The Day Freedom Died

A man or woman has to be at least 98-years-old to say they were alive in the United States when a person could legitimately proclaim “I am a free person!”

The Oxford English Dictionary’s primary definition of “freedom” is: “1. The state or fact of being free from servitude, constraint, inhibition, etc.; liberty. a. Exemption or release from slavery or imprisonment.”^¹

Mario Pei describes “freedom from government” is what set the United States apart from other countries when his family emigrated from Italy in 1908.^² Pei’s description is consistent with the definition of “freedom,” and it presupposes that a person has a right to the fruits of their labor.

In 1908 the federal government was almost invisible to most people, whose only contact with it could have been their local postal carrier. The federal government’s unobtrusiveness at that time is reflected by the fact its receipts were about 2% of the United States’ Gross Domestic Product – and more than half of that was spent on national defense.^³ The federal government was primarily funded by customs tariffs and excise taxes that were invisible to the purchasers of a product.

A natural check on the size of any organization is its revenue, and its ability to borrow based on its expected future revenue. The United States Constitution limited the federal government’s size by limiting it means of procuring revenue.^⁴ The U.S. Constitution’s limitation on revenue collection changed when the 16^th Amendment was declared ratified on February 3, 1913.^⁵ Notwithstanding any academic questions about how the 16^th Amendment was enacted, its legality, and its scope, the federal government’s enforcement of levying and collecting taxes on income began in 1914 and continues to the present day.^⁶

One aspect of the 16^th Amendment that is not disputed is it did not impose any limitation on the tax percentage that could be levied on income.^⁷ In 1944 and 1945 the maximum tax rate was 94% levied on income over $200,000 for all taxpayers, and the lowest tax rate was 23% for income between $0 and $2,000.^⁸ As recently as 1963 the maximum tax rate on an individual was 91% for income over $200,000.^⁹ In 1981 the maximum tax rate for an individual was 70% for income over $108,300.^¹⁰

The effect of the 16^th Amendment was not just to adjust the U.S. Constitution so the federal government had an additional substantive source of revenue, it also ensured the government would have a reliable continuing stream of revenue. The federal government’s increased creditworthiness improved its ability to borrow money for future repayment, which meant the federal government could raise the money it needed to cover spending beyond its current revenue by effectively using its taxing authority under the 16^th Amendment as collateral.

The most visible consequence of the 16^th Amendment is the federal government’s footprint today compared with 1913 when the federal government’s revenue was 1.8% of the U.S.’ GDP.^¹¹ The federal government’s economic presence has increased by more than 1,400% since 1913 to the point that it now spends more than 25% of the GDP.^¹² Payment of the federal government’s more than $14 trillion cash debt and its unfunded liabilities of more than $113 trillion, for a total of over $127 trillion in debt and liabilities (as of April 6, 2011), is secured primarily by the reliableness of the 16^th Amendment’s taxing authority.^¹³

The most ubiquitous consequence of the 16^th Amendment was it fundamentally altered the relationship between the federal government and every individual within the domain over which the federal government claims jurisdiction. As the 16^th Amendment has been enforced the federal government can levy any rate of taxation on income that it deems appropriate. Indeed, within three years the top tax rate increased from 7% in 1914 to 67% in 1917, and it was 77% in 1918.^¹⁴

There is in fact no legal prohibition barring the federal government from levying a 100% federal income tax on every individual, because the 16^th Amendment does not limit the rate of taxation the federal government can impose.^¹⁵ The federal government could take possession of all money earned by an individual directly or through their investments by imposing 100% withholding at the source, and then dispensing to that individual whatever amount it deemed appropriate based on their circumstances. That would be a faithful implementation of the principle “from each according to his ability to each according to his needs!”^¹⁶

Consequently, the 16^th Amendment has been enforced to transform the relationship between individuals and the federal government by creating a heretofore unknown legal claim by the federal government to everything that an individual earns. That same legal claim is made on everything a business earns that individuals have a direct or indirect investment in.^¹⁷ Since 1913 an individual in the U.S. has not had a legal right to any of the fruits of their direct labor or investments, but he or she can only keep what the federal government doesn’t choose to take.

One hundred percent withholding is effectively what a slave owner does to a slave by taking possession of all the fruits of a slave’s labor, and then doling out food, clothes and other incidentals necessary to ensure the slave remains productive.

An actual 40% federal income tax rate means the government is allowing an individual to keep 60% of the money they make. The same end result would be accomplished if the federal government directly received 100% of an individual’s income and allotted 60% to him or her. That would reveal what is obscured by the way the 16^th Amendment is implemented – it transformed every individual in the United States into a slave by created a de facto master-slave relationship between the federal government and every individual it claims taxing jurisdiction over.^¹⁸

The 13^th Amendment’s prohibition of “slavery” and “involuntary servitude” doesn’t legally apply to the 16^th Amendment because the U.S. Supreme Court ruled in the case of Butler v. Perry (240 U.S. 328, 1916): “the term involuntary servitude was intended to cover those forms of compulsory labor akin to African slavery … It introduced no novel doctrine with respect of services always treated as exceptional, and certainly was not intended to interdict enforcement of those duties which individuals owe to the State …” (at 332-333) The 16^th Amendment imposes a legal claim to income an individual earns from forms of voluntary labor – and as the Butler decision makes clear being compelled to provide 100% of the fruits of one’s voluntary labor to the federal government is not “involuntary servitude” but is legally considered a duty “individuals owe to the State.”

