Sunday, June 2, 2013

Libertarianism 101:Taxation + Money Creation = Legalized Robbery

Mark Matheny
June 2, 2013

Taxation +Money Creation=Legalized robbery.

So says  Dutch libertarian leader Toine Manders, in an interview on RT.

So what did the Founding Fathers of the United States think of  taxation?

This from (Before It's News)
During the framing of the Constitution, the founding fathers quarreled over many issues. The issue of taxation was no different. The two main schools of thought, in regards to taxation, resided between Federalists and anti-Federalist parties. Federalists pushed for national authority over the power to tax, in addition to state proposals. Anti-Federalists objected to federal authority to tax, feeling the power would be illiberally abused.[1] There were, however, issues in which the majority of the founding fathers agreed upon. Contrary to today’s popular beliefs, many of the founding fathers believed the poor should be taxed at a higher rate, in an attempt to motivate them to work thus propelling them out of their poverty.  Also conflicting with modern beliefs, they felt those who worked should be taxed less heavily so as to remunerate them for their endeavors: “To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association.”[2] These views are found in the founding fathers private papers as well as delineated throughout the Constitution. 
As previously mentioned, the amount of power in which the Federal Government should be granted regarding taxes, was a major altercation amid Federalist and anti-Federalist parties. To further explain these viewpoints, however, one must first understand the difference between external and internal taxation.  An external tax was a duty on any item which was being shipped to a specific colony or state. The tax would be originally paid by the shipper, but then imposed unto the item itself. This is known in present day terms as a tariff. An internal tax, however, was a tax which was imposed directly upon an item, such as a sales tax. The anti-Federalists made a clear distinction between these two types of taxes, which they argued the Federalists grouped into one category. Richard Henry Lee, a renowned anti-Federalist, argued that external taxes were safe because their abuses were minimal and bounded. In regards to internal taxation, he felt the national government would gradually shift tax policy in order to favor their personal prosperity.[3] He explained: “…the power would be improperly lodged in congress, and that it might be abused by imprudent and designing men.”  Lee also questioned the authority of those in power, and made arguments for the power to be left with the people.  “Why give the power to the few, who, when possessed of it, may have address enough to prevent the increase of representation? Why not keep the power, and, when necessary, amend the constitution”[4]
The Federalists tried the best they could to compromise on the issues being voiced at the time. Alexander Hamilton directly addressed the issue in the New York Packet writing:“There is a simple point of view in which this [tax dispute] may be placed that must be altogether satisfactory. The national legislature can make use of the system of each state within that state. The method of laying and collecting taxes in each State can, in all its parts, be adopted and employed by the federal government.”[5]
Hamilton felt the power should reside in the Federal Government first, and then distributed throughout each state. Lee on the other hand, believed the power should reside in the state first, and maintained by the government. The preeminent argument of the Federalists remained in the belief that one could have a ‘rule of the people’ through representation of the government. Alexander Hamilton argued: “whether the representation of the people be more or less numerous, it will consist almost entirely of proprietors of land, of merchants, and of members of the learned professions, who will truly represent all those different interests and views.”  While authority cannot reside directly in the hands of each individual, he believed that within a state, but both the state and the individual are indirectly granted power by means of representation. 
            In regards to the amount which one should be taxed, Federalists, those in between, and even some anti-Federalists all thought the like. If those who were out of work are taxed a low amount, they would feel only a small need to try and get a job. If the taxes were higher, ample enough to cause burdensome upon the individual, they would need to find work in order to survive. This was the view of Thomas Jefferson, James Madison, George Washington, John Adams, and Benjamin Franklin alike.  While this seems an extreme position to take, Benjamin Franklin argues: I am for doing good to the poor, but I differ in opinion of the means. — I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.[6] 
While the poor would clearly object to higher taxes, Franklin argues that those poor who have harder initial burdens, do better on average verses those having money given to them or deducted from payments by a higher authority. Thus, clearly objecting to tax cuts and extreme national help on low-income families. 
            When it came down to the specific arguments that were made, Federalist and anti-Federalists parties were not in disagreement of national verses no national authority. Rather, what and how much power should be given to the national authority in order to assure it would not be abused nor mistreated. Internal Taxes were one of the issues which the anti-Federalists felt would be abused. Although their opinions were different, the Founding Fathers were able to work together and compromise on the issue of taxation. As can be seen by the wording of the Constitution, which addresses the needs of both parties: “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises…Representatives and direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective numbers”[7]

 What did the Founding Fathers of the United States think of  money creation?

