Scott Horton Show - Just the Interviews - 8/19/22 Sheldon Richman on America’s Totalitarian Tax System

Episode Date: August 22, 2022

Scott interviews the Libertarian Institute executive editor Sheldon Richman about a column he put out last Friday. In it, he discusses the massive boost Biden’s spending bill gives the IRS. Richman explains why strengthening tax enforcement will disproportionally hurt non-wealthy Americans. That leads to a broader discussion of how totalitarian the tax system in the United States has become and how much worse it’s slated to get thanks to this expansion.  Discussed on the show: “TGIF: The Coming New and Improved IRS” (The Libertarian Institute) “Lottery!” (IMDb) Your Money or Your Life: Why We Must Abolish the Income Tax by Sheldon Richman Sheldon Richman is the executive editor of the Libertarian Institute and the author of Coming to Palestine and America’s Counter-Revolution: The Constitution Revisited. Follow him on Twitter @SheldonRichman. This episode of the Scott Horton Show is sponsored by: The War State and Why The Vietnam War?, by Mike Swanson; Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott; and Thc Hemp Spot. Shop Libertarian Institute merch or donate to the show through Patreon, PayPal or Bitcoin: 1DZBZNJrxUhQhEzgDh7k8JXHXRjYu5tZiG. Learn more about your ad choices. Visit megaphone.fm/adchoices

All right, y'all, welcome to the Scott Horton Show. I'm the director of the Libertarian Institute, editorial director of anti-war.com, author of the book, Fool's Aaron, Time to End the War in Afghanistan, and The Brand New, Enough Already, Time to End the War on Terrorism. And I've recorded more than 5,500 interviews since 2004. almost all on foreign policy and all available for you at scothorton.4 you can sign up the podcast feed there and the full interview archive is also available at youtube.com slash scott horton show yay on the line i got sheldon richmond he is of course executive editor of the libertarian institute where he writes a regular column every friday tg i f the goal is freedom welcome back to the show Show, Sheldon, how are you doing? I'm doing okay, and we're nice to be back.

Thank you. Yeah, man, it's been way too long. And anyway, I'm glad to have you on. I have a problem here, which is I have a conflict of interest when it comes to the subject of this interview. You know, I'm not a Branch Davidian or an Iraqi or an Afghan or like any of those other people I'm usually sticking up for. But, man, am I a victim of the IRS? Oh, God, help me. I believe in religion

if God will save me from these goons I hate them so much so I've already said too much to prejudice this interview but I for the record I've always hated them even before they came to destroy me

and so that's good and so my conflict of interest is sort of after the fact or whatever you know I got a head start on it. But for the rest of the interview, I should shut up and just let you talk about all this, which is not personal. It's just libertarianism as applied to this most evil American institution. Not to take the window out of your sales, but, you know, I think every American citizen has a conflict of interest to the IRS. They both want the same thing. Not like this, man.

You want your money and it wants your money. So that's true of every American. No, you're right. Oh, it is. Oh, I know it too. I know it too. I'm just the one particularly, crucified right now. Okay. First they did it to Jesus, now they're doing it to me. Well, for the record, that wasn't the IRS back then. Back then it wasn't the IRS. It was called the Internal Revenue Bureau.

Oh, right, right. Only later did they clean it up and call it a service. Service to whom. That's what I want to. Thank you for your service. Exactly right. Yeah, I'm sure people say that to them all the time. You know what?

My first introduction to the IRS was when I was a boy in the very early 80s, there was a team. 80s, there was a TV show called The Lottery, where the guy from the lottery would go around and tell people, hey, you won the lottery. Here's the thing. But he would bring with him, like his partner was an IRS

agent. And the IRS agent would go, that's right. And then now we're taking half of it. And it was this weird thing. I mean, I actually looked that up. That's the first time I thought of that in a long time. But it was always this horrible, like, good cop, bad cop thing. And the people hated

the IRS agent. I didn't know that show. I didn't know that. I didn't not know that show. There was an older show I used to watch called The Millionaire, where this wealthy guy would pick out somebody that he thought was, I don't know, especially deserving or needy or something and give them a million dollars, but it was tax free. They paid the taxes. The donor would pay the taxes. So the person got free and clear. In other words, he had more than a million so that the person could kill a million. Anyway. Anyways. So, Joe, I mean, remember when W. Bush invaded Iraq. And I know these are 2,000. But still, he invaded Iraq. And he's like, I need $80 billion for occupying Iraq. And everybody was like, $80 billion. Oh, my God. Well, that's how much they're giving just the IRS for the occupation of America.

