The American Income Tax
Written by Darrell Anderson.
Why another book about the income tax? Part of the reason is my own satisfaction. I have been studying and investigating this social phenomena for many years. I’ve read many books, essays, and journals and with each author I found myself dissatisfied. Many of the books and essays I read were limited in content or purpose. Many authors who depend upon coercive wealth redistribution for their sustenance and livelihood are not about to display much public disgruntlement with the tax. Such people do not want to be accused of biting the hand that feeds them. Other proponents seldom have anything bad to say about the tax. After all, they believe that soaking the rich is a Good Thing regardless of the overall social costs. Both types of people tend to focus on “tweaking the code” and little more.
Opponents’ opinions vary all over the map. Some people argue that the tax was intended only to be a corporate profits tax. Others argue that only certain sources of income are subject to taxation. Others argue that only “taxpayers” are subject to the tax. Others argue that the tax is a direct tax subject to the constitutional rule of apportionment. Others say an indirect tax in the nature of an excise. Others argue that the meaning of the word income is limited in meaning and application within the tax laws. Yet others argue vehemently that no typical individual owes any tax at all. Many opponents do what they can to avoid, protest, evade, and destroy this tax.
People on both sides of the debate are keen to protect their own self-interests and agenda. Much of the material I have read lacked scholarship and adequate details to follow the story more closely. I wanted a book that tried hard to investigate the history of this tax but without an agenda and provided a more scholarly approach. Was my goal possible?
Researching the history of the income tax is challenging. Many people have tried to evaluate this history, but because many people study the income tax with a prejudiced opinion, understanding this tax is not always easy. In this book I take a different route. I wanted to understand how we humans got into the awful predicament witnessed today. I detest the income tax, but I wanted to understand the historical process. That desire required me to set aside, as much as possible, my own bias and contempt. As a student of studying human social and legal systems, understanding how this tax system evolved was a subject of intellectual curiosity. I wanted to understand this mess as a scholar. Within that framework I was able to ignore my personal opinions. I think I succeeded, but you the reader will be the sole judge.
The income tax often is referred to as a progressive income tax, but don’t let the “experts” fool you. To consumers the current income tax system operates essentially the same as a regressive value-added tax. Why is this? Business owners and managers do not effectively pay an income tax. Although paper forms are filed and taxes paid, the actual cost of the tax (any tax) is passed to the consumer. Taxes are merely a cost of doing business. Individual humans pay this tax, but attempt to recover those extractions through other means. The result is that end-consumer pays all of these combined but cleverly hidden and embedded taxes. Because every human is a consumer and because everybody tries to pass or recover these costs, the effect is recursive. Nobody escapes the hidden embedded costs of this tax — or any tax. Because the effects are recursive, nobody truly knows how much the hidden and embedded costs add to the cost of living.
Few people like the income tax. Almost everybody has heard the stories of the militant Gestapo-like tactics of Internal Revenue Service (IRS) employees. Harassment stories abound, including abuses of upstanding businessmen, house wives, and even Congressmen. Every spring IRS employees select a few people to “make examples of” in order to scare and intimidate people into “voluntary” compliance. People have committed suicide in order for spouses to collect insurance claims to pay alleged tax bills. Surveys reveal that more than half the time agency employees provide false, incorrect, or misleading information to filers. Employee ineptitude and inefficiency are legend. Each year thousands of people are sent incorrect and sometimes fraudulent notices of tax deficiencies. The statutes governing the system are so complex and circular that the infamous Money magazine test of tax preparers and accountants is well known. Many people are aware that the federal tax burden for the typical family has increased from about two percent in the 1950s to 25 percent or more today.
The story does not stop there. After more than a decade and having spent billions of dollars, a computer upgrade effort was declared a failure. The updating failure is not the big news, but the reason for the effort. Many years ago the IRS bureaucrats established a goal of complete electronic filing and the reporting of every penny that circulates through the nation’s economy. Politicians and bureaucrats do not want people to pay taxes, they want to own people.
The courts are filled with examples of people who have challenged this tax in various ways. There is little debate among opponents that court judges have for years upheld this tax despite opportunities to perhaps help the little guy and tighten the boundaries in which legislators and administrative bureaucrats attempt to proceed. There should be little debate that legislators have created an atmosphere of confusion, both purposely and ignorantly. There should be no debate at all that administrative bureaucrats could care less what the court opinions and legislative history might be and that abuse runs rampant within the Internal Revenue Service.
There are many questions to ask about the income tax. Does the tax honor the principle of consent? Is the tax equitable and uniform? Does the tax promote or discourage production? Does the tax protect or violate privacy? Does the tax encourage or discourage savings, investment, hard work, and enterprise? Does the tax encourage life, liberty, and ownership of property or promote slavery and operate as legal plunder? Not only are these legal questions, but social questions.
Despite being sold as a voluntary assessment process, casual observation reveals the income tax is collected by force and coercion and the threat of violence, thereby violating the concept of consent. That the cost of this tax is routinely passed to other people reveals the principle of equality and uniformity is a pipe dream. The volumes of legal code is an indication that fairness is but a delusion.
Many people are fed up. Estimates are that anywhere from 10 to 60 million people no longer file an income tax return. People still pay the tax, but many simply refuse to file a return. Within those estimates, several million refuse to file returns and refuse to pay the tax. As discontentment rises with the “rob Peter to pay Paul” mentality of the current political process, and politicians lie to convince people to fight wars that should never be fought, additional people join the ranks of the tax protesters and resisters. Make no mistake, the income tax system is crumbling, and the politicians and bureaucrats have no peaceful solution. Much like two tectonic plates pushing against each other eventually causes a destructive earthquake, so too are the human forces pushing each other toward a similar result.
How did this problem arise? The answer is much like the old proverb about the camel’s nose in the tent. Conspiracy theories are unnecessary to understand how this tragedy and socially destructive tax system evolved. A key to understanding this madness is knowing that the problem grew slowly and mostly out of ignorance. Using ignorance as a cornerstone, add a healthy dose of deception, obfuscation, and greed. The law of unintended consequences prevails. One thing led to another and the result is a tax system today that contributes significantly in attacking and destroying the core of our social fabric.
Evaluating history solely from a specific event is impossible. History is a continuing series-parallel sequence of events, all contributing in some respect to the current moment. Inspecting history through the lens of specific events is a static snapshot of a dynamic system. Such a reductionist approach invites errors. Attempting to link various events to prove conspiracies often is futile. The search for conspiracies often is little more than a search for patterns in human action. To understand the current political system, look backwards, and at the big picture.
Those observations provided me another reason for writing Yet Another Book About The Income Tax. I want a social system that is mutually beneficial to all human life. The income tax is theft under the color of law. Another book examining this awful social phenomena adds another straw to the proverbial camel’s back. Another book adds weight to dismantling this socially destructive process.
 Hansen, George, Congressman, To Harass Our People, 1984, A Positive Publications Book.
 Pilla, How to Fire the IRS, pp. 15–18.