NEW YORK–If a time machine whisked Americas Founding Fathers from Philadelphia on July 4, 1776 to Washington, D.C.’s Bureau of Engraving and Printing on Independence Day, 2011, what might they think? Watching high-speed presses spew giant sheets of greenbacks would dazzle the eyes of even Benjamin Franklin, a professional printer. Beyond that, though, they would be disgusted.They would be appalled, says Dr. Judy Shelton, Ph.D, co-director of the Sound Money Project at the Atlas Economic Research Foundation, with which I am a Senior Fellow. The integrity of the dollar has been utterly compromised by fiscal malfeasance, Shelton adds. Monetary policy has become the default mechanism for budgetary irresponsibility.Shelton echoes the Framers words:As George Washington wrote Thomas Jefferson on August 1, 1786, Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.Paper is poverty, Jefferson, in turn, observed in 1788. It is only the ghost of money, and not money itself. In 1817, the author of the Declaration of Independence wrote that paper moneys abuses also are inevitable and, by breaking up the measure of value, make a lottery of all private property.Paper money is unjust, declared James Madison, chief architect of the Constitution. It is unconstitutional, for it affects the rights of property as much as taking away equal value in land.The Founders recognized the perils of legal-tender paper money, which coerces people to accept something that may be inherently worthless   as is the case with our paper money today, says Dr. Lawrence M. Parks, Ph.D., executive director of the Foundation for the Advancement of Monetary Education (FAME) in New York City.Why did the men who launched this nation disdain paper money? They had watched British-colonial governments debauch their currencies and, consequently, impoverish their citizens including some Founders.During the American Revolution, Virginia also issued paper money. Its unbearable lightness eventually made Madison and Washington wince as their tenants paid for leased land with worthless currency. For his part, Virginia’s devaluation left Jefferson on the losing end of a large bond transaction. He then lived impecuniously and died broke.Jefferson’s experience with fiat currency surely influenced his views. If we determine that a Dollar shall be our Unit, he wrote in 1784, we must then say with precision what a Dollar is. Indeed, the Coinage Act of 1792 declared each dollar worth 371.25 grains of pure silver or 24.75 grains of pure gold.For 179 years, the dollar and gold remained linked. But on August 15, 1971, President Richard Milhous Nixon ordered the Treasury to suspend temporarily the dollar-gold connection. Since then, Washington has created cash as easily as saying, Shazzam! The M3 money-supply measure soared from $688.4 billion in 1971 to $10.3 trillion in March 13, 2006, whereupon the Fed suddenly stopped publishing these inconvenient truths. This loose cash has helped Washington boost the national debt, from $398.13 billion in 1971 to $14.34 trillion today. The dollars purchasing power has slid, meanwhile, even as gold has climbed from $35 per ounce in 1971 to $1,511 on Thursday.Federal Reserve Chairman Ben Bernanke once marveled at the Feds nearly supernatural powers. It has a technology called a printing press (or, today) its electronic equivalent) that allows it to produce as many U.S. dollars as it wishes at essentially no cost.From his lair high above Manhattans Midtown East, FAMEs Dr. Lawrence M. Parks monitors all of this with a single-mindedness that skirts obsession. As the repercussions of letting politicians invent money simmer in Washington and boil in Athens, Parks sees the path to economic sanity as clearly in 2011 as the Founders did in 1776.All we need to do is reassert the monetary powers and disabilities of the Constitution, Dr. Parks says, which require that America re-monetize gold and silver as money.

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