Christopher Ruddy
Friday, March 22, 2002

In Part I of this series I called for abolishing "tax slavery." We need to re-acquaint ourselves with the facts: Americans have slowly become tax slaves to the federal government.

I noted that medieval serfs paid less in taxes to the lord than we do to Uncle Sam and government at every level.

It wasn't always this way.

When the personal income tax was first enacted in 1916, the maximum rate was 2 percent and that only applied to incomes over $500,000 a year – equivalent to at least $10 million a year in current dollars. Congress also promised that the maximum tax rate would NEVER go over 7 percent.

Even as late as 1955, the average person paid less than 10 percent of his or her income in taxes. But that was before Kennedy's New Frontier, Johnson's War on Poverty, Medicare, Medicaid and dozens of other liberal welfare schemes that are now bankrupting America.

According to President Clinton's last budget, the average lifetime tax rate someone who is 20 can expect to pay is 84 percent!

That means someone earning $50,000 a year will soon have only about $8,000 left over to feed, clothe and house his family, put gas in his car, pay his medical bills, educate his children and save for retirement – obviously an impossible situation.

These projected astronomical tax rates are partly the result of what is known as "bracket creep" resulting from inflation. Here's how it works:

Since the more you earn, the more you pay in taxes, inflation pushes us all into higher and higher tax brackets, and we end up paying a higher and higher percentage of our income without any actual increase in wealth.

A second cause of skyrocketing tax rates is the Alternative Minimum Tax (AMT). Like the income tax itself, the AMT was passed in the name of preventing "the rich" from escaping from paying their fair share of taxes. But thanks to inflation, more and more average Americans are now forced to pay the AMT, increasing our tax burden enormously.

A third cause of skyrocketing tax rates has been the gradual elimination of tax deductions in the name of "tax simplification." In the last decade, dozens of deductions have been stricken from the tax code without any corresponding decrease in tax rates, again forcing us to pay more.

The triple whammy of bracket creep, the AMT and elimination of deductions means that Congress must either continually pass tax cuts or we all will end up being literally taxed to death.

The Enforcers

Every slave owner has his enforcers, to make sure the slaves continue to produce and don't rebel.

In America we call these enforcers the IRS.

Not only do we have to hand over half of what we earn to the government, we also have to endure endless abuse at the hands of the IRS in the form of contemptuous tax collectors, audits, late fees, penalties, freezing of bank accounts and seizure of property.

Despite reforms, the IRS is still the most hated of all government agencies. These stories – three of literally hundreds that we have – explain why.

• In Michigan, IRS agents raided the Englewood Learning Center near Detroit. Parents were told that their children would not be allowed to leave until they immediately paid any balance due to the Learning Center for the coming months. The money would not go to the Center, however, but to the IRS.

  "It was like something out of a police state," Sue Stoia says. "They were using the children as collateral."

• In October 1990, when Michael Stern's father died, his estate consisting mostly of real estate was assessed at $7.7 million. That created a tax liability of $3.8 million. By the time the property could be sold, however the real estate market had crashed and the property ended up selling at about 40 percent of its assessed value.

  Nevertheless, the IRS insisted on collecting taxes based not on the actual selling price of the property but on its assessed value at the time of Mr. Stern's death. The surviving members of the Stern family ended up with less than $200,000.

• P. T. Shamrock tells this horror story:

  "In 1976, my mother owed $300 in taxes. They were not paid due to the fact that she was diagnosed with cancer and given 12 weeks to live. In May, as she lay dying, two IRS agents showed up at my house.

  "[T]hey … served her with papers to confiscate everything she owned. She was too weak to sign the paper but did make an X. On that day, they took everything she owned, even the soda bottles at her place of business! She died within the week." www.ptshamrock.com/finance/financial1.html

During the Clinton years, we also discovered that with the legal authority of the IRS, political opponents and foundations critical of the White House were targeted for audits. The purpose of these audits is clear. With so many regulations, the IRS can ensnare any decent individual or group in legal actions that can put them out of business.

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