Freedom officially died in the United States on February 3, 1913, because that it is the day every individual became a de facto slave of the federal government. Mario Pei’s family lived for 5 years before they found themselves in a country that officially adopted the same policy that individuals are subservient to the federal government that they left Italy to escape. However, freedom has been symbolically dead in the U.S. since September 17, 1787 – which is the day the U.S. Constitution was ratified to replace the Articles of Confederation. The U.S. Constitution didn’t include any prohibition from public transformation of every individual in American into a slave of the federal government by enactment of the 16^th Amendment 127 years later. The 16^th Amendment is simply fruition of the seeds planted by the U.S. Constitution’s fatal defect of not even attempting to preserve that individuals are the sovereign who have the ultimate legal and moral authority over the federal government – and not vice-a-versa.^¹⁹

In 1953 historian Harry Elmer Barnes wrote in his Introduction to Perpetual War For Perpetual Peace (Caldwell, ID: Caxton Printers, 1953) that the United States was a “police state.” The foundation of that police state was laid by the U.S. Constitution in 1787, and enactment of the 16^th Amendment in 1913 provided the means to erect its structure into what exists today.^²⁰

3 The United States GDP in 1908 was $30.1 billion (See, http://www.usgovernmentspending.com/year1908_0.html (last visited April 6, 2011.)) The federal government’s receipts in 1908 were $602 million. (See, http://federal-budget.findthebest.com/detail/10/1908 (last visited April 6, 2011.)) In 1908 the federal government spent $366.6 million on defense. (See, http://www.usgovernmentspending.com/year1908_0.html (last visited April 6, 2011.))

5 The U.S. Constitution replaced the Articles of Confederation that created a federal government that was hobbled because it had no authority to lay and collect taxes to fund its operation. Even though the federal government’s initial sources of revenue were limited, the U.S. Constitution did not prevent expansion of its means of funding from what the basic document authorized.

6 There are those who question whether the 16th Amendment was “legally” ratified and question the ethicalness and legality of the tactics used to promote it and have it certified as ratified. See e.g., Bill Benson and M J “Red” Beckman, The Law that Never Was: The Fraud of the 16th Amendment and Personal income Tax (Constitutional Research Assoc; 2nd ed., 1985), available on Amazon.com at, http://www.amazon.com/Law-that-Never-Was-Amendment/dp/B0006ELT78. There are also those who question the scope and applicability of the 16^th Amendment. See e.g., the legal case of actor Wesley Snipes, who was convicted in 2008 of tax related charges. See, USA v. Wesley Trent Snipes, No 08-12402 (11^th Cir., 07-16-2010).

8 See, the Tax Data webpage on the Tax Foundations website, http://www.taxfoundation.org/publications/show/151.html (last visited on April 6, 2011).

11 The United States’ GDP in 1913 was $39.1 billion (See, http://www.usgovernmentspending.com/year1913_0.html (last visited April 6, 2011), and the federal government’s revenue was $714 million (See, http://federal-budget.findthebest.com/detail/15/1913 (last visited April 6, 2011).

12 In 2010 the U.S.’ GDP was $14.624 billion and the federal government’s spending was $3.720 billion, or 25.4% of the GDP in the U.S. See, http://www.usgovernmentspending.com/year2010_0.html (last visited April 6, 2011).

14 See, the Tax Data webpage on the Tax Foundations website, http://www.taxfoundation.org/publications/show/151.html (last visited on April 6, 2011).

15 As recently as 1963 the top tax rate was 91% – which means that combined with local, state and other federal taxes, those individuals were likely levied total taxes in excess of 100% of their income.

16 Karl Marx, “Part I” In Critique of the Gotha Program (Moscow: Progress Publishers, 1970), http://www.marxists.org/archive/marx/works/1875/gotha/ch01.htm. (last visited April 6, 2011).

17 Federal revenue regulations refer to “persons” – which includes individuals and the various business organizations that are artificial entities created by individuals or collections of individuals.

18 The federal government claims the legal authority to tax the income of all U.S. citizens no matter where they reside in the world. It also claims the legal authority to tax the income of an individual for a period of years after they renounce their U.S. citizenship. That master-slave relationship is masked by the nomenclature used to describe the rate of income taxation.

Although there is nothing preventing the federal estate tax from being levied at a 100% rate, it only applies to an estate after an individual’s death. It imposes no obligations on an individual while he or she is alive. Consequently, it doesn’t involve a master-slave relationship between an individual and the federal government. Additionally, with advance planning an individual can avoid all or to some degree application of the estate tax to the wealth they accumulated while alive.

19 The failure of the U.S. Constitution to preserve the will of individuals as the sovereign has had other serious consequences. It enabled reliance of the northern states on the Constitution’s ambiguity to justify their refusal to recognize the “right” of the southern states to secede and establish a new union more representative of what was considered the collective interests of the individuals in those states.

20 The scope of the federal government’s reach into life in the United States is suggested by the fact that in 2005 there were 14.6 million people employed in activities under the direction of the federal government. See, Paul C. Light, A Government Ill Executed (Boston: Harvard University Press, 2008), 223. In addition to that are people employed by local governments, 14,227,163, and state governments, 5,329,022: which totals 19,556,185 in 2009. (Government Employment and Payroll - 2009, U.S. Census Bureau, http://www.census.gov/govs/apes (last visited April 6, 2011.) So the total federal, state and local employment is something over 34 million people.