Organic Wealth: Create Your Own Slice of Pie by Donald Ax

Author:Donald Ax [Ax, Donald]
Language: eng
Format: epub
Tags: wealth, wealth creation, democratic socialism, personal finance, wealth tax, private property, investing
ISBN: 9781734665628
Google: A79VzQEACAAJ
Publisher: Liberty Word Publishing
Published: 2020-02-27T05:00:00+00:00

Power to Tax

The main issue with the Articles of Confederation was it didn’t give the federal government a source of revenue. This became painfully clear during Shays’ Rebellion in 1786 and 1787.63 Daniel Shays reluctantly and partially led former Revolutionary soldiers, turned farmers, in acts of insurrection.

The armed group closed down courthouses because of the many foreclosures and imprisonment of farmers who couldn’t pay their debts or taxes. The farmers used a barter system to trade their agricultural products because paper money was scarce. With no currency, they had no ability to pay what they owed. The farmers’ treatment was unjust, but the revolt threatened the fledgling country’s attempt at independence.

The national government was incapable of helping Massachusetts gain order because Congress had no budget to pay an army or militia. If the government couldn’t help with an internal rebellion, the country would be seen as feeble and would be just inviting an attack from a hostile foreign power.

The uprising was the final straw in the minds of many, including George Washington. After leading the Continental Army to victory in the War, Washington retired to his home in Mount Vernon, VA. The former General became greatly concerned about the new government and the welfare of the country. As such, he was persuaded to attend the Convention in Philadelphia and was unanimously elected to preside over the assembly that would eventually write the new U.S. Constitution.

As a result of the Convention and the Constitution’s subsequent ratification, the nation was no longer a confederation of friendly states. Instead, the country became a constitutional republic with a much stronger federal government that would no longer rely on the States for revenue. It had the authority to implement taxation and the enforcement power to collect.

The taxing power fell on the legislative branch. Despite the fact Congress was given the authority to tax, its power wasn’t unlimited. This is especially of interest in our day with the rise of socialists within the Democratic Party. Congress’s power to tax is derived from the Taxing and Spending Clause:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; (US Const. art. 1, sec. 8, cl. 1; Emphasis added).

To better understand the above clause, we need to define the following terms: taxes, duties, imposts, excises, indirect taxes and direct taxes.

The general term, taxes,64 was understood in the Founding Era to mean any levy where the primary purpose was to raise revenue, but not for the purpose to restrict commerce like with a tariff.

At first glance, the power to impose taxes seemingly gave Congress the absolute right to pillage society simply by calling something a tax. As we’ll soon discover, however, that interpretation is not valid. Before we define the remaining three taxation terms (duties, imposts and excises), we need to break down taxes further. There are two different categories of taxes: indirect and direct.

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