FedUpUSA

Archive for September 12th, 2010

War has oft been used as an excuse for raising taxes, and tax hikes have sometimes led to war. Prior to the imposition of the income tax, the federal government’s primary source of revenue was through tariff duties. Tariffs were taxes imposed on certain imported goods which were produced by cheap foreign labor. Protectionists demanded higher tariffs to protect Northern industries from cheaper imports. Southerners favored lower tariffs as a means of encouraging foreigners to import their cotton and other agricultural exports. Some historians say that it was the bad blood over tariffs, between the years of 1828 and 1861, which actually lead to the Civil War.

The first income tax was levied in 1861 at a flat rate of 3%, but was quickly replaced with a progressive structure. The income tax was intended to be a temporary measure to help pay for the Civil War, but eventually became the primary source of federal funding. When the first full fledged progressive tax was imposed in 1913, it only applied to about 1% of the population. Today, roughly 60% of Americans are affected by income taxes, and every working person is subject to a Social Security tax of 6.2% levied on the first $106,800 of wages, and a Medicare tax of 1.45% on all wages. It’s interesting to note that the top tax rate of 7% imposed in 1913 was less than the minimum rate of 7.65% imposed on most workers today (and let’s not forget that employers get soaked with a matching amount).

The Revenue Act of 1861

The Revenue Act of 1861 included the first U.S. Federal income tax statute. The Act had been motivated by the need to fund the Civil War. It introduced the federal income tax as a flat rate tax. The income tax was to be “levied, collected, and paid, upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever”.

Rates under the Act were 3% on income above $800 ($19,389 in 2010 inflation adjusted dollars) and 5% on income of individuals living outside the country. It was signed into law by Abraham Lincoln, the first Republican President.

The Revenue Act of 1862

The Revenue Act of 1862, also imposed to help fund the Civil War, and also signed into law by Abraham Lincoln, imposed the first progressive rate tax in U.S. history. The office of the Commissioner of Internal Revenue was established, with the Act specifying that Federal income tax was a temporary measure that would terminate in the year 1866.

Annual income of U.S. residents, to the extent it exceeded $600 ($13,632 in 2010 dollars), was taxed at a rate of 3%; those earning over $10,000 per year ($227,214 in 2010 dollars) were taxed at a 5% rate. With respect to the income tax liability generated by the salaries of “officers, or payments to persons in the civil, military, naval, or other employment or service of the United States, including senators and representatives and delegates in Congress”, the law also imposed a duty on paymasters to deduct and withhold the income tax, and to send the withheld tax to the Commissioner of Internal Revenue.

The Revenue Act of 1913

The Revenue Act of 1913, signed into law by Woodrow Wilson, re-instituted the federal income tax as the primary source of revenue for the federal government. It would require only a few years for the federal income tax to become the chief source of income for the government, far outdistancing tariff revenues.

The previous effort to tax incomes (Wilson-Gorman Tariff of 1894) had been declared unconstitutional by the Supreme Court because the tax on dividends, interest, and rents had been deemed to be a direct tax not apportioned by population. That obstacle, however, was removed by ratification of the Sixteenth Amendment on February 3, 1913.

The 1913 Act provided in part that:

“ . . . subject only to such exemptions and deductions as are hereinafter allowed, the net income of a taxable person shall include gains, profits, and income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, businesses, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the transaction of any lawful business carried on for gain or profit, or gains or profits and income derived from any source whatever . . . “

The incomes of couples exceeding $4,000 ($88,100 in 2010 dollars), as well as those of single persons earning $3,000 or more ($66,100 in 2010 dollars), were subject to a one percent (1.0%) federal tax. Further, the measure provided a progressive tax structure (shown below), meaning that high income earners were required to pay at higher rates.

It has been said that less than 1% of the population paid federal income tax at the time.

Tax Rates: 1913 vs. 2010

The following table shows what the 1913 tax rates would look like in current dollars:

Amazing! That’s what our tax rates would look like today, if we had a fiscally responsible and efficient government. Under the first Revenue Act imposed after ratification of the 16th Amendment, most Americans would be exempt from taxes today.

Exemptions

In 1913, a single taxpayer was allowed an exemption of $3,000 ($66,100 in 2010 dollars), while a married couple was allowed $4,000 ($88,100 today). The following table compares the standard deduction and personal exemption(s) provided today versus what was allowed in 1913.

National Debt: 1913 vs. 2010

Nowadays, the excuse for raising taxes isn’t related to war, it’s related to a drive to help irresponsible politicians pay for their devil-may-care spending sprees. The national debt in 1913 was about $64 billion, in 2010 dollars, which is 211 times less than today’s appalling $13.5 trillion. Even with the lowest tax rate today being greater than the top tax rate in 1913, politicians have managed to ‘muck things up’.

So how high need our tax rates grow in order to keep pace with the national debt? If we were to presume that tax rates are a function of the amount of revenue needed by the federal government, then tax rates should either shrink or grow in line with the need. The answer (shown below) would require a bottom rate of 211% and a top rate of 1,477%, or 211 times the rates of 1913.

