Hey, America! Revolution, Civil War or Tyranny--Take your pick!

America has moved backward over the last half century. There is now representation without taxation, the opposite of the nation's founding philosophy.

Top 400 people have more money than the bottom 150 million combined!

(CALGARY, Alberta) - I read a comment to a news story recently:

“Every one of ‘We The People’ is an equal owner in this thing we call the US of A. The land, the water, the sky. The government is our family business. Some of 'US' receive very little in return for the use of our share by others. When Canadian firms mine our public lands, when British firms drill for oil in our waters, when global capital of all types monopolizes our business sectors making it hard for 'US' to start and run decent small firms, why are 'WE' not included as shareholders in the work. It is reasonable for all 'The People' to be included in the profits, and in the planning. Some might call it socialism but those making the suggestion are usually the one's doing the taking. The rest of us might call it fairness.”

The reality in modern American society is chillingly shown in this The reality in modern American society is chillingly shown in this six minute video.

America has moved backward over the last half century. There is now representation without taxation, which is the opposite of the founding philosophy. What America has now is a culture where a few thousand people control the political and corporate worlds and are not taxed. Because they control the political process, they have almost entirely freed themselves of a tax burden. This is famously demonstrated in the case of Warren Buffet who has argued (disingenuously, I suggest) that he should have a higher tax rate than his secretary. He was paying taxes on his income at 17% and his secretary (at an apparent $60k salary) was paying nearly double--30%.

The late economist John Kenneth Galbraith distilled the process into a rule:

"As power [flows] down, income extracted thereby flowed up. It’s a rule worth having in mind. Income almost always flows along the same axis as power but in the opposite direction."

Here's the Galbraith rule in a four minute video "The rich aren't giving you money, they're taking your money":

America is no longer No. 1. A great nation doesn’t torture people and make them disappear without a trial.

Galbraith described, more than 30 years ago, the normal result of the first inequality video above:

"In 1774, [Anne Robert Jacques] Turgot became Comptroller-General of France, and his task was to curb the extravagance of the French court and thus to reduce the burden on the ‘produit net’....He failed. A firm rule operated against him. People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich. So it was in the Ancien Régime. When reform from the top became impossible, revolution from the bottom became inevitable."

Tea Party

The U.S. has become so polarized, that the slogan of the Tea Party movement revolves around the theme of “taking the country back”. Those who follow the TP don’t understand that that the tea baggers are the equivalent of an American Taliban

A new direction America began its Revolution as a protest against Taxation without Representation. But, over two centuries, this has become reversed so that now America has Representation without Taxation; i.e., the 1% own the government and the Supreme Court and thus present themselves as representing all Americans and are not taxed (except minimally)—Representation without Taxation!

Here is how it happened and continues to happen, as described by Ferdinand Lundberg in The Rich and the Super-Rich (1968).

Louis B. Mayer, the movie mogul had a special tax law drafted and passed for him personally. In such a case, Lundberg writes, the law as written is a complete mystery to the Treasury Department people until one day, a return is received that uses that section. “Then it is seen, in a flash, that the return fits the law as neatly as a missing piece fits into a jigsaw puzzle.”

“The experts in the Treasury Department were mystified upon first reading Section 1240 of the Internal Revenue Code of 1954, written in customary opaque tax language…What it said was:

“’Amounts received from the assignment or release by an employee, after more than 20 years’ employment, of all his rights to receive, after termination of his employment for a period of not less than five years (or for a period ending with his death), a percentage of future profits or receipts of his employer shall be considered an amount received from the sale or exchange of a capital asset held for more than six months if (1) such rights were included in the terms of employment of such employee for not less than 12 years, (2) such rights were included in the terms of the employment of such employee before the date of enactment of this title, and (3) the total of the amounts received for such assignment or release is received in one taxable year and after the termination of such employment.’”

What this meant was Mayer and no one else may receive all future profits in the company in one lump sum which will be taxed at 25% as a capital gain even if it is in no way a capital gain. As a result of this special ruling he benefited by $2 million (in a day when $2 million actually meant something).

How did he get this unique treatment? His attorney was Ellsworth C. Alvord who appeared before the Senate Finance Committee, not as Mayer’s attorney, but on behalf of the U.S. Chamber of Commerce.

In 1968, Lundberg described the tax structure as “a pullulating excrescence negating common sense, a parody of the gruesomely ludicrous, a surrealist zigzag pagoda of pestilent greed, a perverse thing that makes the pre-revolutionary French system seem entirely rational.”

Looking at the economic situation, the tax system has obviously degenerated in the intervening half century. The day is not far away (thanks to the internet) when a critical mass of Americans are going to become aware of the incredibly unfair distribution of wealth in the country and they are going to be mad as well and will refuse to take it anymore.

The two obvious potential outcomes are a Second American Revolution or a Second Civil War. With the number of guns available and the susceptibility of the bulk of Americans to being brainwashed and set against each other, a Second Civil War is a distinct possibility.

But, if cooler hotheads prevail, a Second American Revolution is possible and could yield the better outcome.

This is where democracy would have to reinstate itself. All the domestic enemies of America would have to be swept away—conservatives, Republicans and fellow travelers. Then, with an elected (people’s) government in charge, some changes could be made. The Tax Act, is a single law—despite it’s hundreds of turgid pages—and it could be repealed in its entirety. In advance a new, fairer, tax system could be written and on repeal of the old, it could replace it so that the country would be without a tax system for a few hours at the most.

Once the 1% (and their fellow travelers) start paying higher taxes, like they did under Eisenhower in the 1950s, both the deficit and the national debt could be tackled. Unfortunately, that doesn’t address the fundamental problem of the greatest wealth inequality in history outside the Egyptian pharaohs and pre-Revolutionary France, existing today in America. That means that the Constitution would have to be amended, perhaps even rewritten to allow for confiscatory taxation of excess, unearned, wealth. The Walton family are the poster children for this concept.

Christy Walton, Jim Walton, Alice Walton, S. Robson Walton, Ann Walton Kroenke, and Nancy Walton Laurie have a combined net worth of about $116 billion according to Forbes 400. Did any of these six people earn any of their wealth? No, they are all inheritors. So, what society gives, society can take away. Their fortunes could reasonably (although not from their vulture vantage points) be reduced to $30 or $40 million each. The New Constitution could cap fortunes (actually, rein in predatory capitalism), no matter how acquired .

Or take Charles and David Koch at $31 billion each. Did they work for their fortunes? They have worked and presumably very hard, but definitely not a million times harder than any of their employees. In addition, their fortune comes from extraction industries—resources that belong all Americans. So it would be fair to cut them back to $30 or $40 million each.

What I am arguing is that if people want to acquire a fortune allowable by the commonweal and sit back and just relax and do no work for the rest of their lives, that’s okay. It is just not right that they do it at the expense of everyone else.

I’m not going any further at this point but just pose the question: Could such an idealistic situation ever evolve? Watch this video (four minutes) and you decide.

Greed is good

"Americans will do anything to each other for money."

Blame Ronald Reagan?