report of the Secretary of the Treasury for 1946 shows receipts of more than 30 billion from "income taxes," but that amount includes "profit taxes" on transactions in business, as distinguished from wages, salaries, and other forms of personal income.
Who really got "soaked" when Congress passed a "graduated" income-tax bill which was not authorized by the Sixteenth Amendment of 1913, and which was therefore unconstitutional?[3]
The very rich forsook the risks of industry and trade, forgot the troubles with employees over wages and working conditions, and retired to the velvet comforts of that most stupendous American business, the National Debt, largely tax exempt.
By beginning in time of peace (1913) the borrowing of money from the people of the country and securing, through the enticement of exemption from taxation, a high price in the market for its bonds issued therefor, Congress gathered away from taxable enterprises millions which rose to billions and are in 1950 headed for trillions -- all cleared of the taxes which had before gone to the support of government.
Necessarily those not owning bonds had to take a larger load of taxes to compensate for the exemption.
How much will the depletion thus caused of this country's powers of production and transportation, which won both wars, imperil the future of the United States?
How much did the corroding debt of England, attended by widespread poverty, for 125 years before World War I contribute to the debilitation of industry resulting in its "nationalization"?
3. Whatever talk there may have been in the streets about "soaking the rich" by a graduated tax, or whatever may have been said by some in Congress on that point, the rule of interpretation is that the enactment must be taken at its face value. A radical change in the existing order -- like the introduction of a form of taxation not used against any other kind of property -- can be accepted only on a purpose most clearly expressed. The amendment proposed by Congress and ratified by the legislatures did not use "graduated" to describe the tax. Therefore, a graduated tax was not proposed.
"Where the language of an enactment is clear," said the Supreme Court of the United States (278 U.S. 269) ". . . . the words employed are to be taken as the final expression of the meaning intended. And in such cases legislative history may not be used to support a construction that adds to or takes from the significance of the words employed."
That is to say, authority "to lay and collect taxes on incomes" was authority to lay taxes as they are laid on all other kinds of property -- one rate on all property of the same kind, money in the case of incomes. In going beyond that, Congress violated the Constitution.
The talk about soaking the rich might have related to the fact that the big incomes (along with the little) never had paid any tax at all. It was quite proper to tax them -- but only constitutionally.
Courts of States had
denounced "graduated" tax
In 1882 the Supreme Court of New Hampshire held a "graduated" tax on estates void for conflict with the command of the Constitution of the State, that taxes be proportional and reasonable."
In 1889 the Supreme Court of Minnesota held likewise.
In 1894 the Supreme Court of Ohio said:
"The rate per cent must be the same on all estates. There can be no discrimination in favor of the rich or poor. All stand on an equality under the provisions of the Constitution, and it is this equality that is the pride and safeguard of us all."
In 1898 the Supreme Court of Missouri, eighteen years before the Supreme Court of the United States sanctioned the graduated or confiscatory tax, expressed (143 Mo. 287) the like view, saying that it was "without rhyme or reason."
The next year the Supreme Court of Pennsylvania held (191 Pa. 1) that classification of different amounts of money as different kinds of property, and therefore subject to different rates of tax, is a fallacy and "necessarily unjust, arbitrary and illegal."
In short, the graduated tax is Communistic.
Congress quickly repealed
Civil War Income Tax
The Act of 1861 levied 5 per cent flat on incomes over $800.
The Act of 1862 levied 3 per cent on $600 to $10,000; 5 per cent above $10,000.
The Act of 1864 levied 5 per cent on $600 to $5,000; 7½ per cent on $5,000 to $10,000; 10 per cent on more than $10,000.
The Act of 1867 levied 5 per cent flat on more than $10,000.
The Act of 1870 levied 2½ per cent flat for 1870 and 1871, "and no longer," quoting the words of the law.
Of the five levies, two were "graduated" and three were flat.
Congress recognized that such taxes could be justified only by the peril of war and through the exertion of the war powers, and it wiped them away as soon as it could. It never returned to nonuniform taxes until the doctrine of Communism had been taken up by our "intellectuals."
In 1864 Congress called for the prayers of the country "to implore Him as the Supreme Ruler of the world not to destroy us as a people, nor suffer us to be destroyed by the hostility or connivance of other nations" -- referring to the unneutral conduct in our Civil War of England and France. In such circumstances of national alarm no American would question in a lawsuit the validity of taxes of whatsoever sort.