Meanwhile, Washington continues to borrow at a rate of $100,000,000,000 per month. The first priority of the Congress should have been tax and spending reform, yet we find ourselves in a bigger mess than the one they promised to clean up. To raise taxes on producers would only bring economic disaster. To cut taxes would mean a much smaller federal government, fewer entitlements, and a surge in economic activity. It’s time.

References:

http://en.wikipedia.org/wiki/Revenue_Act_of_1913

http://en.wikipedia.org/wiki/Revenue_Act_of_1861

http://en.wikipedia.org/wiki/Revenue_Act_of_1862

Natural Born Conservative

Some wonder, given the following warning in the forum’s TOS:

Any discussion of 9/11 “Troofer”-related nonsense on Tickerforum will result in an immediate, no-notice and permanent account (and possibly IP-level) ban. There are literally thousands of places on The Internet where you can run this sort of tripe. This is not one of them, and those who refuse to respect this constraint will have their access privileges removed.

This is why:

We live in a serious time folks.  Women like this “teacher”, who spends her days filling your kids’ minds with garbage, fully believing every bit of the lies that she spat at the Governor, are a direct and present threat to the future of our nation.

So are those who think that our nation’s government blew up three buildings in NYC on 9/11, shot down UA 93, or fired a missile into our own Pentagon.

So are those who refuse to pay attention to the historical record on many other accounts, including Islam.  Our own founding fathers wrote on the latter topic, having suffered under piracy on the high seas that resulted in over a million Europeans and Americans being sold into slavery.  Upon trying to “settle” this matter diplomatically and asking by what right these people were being taken….

As Jefferson later reported to Secretary of State John Jay, and to the Congress:

The ambassador answered us that [the right] was founded on the Laws of the Prophet, that it was written in their Koran, that all nations who should not have answered their authority were sinners, that it was their right and duty to make war upon them wherever they could be found, and to make slaves of all they could take as prisoners, and that every Mussulman who should be slain in battle was sure to go to Paradise.

Where – and when – have I heard that sort of sentiment expressed before?  And aren’t we dealing with a similar situation with Somali Muslim pirates now?

You never hear the Somali pirates with their proper affiliation inserted, of course.  The media doesn’t want to talk about that.  Gee, I wonder why?

Let’s be straight-up here folks:

We live in a perilous time, where both governments and others have deceived.  You have been lulled to sleep through the false belief in the God of “profit” that was emitted not from your hands and minds, but rather by the simple passing of “assets” from one person to another at an ever-higher price. 

This was a knowing and willful fraud.  The Boomers exacerbated it and in fact press their case now, as with the teacher in that video clip, believing that they have the right to extort wages that perpetually rise even though they do the same job today they did yesterday.  That is, they produce no more and labor no harder, but are “due” more money – from you, the taxpayer.

They also press the position that they (and everyone else) are “due” free medical care, a free retirement, and the ability to live at a standard much higher than you, simply because they are “government employees.”

The blowing of serial bubbles was not an accident.  It was an intentional act created by our government and private actors on Wall Street.  It was intended to lull you to sleep with “free” houses, “free” iPhones, “free” cars and other trappings of prosperity that you did not actually have to work for.

These jackals in fact did nothing other than write a post-dated check against your labor and cash it, “allowing” you to have the money now that you must now earn tomorrow.

This nation sits on the edge of a convulsion not seen in more than 200 years.  The edges of it are apparent now in places like Arizona, southern Texas, Chicago and Detroit, where gangs, whether illegal immigrants or simple roving bands of thugs, terrorize and disrupt, fueled by our own idiocy – a “drug war” that we learned in the early part of the 1900s could not work (during Prohibition.)  Yet we allowed the Harry Anslingers of the world to work us into a frenzy, and then piled on with Nancy Reagan and MADD, all of which did nothing other than provide the fuel for two very-valuable enterprises – the gangs who now murder our children and the prisons that lock people up for consensual adult conduct.

We have spent fifty years deluding ourselves on the international scene to go along with our domestic delusions.  First, we played cop in Korea.  Then, Vietnam.  Then, not content to stop there, when Saddam invaded Kuwait we “ejected” him and then let him get away with it after his entire military force was cornered and on a single road.  We then sat back and let the Muslims try to blow up one of our Destroyers, did nothing, then let them blow up a second one (the USS Cole) and again did nothing.  This of course culminated in the attacks on 9/11.

But did we go to all of the sources of those people and their funding and blast them to Mars?  Why of course not.  Doing that would have caused “economic disruption”, since some of those very same people were selling us oil!

Do you get that one folks? 

You bought the training and organization that blew up the towers and the Pentagon with your own fucking money, and you DEMANDED (and still do!) that we not drill for that same damn oil RIGHT HERE in AMERICA!

Still, we continued to believe, for five more years, even after 3,000 of our nation’s men, women and children died, that we could have a “Free Lunch.”  We allowed bankers to create hinky derivatives, we allowed cities, towns and states to promise “retirement benefits” that could not possibly be paid, we allowed colleges to rig their pricing by making it unlawful to discharge student loans in bankruptcy.  We allowed our towns and states to rig their budgets with ever-increasing assessments on the “value” of Real Estate, never questioning why it is that you claim to BUY something that you then have to pay a tax on to own every year! 