It seems hard to believe. You think that that's got to be a million. A lot of people have said, isn't that a typo, but it isn't a typo. These bills are always 10-year bills. This is the greatly named Inflation Reduction Act. And I've long thought that Congress ought to be able to pass any bill at once, but it has no text. They can put whatever title long they want it, but, you know, they want, but no text. So they can say the Crime Abolition Act, the Inflation Abolition Act.

You know, they can make any title they want, but they're all blank pages inside. So they can get that out of the system. Anyway, this is supposed to reduce inflation, of course. And what it is is a bunch of, in effect, tax increases, some outright, but some through these increased audits, and spending increases. Now, how that's supposed to cut inflation, I don't know. But you're right, $80 billion over 10 years, and an additional 87,000 more employees. Now, those aren't all auditors, but many of them are enforcement employees. And that more than doubles the current staff, the current staff of the IRS.

So this is, these are big numbers. This is part of, like I said, this is the revamped and slightly scaled down, build back America because Biden wasn't able to get that through in any form last year because Mansion didn't like parts of it. But anyway, that's one of the big showcases of the bill, is this beefing up the IRS. And they're claiming, of course, that the way they're going to close the deficit, which they don't explain how that it relates to inflation, and it does. But the point is, if they can use this beefed-up IRS to get more money out of the rich and corporations that aren't paying

their fair share, then they can close the deficit, and theoretically, that would lead to less inflation. They promised that nobody below $400,000 will face an additional chance of audits, but there's nothing in the bill about that. And we know how these things work. There aren't enough rich people. Unfortunately, there aren't enough rich people, number one. So they're not going to be able to get the money they say they're going to get, which is like $400,000 over 10 years, which is a very tiny percentage of the debts of the deficits that will accumulate over the 10 years anyway, like 2%. So even there it doesn't matter much. But they're not going to be able to get the money from the wealthy people. Number one, they're not enough wealthy people. Number two,

wealthy people by and large don't evade taxes. In other words, they don't violate the taxes. In other words, they don't violate the tax laws. They avoid taxes. Tax laws are complicated. There's all kinds of things built in, exceptions and so-called loopholes. And they have the best attorneys, tax attorneys and accountants to find them mostly, you know, legal ways. Now, there is vagueness in the law, so something may seem legal to the taxpayer and the IRS may say, no, you're wrong about that, so you owe us money. But the point is they're not going to get enough if they only go after the people they're regarding as, you know, really, really wealthy, which means they're going to have to turn to lower hanging fruit, which are people below 400,000, which means middle-class

people. And then you need to get a lot of them because you're going to get less money per person out of them, so you need to get a lot of those people. And the CBO last year, in doing an analysis of this sort of thing, said every group of taxpayers will face a higher risk of ordering by the IRS. So all this language is designed to make us relax. Don't worry if you're under 400,000 you're safe is just propaganda, and it's just bad news. It won't do anything about inflation because the government will keep spending. And even if it gets some new revenues, it's more likely that they'll just spend the revenue. The Congress will spend the revenue on additional things that it wants rather than even shrink

the deficit. I mean, look, how many times in the past have we been told that beefing up the IRS will bring in more revenue and that will close the deficit? And yet the deficit keeps growing. The debt is of 30 trillion. The deficit last year was, what was it, like 1.8 trillion. And the year, that was smaller than the year before, which was like 3.13 trillion. The deficit is large and it hasn't gone down despite all these attempts to bring in new money.

So obviously that does not work. And there's no reason to think it will work this time. So this is all the, as I say, this. same old snake oil but in a new packaging yeah well i mean i don't know i really need to study up on this stuff a lot but it seems to me like raising everybody's taxes is deflationary right punishes people for taking out loans and investing it in businesses and then earning more money and all of that and so it dissuades people from doing that so the multiplier of all that fraction reserve banking is lowered.