Income tax thus adjudged war measure
The most striking example of the fatuous condition of affairs in our country is in the call of States for an amendment to prevent their representatives in Congress from weakening them by the income tax and the estate tax of more than 25 per cent. Article V authorizes the States to apply to Congress "to call a Convention for proposing Amendments," and during 1949 many States made the application.
First, as a practical matter, the action is objectionable, because if Congress should get authority to take 25 per cent of incomes and estates, it will do so forever -- whereas, our history for 130 years demonstrated that Congress can get along without either of those taxes.
Second, the needed amendment -- if the States fear (as they may have reason to) that their representatives in Congress will not refrain from exhausting them by taxation -- is one forbidding income and estate taxes by Congress except in time of war. As elsewhere shown herein, the Civil War income tax was promptly rejected by Congress as a tax justifiable in time of peace.
That definition of the tax should stand forever.
But the spectacle of citizens petitioning for protection from the men they elect to Congress! Can you believe it?
Exemptions as unconstitutional as graduation
During a housing and building shortage caused by World War I the legislature of New Jersey, to encourage construction, enacted a law exempting from taxation for five years all new structures. It was held (116 Atlantic 328) void for disregard of the command of the Constitution of the State for uniformity of taxation upon all.
Cooley, the great authority of his time, said in his work Taxation (2d ed., p. 215) that "it is difficult to conceive of a justifiable exemption law which would select single individuals or corporations, or single articles of property, and, taking them out of the class to which they belong, make them the subject of capricious legislative favor. . . . It would lack the semblance of legitimate legislation."[4]
4. The constitutions of the States generally authorize the exemption from taxation of church property, of school property, of public property and buildings, and of other property not used for profit. Such properties are not in competition with those employed in providing a livelihood for men, who secure through taxes the protection of government in their endeavors. Further, by teaching and other work they give service to society equal to or above a yield in taxes. They are not really "properties" within the class for taxation.
Exemptions prime cause
of French Revolution
When Louis XVI convoked (1789) the States General it appeared that the troubles of the country which resulted finally in the Revolution sprang from exempting government officials and the favored classes from taxation.The Income Tax Law of 1894 exempted all incomes below $4,000. Although the law was held void for failing to "apportion" the burden among the States according to population, as directed by the Constitution, Justice Field took occasion to denounce the exemption of all incomes below $4,000.
"The present assault upon capital is but the beginning," he wrote. "Unless the rule of the Constitution governs, a majority may fix the limitation at such a rate as will not include any of their number."
American officials like exemptions
5. Section 1 of Article II of the Constitution commands that the "compensation" of the President "shall neither be encreased nor diminished during the Period for which he shall have been elected." In January, 1949, just before the President entered upon the term for which he was elected in November, 1948, Congress increased his salary from $75,000 a year to $100,000.
In January, 1949, Congress granted to the President $50,000 a year to cover his expenses, which theretofore had been carried in the budget in support of the White House. This grant was made exempt from the income tax. If it was for expenses, it was not taxable as salary, and the exemption was superfluous. If it was in truth salary -- for the usual report on expenses was waived -- then it could not be legally exempted. And, more important still, it could not be enjoyed by a President before the next term, beginning in January, 1953.
It may interest the taxpayer to study those cards as played.
The whole White House force of 225 (53 under Roosevelt and 87 under Hoover) received increases from the taxpayers. (Cont. on 74)(Note 5 cont.) Special counsel was advanced from $12,000 to $20,000 a year. President's aide (labor) from $15,000 to $20,000 a year. 3 secretaries, each from $10,830 to $18,000 a year. 5 administrative assistants from $10,330 to $15,000 a year. 10 Cabinet members from $15,000 to $22,000 a year.
A number of lesser functionaries were favored with increases of pay, 900,000 classified workers receiving advances aggregating $130,000,000 yearly.
Colossal properties illegally
exempted from taxation
In 1931, before the saving of mankind from want and fear by Government became known to Government as the first of its expanding duties, there were outstanding $22,536,000,000 of bonds wholly exempt from (1) the property tax, from (2) the normal tax, and from (3) the surtax of the United States, as shown by the Report of the Secretary of the Treasury for 1932, page 439.
