Ninety-four Years of Serfdom

This April 15 is the 94th year that Americans have had to file an income tax. For most Americans, the day is a nonevent. The federal and state governments collected the taxes due by withholding from each paycheck over the course of the previous calendar year. Most Americans never see the money and have no real idea that they earned it.

Some Americans have their incomes over-withheld as a form of forced savings. They look forward to tax time, as it means they will receive a refund check from the government that they can use for a summer vacation, a big screen TV, a new appliance or a down payment on a new car.

Few Americans realize that over the last 94 years they have been enserfed and have no more rights to their own labor than medieval serfs or 19th century slaves.

The 16th Amendment to the Constitution was ratified because the income tax was only for the rich. Some states ratified the amendment because no one in the state had an income high enough to be subject to the tax.

According to the U.S. Department of the Treasury's history of the income tax, less than 1 percent of the U.S. population was subject to the income tax. A progressive structure was applied to this less than 1 percent of rich Americans, with rates ranging from 1 percent to 7 percent on incomes over $500,000, a great sum of money in those days.

In the first year of the income tax, the world's richest person, John D. Rockefeller, paid $2 million in income tax, almost 3 percent of the total income tax collected.

People were happy. They had finally gotten the rich.

And themselves, as well. Exemptions were reduced and tax rates were raised in rapid succession in 1916, 1917 and 1918. Within five years, the tax rates ranged from 6 percent to 77 percent, and people whose incomes were initially exempt now paid tax at more than double the initial top rate that had applied to Rockefeller.

In "free" America today, despite the John Kennedy, Ronald Reagan and George W. Bush tax-rate reductions, ordinary Americans have no more claim to their own labor than a medieval serf. Most are content, however, with handing over 30 percent of their income as long as they can hope to tax the rich at 50 percent, the tax rate on 19th century slaves.

Some 19th century slaves, whose skills were worth more in towns than on plantations, were leased by their owners to businesses in town. The businesses would remit half of the slave's wages to the owner. Out of the remainder, slaves could save enough to purchase their freedom.

Today, we cannot purchase our freedom from the IRS. The only free Americans today are those who can work off the books or live on public welfare.

People who reject my analogy can test it by refusing the government's claim on their labor. They will find that the IRS can be just as ruthless as the worst feudal lord or slave owner.

For many Americans, freedom is not as important as "fairness," by which is meant a more equal distribution of income. However, a number of studies indicate that a progressive income tax doesn't achieve the kind of leveling that some desire.

Government does not seem to be the answer. Indeed, some of the largest incomes result from collusion with government, such as the Clinton-Bush financial deregulation that produced the world's first annual incomes of $1 billion.

The desire to tax the rich has caused a concentration of less-accountable power in the United States as national and global corporations took over from local businesses. The estate tax, created in 1916, has forced family businesses, newspapers and farms into large corporate conglomerates. The corporate media; animal, chicken and egg farming, with its inhumane conditions, antibiotics and waste concentrations that pollute the environment; and large-scale chemical fertilizer farming that pollutes rivers and oceans are, in part, unintended consequences of taxation aimed at the rich.

Today, the income tax serves our interest less than ever before. The collapse of socialism and the rise of the high-speed Internet have opened vast underutilized foreign workforces to first-world corporations. The consequent loss of jobs and careers by Americans cannot be rectified through the corporate income tax.

Ralph Gomory, coauthor with William Baumol of the most important work in trade theory ever published, "Global Trade and Conflicting National Interests" (MIT Press, 2000), has suggested that jobs would flow back to America instead of continuing to leave if the corporate income tax were replaced by taxing corporations on the basis of whether the value added to their products occurs at home or abroad.

The ecological economist Herman Daly has suggested that the tax base be moved off of income and on to the use of increasingly scarce natural capital. Non-renewable resources are being depleted, and the overuse of nature's waste absorption services is resulting in pollution.

Taxing the use of natural capital would conserve it and lead to its more rational use.

These promising ideas directly address the most pressing economic and environmental problems of our time, but they cannot be considered because people are still absorbed in class warfare.

A mainstay of class war is the propaganda that "the rich don't pay taxes." This myth lives on despite the annual release of IRS data that proves the contrary. In 2006, the most recent year for which data is available, Americans whose tax returns placed them in the top 1 percent earned 22.1 percent of adjusted gross income and paid 39.9 percent of all federal individual income taxes.

The top 5 percent, defined as rich by President Obama, paid 60.1 percent of all federal individual income taxes. The top 10 percent paid 71 percent.

Those Americans whose earnings placed them in the bottom half of the income distribution paid less than 3 percent of the individual income tax collected.

The immunity of many Americans to facts is impressive. Just as many Americans continue to believe that Saddam Hussein had weapons of mass destruction and hid them in Syria, Russia or Iran, many Americans will continue to believe that "the rich don't pay taxes."

To find out more about Paul Craig Roberts, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

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