America’s Tax Code Is Made By Banksters For Banksters

The Bilzerian Report – by Alcibiades Bilzerian

It’s no coincidence that America’s federal income tax was implemented in the same year as the United States Federal Reserve. A Federal Reserve needs to be backed by a significant, expandable government revenue source to be credible. If a government is operating efficiently, balancing its budget with revenue from tariffs (as America was doing prior to federal income taxation), then a central bank which seeks to print billions or trillions of dollars and set the interest rates for the nation would have no credibility. Expanding tariff revenue is severely limited compared to the ability of a corrupt government to expand income tax revenue, therefore, creating massive government debts through the expansion of the monetary base would inevitably lead to immediate inflation, default, and economic collapse in a tariff-financed economy.  

A Federal Reserve is supposed to minimize economic downturns, but history has proven that it actually has the opposite effect. The severity of the Great Depression and 2008 crash, among other financial bubbles, were direct results of the Federal Reserve’s monetary policies. For bankers though, a central bank provides great benefit. Central banks give bankers control over interest rates, inflation targets, and most notably, the use of this inside information to reap massive profits, control the economy, and siphon off trillions of dollars. As the following quote illustrates, an income tax also does nothing but harm to the people. For the government and the ruling banker class, however, it bestows exorbitant power and an unlimited access to money.

“A hand from Washington will be stretched out and placed upon every man’s business; the eye of the federal inspector will be in every man’s counting house… The law will of necessity have Indus[tr]ial features, it will provide penalties, it will create complicated machinery. Under it, men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the taxpayer. An army of federal inspectors, spies, and detectives will descend upon the state.”

–Virginia House Speaker Richard E. Byrd, 1910, predicting what would happen if a federal income tax became law

Historical Context

Article 1, Section 8, Clause 1 of the US Constitution says, “No Capitation, or other direct tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.” For the layman, that means each state must raise its fair share of funds for the federal government. If, for example,  the government wants to raise $1 billion, and Florida has 10 percent of the nation’s population, then Florida would be responsible for $100 million.

This clause is crucial for many reasons. First, it makes sure that certain people or states are not forced to pay disproportionate amounts of the federal budget. Second, it ensures that the federal government will not have an unlimited budget, thereby restricting the government’s ability to raise and waste money because it is dependent on the finances of the poorest state. Third, it effectively prohibits the federal government from enacting laws such as a progressive federal income tax because there is no way it could be equally apportioned based on the census. That clause is a key limitation on the federal government’s ability to tax indiscriminately.

The first income tax was suggested during the War of 1812, but the war was over by the time it was ready to be enacted, so it was never imposed. Then, the Tax Act of 1861 was passed to raise money for the Civil War; it was later repealed. The Wilson-Gorman Act of 1894 was the first peacetime federal income tax. It was challenged several times in the Supreme Court and eventually declared unconstitutional in Pollock v. Farmer’s Loan and Trust Company because it represented direct taxation on the citizenry, which had to be apportioned according to Article 1, Section 8, Clause 1. In order to circumvent the Constitution and the Supreme Court ruling, the federal government had to pass a new amendment to the Constitution.

The proposed Sixteenth Amendment read: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” Not only is the amendment directly contrary to the wording and the principles of the Constitution, and exactly what the War of Independence was fought over (unfair and excessive taxation), but Bill Benson’s findings, published in The Law That Never Was, makes a convincing case that the Sixteenth Amendment was never legally ratified. See here for a full summary of his case.

Although the 16th Amendment and the Federal Reserve Act were both passed in 1913, the planning began far earlier. In 1910, Rothschild agent Paul Warburg headed a secret meeting on Jekyll Island between representatives of the nations’ top banks. Warburg later wrote that, ”The matter of a uniform discount rate (interest rate) was discussed and settled at Jekyll Island.” Essentially, the bankers had “decided” American law. No legislative process necessary because the bankers controlled the money, and therefore the politicians. The legal formality of The Federal Reserve Act of 1913 was slipped through Congress just two days before Christmas, at a time when most Congressmen were on break. The Federal Reserve is currently owned by many of the same banks that chartered it. Bankers have used this control over America’s monetary supply to enrich themselves at the expense of the general public. Since the implementation of the income tax and Federal Reserve, America has seen one of the greatest wealth transfers from the middle and lower class to the super rich in the history of modern civilization. It should also be noted that this new found ability to finance almost unlimited government debts through income-tax backed money printing was followed by a lengthy period of world wars.

Prior to income taxes and Federal Reserve banks, America experienced the greatest period of economic growth in its history. During this economic Golden Age, the federal government was able to manage its responsibilities on revenue from tariffs. Of course there were busts during this period as well, as will always be the case in any capitalist economy, but they paled in comparison to the Great Depression, which was a direct cause of the Federal Reserve’s economic policies. Common sense dictates that any time an organization purposefully creates inflation and easy credit, there will be bubbles and severe crashes. A fractional banking system exacerbates both the booms and the busts. In the 1920′s, the Federal Reserve instituted an easy money policy and was rewarded with skyrocketing asset prices. By the time the Federal Reserve realized what it had done and tightened policy, it was too late. The inevitable crash was severe, but probably would have been much worse had policy makers prolonged the pain by keeping interest rates low, as they are doing today. After all, one can’t fix an asset bubble by creating another asset bubble.

Conclusion

If an income tax were truly designed for the good of the nation, then everyone would either pay: (1) an equal share of the expenses, (2) an equal percentage of their income (flat rate), or (3) a pro-rata share based on usage of public services. In the case of the latter, a rich person would pay more because he has more houses and cars which need greater protection, or because he uses public services, such as the courts, in greater proportion to the general population. In no rational system would the richest people, who contribute the least to society (bankers), pay a smaller percentage of their income to the government than poorer citizens, but that is exactly what is happening today. The banker class has trust funds, corporate loop holes, and most notably, favorable capital gains taxes which are much lower than regular income taxes. In effect, hedge fund managers and bankers are able to remain in lower tax brackets than their secretaries, despite making hundreds of times more money. Not so shockingly, the bankers who designed our entire financial system for their benefit, including our tax code, are treated better than common people. Between the IRS and the Federal Reserve, common Americans never stood a chance.

The corporate owned media has propagated the myth that Americans need big banks and a Federal Reserve, but the reality is that we only need these institutions because the government has given them a monopoly over our financial lives. Without a tax code, banking regulations, and money laundering/drug laws, people could use many different means to transfer money to each other. People do not need big banks to charge them exorbitant fees to house their money when private companies, small banks, or individuals could do the same for less. For example, a new technology has been developed called Bitcoin, which essentially creates an electronic medium for currency exchange which eliminates banks from the equation. With Bitcoin, private individuals can transfer money between themselves with no fees or currency exchange rate charges. Bitcoin is now coming under investigation from the US government because it threatens the banker monopoly.

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