That property, paying no taxes as property and not taxable on its income, was greater than the aggregate value of Class I railroads in the United States (95 per cent of mileage and 97 per cent of total earnings) as found by the Interstate Commerce Commission in 1945, namely, $19,571,000,000.
The railroads paid over a billion in taxes that year.
Enormity of prejudice to
overburdened taxpayers
What would the average man say if word were to be given out that Government (National and State) had determined to exempt the railroads from that burden and put the billion load on other taxpayers!
While at first the common man was to be very kindly treated under income-tax laws as Government would proceed with the new weapon to "soak the rich," it has come to pass that a person with an income of $600 a year (which takes in practically all wage earners) must report his earnings. Yet banks, many of them living largely on the Public (National and State) Debt, trust companies holding vast estates resting on exempt bonds, universities and other institutions with exempt bonds a considerable part of their endowments, are released from support of Government to the extent of their property in bonds and on the income of some of them.
Wrong should be
righted by guilty States
The States, by proposal in Congress or by action of their legislatures under Article V, should amend the Constitution again by repealing the Sixteenth Amendment and resuming police Jurisdiction of the wealth of their people, as they repealed the Eighteenth Amendment after becoming convinced that they had made a mistake in giving to the Nation a burden of police which it was not -- and could not be -- organized to carry.
Congress would then still have power to tax incomes, as it had before the Amendment, but it would be obliged to do so Justly -- for revenue only, not for the distribution of property, for leveling down possessions, for punitive purposes, or for stripping Americans for the help of Europeans who are antagonistic to our Government and our beliefs.
And it would be unable to bleed the States to financial helplessness, where the Supreme Court thought them to be when it gave sanction to the Social Security Law chiefly on that error. For if the representatives of the people of the States in Congress at that critical juncture had repealed the Income Tax Law, as they should have done, the States would have the money properly belonging to them and far more than enough to meet the needs of the people.
Washington preferred to treat the States as bankrupt, and execute a coup d'état. The police power thus exercised by Congress over the "health, safety, morals, education and general well-being of the people" was withheld from it by the Constitution and -- for double security -- denied to it by the Tenth Amendment. Its conduct was twice wrongful.
The States must return to the Constitution and resume control of their Union, their property, and their prerogatives.
The fallacious idea
of the Supreme Court
Probably the success of that litigation for the tax gatherer induced Congress -- which had failed with its Income Tax Law of 1894 -- to step in and enact (1898) a Federal Estate Tax Law with a "graduated" scale and thereby get some funds of a new sort. In 1900 that Act of Congress was upheld (178 U. S. 41) on the "principle" laid down in the case from Illinois, to be quoted presently.
Then came the Income Tax Amendment of 1913, which made no mention of "graduation." Congress immediately enacted, in October of that year, a "graduated" tax levy, which was upheld (240 U. S. 1) by the Supreme Court in 1916 on the "principle" of the two preceding decisions respecting estates passing at death.
Justice Brewer dissented from the doctrine established because "equality in right, equality in protection, and equality in burden is the thought which runs through the life of this Nation and its constitutional enactments from the Declaration of Independence to the present hour."
State Supreme Courts
understood subject clearly
The "philosophy" enunciated by the Supreme Court in 1898 and repeated in 1900 and 1916 was in this language, practically a copy of the erroneous holding of the Supreme Court of Illinois:
"The right to take property by devise [will] or descent [by statute in absence of will] is the creature of the law, and not a natural right -- a privilege, and, therefore, the authority which confers it may impose conditions upon it."
That is, the law may say to the transmitter or the taker (or to both as it has come to pass) that this property will not descend unless you accept a graduated scale of taxation on the "privilege" which a gracious government extends to you.
Some history on
property rights
That is at once historically erroneous and contrary to the first fundamental of American Government, as stated by Justice Brewer. The Americans set up Government "to secure" (the Declaration of Independence says) preexisting rights to life, liberty, and the pursuit of happiness -- the pursuit being largely the pursuit of property and the comforts and cultures which it brings. And as his Constitution twice puts property in the class with liberty and life, how can it be contended that law (which he writes himself) gives to him his property any more than it gives him his life?
In the earliest of English charters (1101) we find recognition by King Henry I of the preexisting right of a subject to dispose of property at death. By that charter, which Henry was compelled to sign as a condition of being crowned, he was restoring to the people rights which had been usurped by William the Conqueror (1066) and his son, William II. Section 7 of the charter reads:
"If any of my barons or feudal dependents shall fall sick, according as he shall give away his money, I concede that it shall be given. But if, prevented by unlikely chance of physical infirmities, he shall not give away his money or arrange to give it, his wife and children or relations and lawful heirs shall divide it up for the good of his soul as shall seem best to them."