You don’t own your house – even if it’s allegedly “paid off” - you’re renting it from the damn county!

Through all this we spent our political debate on whether we should overturn Roe .v. Wade or whether gays can serve in the military. 

These are worthy debates, but ones that any thinking person cannot even CONSIDER entertaining until we eject the jackals from our financial and government infrastructure, quit making promises we cannot possibly keep, lock up the scammers and take the excess debt – all $25 trillion or so – out of the system.

2008 was a tiny crack in the dam.  A spurt of water.  The economic dislocation you saw was one small part of the $53 trillion on balance sheet debt bubble quivering.

A mere 2% of that debt bubble actually going bad caused all the awful things you saw happen from the beginning of 2007 to the spring of 2009.

The other 98% is still there, and of it half, if not more, stinks like dead fish.

You think this is over?  That things are “stable”? 

This is what you’re doing, here and now:

We cannot stimulate our way out of this, nor can the government spend its way out.  We are now spending 12% of our GDP in borrowed money each and every year simply to cover up an ongoing, three-year old economic Depression.  A depression that the CBO says will continue next year, as they project deficits equal or worse than we’re running this year. 

For how long will we get away with this?

I don’t know.

But what I do know is that we won’t get away with it indefinitely.

The other $25 trillion of bad debt will pop.

Perhaps half of the outstanding mortgage and HELOC debt, on balance.

Perhaps half of the student loan debt.

Perhaps 20, 30, 40% of the corporate debt.

And God knows how much of the derivatives so-called “notional value” is in fact hedged, and how much is not – despite belief that most of it is.  See, a hedged bet is only good if the guy who you hedged it with can pay!  If he can’t, you’re naked on the beach with your tiny little pecker that everyone can see when it comes time to settle the checks.

When I started writing The Ticker in April of 2007 I was doing it to provide an alternative point of view, and hopefully some perspective for our leaders in Government to take to heart.  I did not believe I would “reach them” – after all, I’m one guy with a loud mouth and a fair bit of computer and networking skill, and these scams and frauds have been going on for a hell of a long time.

But as a father with a school-age daughter that I do not want to grow up in a decaying society, or worse, one that has gone Mad Max, I had to try.

Today, I’m a bit more-focused and limited in my goals.

We’re not going to fix this folks – it’s going to blow up.  Neither Republicans or Democrats will do a goddamn thing about the scams and frauds.  They’ve proved it conclusively.  Neither a Republican or Democrat Attorney General has brought one single criminal prosecution against the bankers who created and profited from the scams – not even when there is publicly reported evidence of organized criminal activity in money laundering for criminal drug cartels in Mexico and blatant bribery in county and state financial dealings, along with funneling money to Iran so they can pay “bounties” for our soldier’s heads on pikes.

When our so-called “law enforcement” apparatus will sit on their hands while institutions finance literal murder by the Mexican Drug gangs and Iranian bribes to the Taliban, there’s no reason for any citizen to expect that the rule of law matters or that any sort of prosecutorial response will ever be forthcoming, no matter how obscene and outrageous the behavior of these “titans of industry” might be, now or in the future.  Forget it.

All I’m trying to do now is chronicle enough, and provide enough information, so that those with their heads on straight have a chance of survival in the years to come.  That begins with my personal family, and it extends to those who wish to listen, investigate on their own, and understand.

If you’re one of the nutters who thinks that we’re being attacked “because we’re war-mongers”, or if you think “we deserved it” on 9/11, or if you think “people deserved it” because they drove an SUV, you truly and richly deserve what’s coming in this country, and you will not be prepared for it.  Further, I don’t have time for it – feel free to debate all the BS issues you think are “so important” wherever you like – so long as it’s not on my forum.  Run that crap there, you’re gone.

But if you’re not one of the nutters then keep reading, keep doing your own due diligence (yes, even against what I have to say – don’t take anyone’s word for anything, including mine), and get prepared.

This is not going to end well folks.

And that, my friends, is my screed for 9/12, what should truly have been (and could still be) Patriot’s Day.

From Bankrupting America:

According to a recent poll, 74 percent of likely voters are extremely or very concerned about the current level of government spending. And 58 percent think the level of spending is unsustainable.

Is the public right? Is Washington bankrupting America? Some facts from the video:

Spending per household has risen over 40 percent in the last 10 years and is set to do so again in the next 10 pushing debt (and interest on the debt) to unprecedented levels. But that’s just a result of PAST spending…

Our government owes $106 trillion in FUTURE spending commitments – that cannot be paid for.

We can solve it, but politicians will have to make tough choices. Increasing taxes can’t do the trick ($106 trillion is equivalent to taking all of the taxable income from every American nine times over), nor is it fair to saddle taxpayers with a problem created by government irresponsibility.

We need real spending reform. Merely returning to the spending per household levels of the 1990s would balance the budget in three years.

Reform can only be achieved if the public is informed and engaged. You can start by doing the following:

(1) Share this video with at least 5 friends, family and coworkers

(2) If you haven’t already, sign up to be the first to receive our next videos at our website http://www.bankruptingamerica.org