The Power to Destroy

Most people who didn't sleep through their high school history classes are familiar with the Supreme Court case McCulloch vs. Maryland. Those who were the brighter stars in their constellations may even remember the essence of the dispute: In the midst of an ongoing firestorm over the relationship of the state and federal governments, the Second Bank of the United States mischievously established a branch in Maryland. The state legislature fired back by passing a bill that placed such a tax burden on the bank that it couldn't hope to make a profit. Chief Justice John Marshall rejected this bill and with it the ability of a state to impede a Federal project. He declared that "the power to tax involves the power to destroy." As you can see, it was an interesting era; one where "Federal government" and "larceny" weren't yet synonyms.

This blush of youthful innocence wouldn't last terribly long, however, thanks to a Federal government that overcame the troublesome check of the states by learning to wage unjust wars by unjust means. In 1861 the first (and, at that time, unconstitutional) income tax was passed as part of the Revenue Act of 1861, confiscating 3% of the annual income of Americans to aid the war effort. Prior to this, the Federal government's revenues had come mainly through indirect taxes like excise fees, and for good reason. Indirect taxes targeted events rather than specific people or property. The Founding Fathers' revolt against governmental power run amok had been partly because of the ease with which direct taxation could be abused. They enshrined this experience in the Constitution's Article Nine, expressly forbidding an income tax. Any remembrance of this was all but drowned out by the furor of the Civil War years. In 1862, a second act was passed that expanded on the Revenue Act. A bedrock precedent was laid for the progressivism of the early 1900s when the 16th Amendment was passed, making the income tax constitutional. At first rates were well below 10%, but with newfound legal authority came newfound abuse, and they began to climb steeply. At first, there were seemingly good reasons, like World War II. But it is the nature of injustice once justified to numb its victims. The 1940s' jump in rates by more than 400% was quickly followed by less extenuating, and more suspicious, reasons to which there was little resistance. With a seemingly unlimited pool of wealth to draw from, America was soon the proud owner of several bizarre accomplishments characteristic of a government with more money than it needs: Korea, Vietnam, and the Great Society.

Edward Gibbon's Decline and Fall of the Roman Empire contains a very striking account of what eventually happens when a nation allows its government to prey directly upon the fruits of its labor: "In the sixth year of his reign Constantine visited the city of Autun, and generously remitted the arrears of tribute, reducing...the proportion of their assessment...to eighteen thousand heads, subject to the real and personal capitation [i.e., income tax]. Yet even this indulgence affords the most unquestionable proof of the public misery. This tax was so extremely oppressive...that, whilst the revenue was increased by extortion, it was diminished by despair: a considerable part of the territory of Autun was left uncultivated; and great numbers of [citizens] rather chose to live as exiles and outlaws than to support the weight of civil society."