Government not to take
property at death
That is, in no circumstances could the King any longer take the property of a subject at his death. When an Englishman "arranged" to give away his money, that was a will (which need not have been in writing); when he failed to arrange, his property went by custom (now in the United States by his own Statute of Descent) to his widow and other heirs.Of that right, which did not come from the King of England (and does not come from Government or "law" in the United States), Blackstone wrote in 2 Commentaries, page 491:
"With us in England this power of bequeathing is coeval with the first rudiments of the law: for we have no trace or memorials of a time when it did not exist."
That is, the right to distribute property at death is a natural right. Feudalism in England denied it for a time. A recent English writer on the law says that the estate tax is a recrudescence of Feudalism.[6]
Hallam, the constitutional historian, tells us (Middle Ages, p. 445) that, in early England, man passed lands and other property at death by his own right, not by governmental permission, but by the custom of which he was, of course, the maker:
"The descent of lands before the Conquest [1066] was according to the custom of gavilkind, or equal partition among the children."
Thus, the history of the law is that the English-speaking man does not get from government the "privilege" of transmitting property at death, or of taking it by bequest or inheritance upon the death of another.
6. On December 23, 1949, the Associated Press reported that a 9-million dollar oil company in Pennsylvania had sold its property to a larger company because "the higher and higher inheritance taxes, as well as income taxes, have meant that a business developed by an individual, or by a small group of individuals, cannot be passed on to a second generation."
William the Conqueror (1066), who rooted Feudalism in England, and his sons took the estate at death until stopped by the Charter of 1101.
So many properties in this country had been unable to marshal the cash to meet the estate tax levied upon the death of an owner or part owner that the practice became common to carry life insurance on the members and thereby with ready money prevent the destruction of the company.
In reporting to 1,000 employees the sale of the property first mentioned, the two men owning most of the stock said: "In the event of the death of one of our principals, a sale of the company would be almost inevitable."
The history of tyrannical governments does not disclose many cases to beat that, of a common sort in our land of supposedly independent men.
Supreme Court decision
rested on sand
The foundation of the decision of the Supreme Court of the United States upholding the "graduated" -- capricious and confiscatory -- tax of Communism was laid in sand.
From that developed the most cruel fleecing by taxation of a great people by the Government which they established to protect them and their property that the world has known.
From the money, almost beyond measurement, came the intoxication of Government with power.
The theory applied by the Supreme Court in the case of the "graduated" inheritance law of Illinois, namely, that as transmission of property is by permission of government, conditions can be added, should not have been employed to justify "graduated" taxes on incomes. For certainly the living man does not require permission of government to engage in income-yielding activities!
Historically and legally untenable as the first decision was, the last was worse.
Where are we "at"
with this money?
Where have we been brought with the money yielded by the unconstitutional application of the Income Tax Amendment?
In 1949, the National Government spent $6 for every $5 collected. For 15 weeks of the fiscal year beginning July 1, expenditures were 12 billion and collections were 10 billion. That proportion for the full year would bring a deficit of more than 7 billion.
The Truman administration spends yearly 45 billion The Roosevelt administration spent (including War) 81 billion The Hoover administration spent 3.8 billion The Coolidge Administration spent 3 billion The Harding administration spent 3.8 billion The Wilson administration spent (including War) 5.8 billion (Figures from Washington Bureau, Chicago Tribune)
And at the close of the first session of the 81st Congress in October, 1949, it was announced that higher taxes would be levied at the next session!
Where the point of peril is
As remarked elsewhere in another relation, and as has been learned by the dwellers along the rivers of the country, it is the first trickle of the water over the levee that must be prevented. The Constitution is a levee to prevent power in Government from breaking into a boundless field "no longer susceptible of any definition."
It is the obligation of the schools, colleges, and universities to make the American competent to see what is coming before it strikes him down.
The Americans who founded the Republic had such education. In a speech in the House of Commons in 1775 defending them, Edmund Burke remarked on this, saying that "they anticipate the evil, and judge of the pressure of the grievance by the badness of the principle."
That is where latter-day education has failed the American.
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