"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens....Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." ~ John Maynard Keynes
Column by Paul Hein.
Exclusive to STR
The Supreme Court’s ruling in the Obamacare matter stirred up interest in the subject of federal taxation, and just what the government can, or cannot, tax. This, I gather, was because of the expectation--not to be realized--that the Court, if it ruled Obamacare constitutional at all, would do so on the basis of the Commerce Clause of the Constitution. That clause allows government regulation of interstate commerce, which our Rulers have interpreted to mean they can regulate or control almost anything they want.
Thus, if you raise your own vegetables, from your own seed, in your own backyard, and sell them to your neighbors, you could still be regulated by Washington under the Commerce Clause, because SOMETHING you use was involved with interstate commerce. Maybe the hose you used to water your garden came from another state. Lo! Interstate Commerce! Maybe the fertilizer you used was produced in another state. More Interstate Commerce! Ridiculous, of course, but so much of what our Rulers do is ridiculous that it passes unnoticed; just another thorn among the brambles.
If the pundits are correct, Chief Justice Roberts was wary of legitimizing Obamacare’s punishment for being non-insured on the basis of the Commerce Clause, however, precisely because that excuse for federal intervention has been used so often, and so preposterously, that it is falling out of favor. Arguing that someone who didn’t buy health insurance was, somehow, involved with interstate commerce was a bit of a stretch, even for a judge. Therefore, he decided that what had been called a “penalty” for being non-insured was, in fact, a tax. There! You’re still being robbed, only at the muzzle of a revolver instead of an automatic. Problem solved.
Or was it? The federal government is authorized to levy two kinds of taxes: direct and indirect. Direct taxes are taxes placed directly upon property, and must be apportioned. In other words, they are collected by the states, on the basis of population (states with ten million people pay twice the tax of states with five million). The states forward the money to Washington, collecting it from the people. When was the last time a tax was apportioned? Not in my lifetime, or yours. To all intents and purposes, direct taxes don’t exist. Since the Obamacare “tax” was not to be apportioned, it could not be a direct tax. Hence, it must be an indirect tax.
We learn from the law dictionary that an indirect tax is one upon a particular privileged occupation or activity, like making tires or importing wine. (Of course, the rulers decide whether some activity is privileged or not.) Thus, the Obamacare tax must be an indirect, or excise, tax. Well, upon what activity is it levied? Upon the activity of NOT buying insurance! That makes perfect sense, right? It does, if you’re thinking like a politician.
Actually, it doesn’t matter. The whole direct vs. indirect tax is confusing and illogical. Consider, for example, the income tax. Could any tax be more direct? It falls directly upon your property, i.e., your income. But it is not apportioned! Thus, the Supreme Court (Pollock case, 1895) ruled it unconstitutional. Yet it’s still with us. That’s because our wily Rulers decided, after the setback in the Supreme Court, that the tax was actually an excise, levied upon the privilege (!!!) of earning an income. The amount of the tax was determined by the size of the income. (I might mention in passing that the multi-million word Internal Revenue Code does not define “income.”) So everything is clear and logical. The non-activity of declining to buy health insurance is, nonetheless, a privileged activity subject to an excise, whereas the God-given right to own property is, somehow, a “privilege” making it taxable as an excise also. To their credit, our Constitutional scholars can tell us this with a perfectly straight face, without blushing or cringing in shame.
If anything can be clear through this muddy water, it is that the Rulers will get what they want, logic and the law (which they’ve sworn to uphold!) notwithstanding. What is also clear, and infinitely more depressing, is that we allow them to get away with it!