Yeah, but we get less, we have less output, which means... I mean, if you raise it to 99%, that would crash the economy. So anything between here and there crashes it to a degree, you know? I mean, look, inflation is an expansion of the money supply. So the old proverb is it's too many dollars chasing too few goods or more dollars chasing the static amount of goods. But the fact is the amount of goods aren't static because of the, you know, of the lockdown from COVID, there's been a slowdown. There were lockdowns. So it was much

less being produced and the supply chains were disrupted. So there was much less coming even from foreign sources. So there are even fewer goods than there would have been under normal circumstances. So you have all these dollars that the Fed has been creating, at least since 2008 with the bailouts because of the government-caused housing crash. So you have all that money, which is now getting out of the economy, plus the government was spending a lot of money. on the stimulus and sending money to people that couldn't work because of COVID. You have all these new dollars, these aren't existing dollars, they're new dollars, chasing a smaller amount of goods.

So why should we be surprised by an increase? Yeah, if the government actually crashed the economy, then you'd see prices go down. But I presume that's not what they're intending to do. I don't think they want to crash the economy. That's not good politically either. So even if, you know, even with their assumptions, there's no reason to think it's going to make much of a difference. Like I said, it's only about 2% of the next 10 years worth of, of a budget deficits that are anticipated.

The other thing is a lot of these, all these predictions are based on computer models, which means we don't really know how much money even these changes will bring in because we can't, there's no way to put a new computer model how entrepreneurial people will react to new conditions. Yeah. Because people are like black boxes, right? Right? They're creative. They discover things on the spot that they didn't even dream they would discover. Obviously, they can't know a future discovery or else that means that's already discovered in the present. So it wouldn't be a future discovery. So there's no way you can know. And we know how bad these models are.

They were bad on COVID. They made predictions that weren't worn out. And they're bad on climate. They've been predicting climate disaster and much higher temperatures than we've seen, much higher. And so why should we have any confidence in numbers about the future that these models give us? This doesn't make any sense. Yeah. So, I mean, that's really the bottom line here is that this is a negligible difference when it comes to financing the national government. It's going to make a huge difference in terms of the police state that the Americans live under and everybody being audited to death and this kind of thing. And the power that the regime has to target whoever they want specifically, and not just

necessarily the right, but anyone who's in or out of their favor, especially business-wise, right? Right. I mean, I think there are some checks on it being used politically, and if they get caught in that, and some journalist, investigative journalists, discovers that that looks pretty bad. So, you know, I have a feeling the big thing isn't politically. motivated. I think it's just the agents, the people who have maybe informal quotas, if not formal quotas, are going to want to need to have, you know, skins to, you know, nail up on the, on the

mantle piece, right? Here's how many taxpayers I got here, so much money. So the money may be less than they're expecting, but that's because, like I said, the rich, there aren't enough rich. Too bad. I wish there were more rich people. Yeah. You know, I wonder, I wonder if there's a slide somewhere. I bet there is, you know, even if it hadn't leaked, I wonder if even a congressional committee might have gotten a hole at one point of some kind of PowerPoint thing that shows on the sliding scale of people who you want to loot, once they have too much money, you want to stop trying to go after them. Because even though they have more money to try to steal, they have more money that they can afford on the margin to spend on lawyers defending themselves.

and make it more difficult to be worth your time. So there must be a sweet spot, right? There must be like a bell curve-shaped line graph thing that says these are the people that you want to go after who have enough to steal but who don't have enough to really protect themselves from you. Yeah. Yeah, right, if you're going to take on the really upper super wealthy

and companies, you've got to realize it's going to. going to be a lot of time and a lot of expense of the IRS budget. Even though it's being increased, it's still limited. And you may not win or you may not get very much money to show for it. So you may think, well, is that worth it when there's easier pickings that will be cheaper and less time consuming so I can get on to somebody else? No, that's certainly true. I mean, I don't know how they've never seen documents on how they calculate such things, But that stands the reason. We know human nature.

We know how you want to spend as little as possible to get the most as possible. That applies to an IRS agent, too. And just the fact that some people, you know, additional people will now need to be concerned, even though they've done nothing even violating the law to violate the law about being called in. And the IRS, of course, can make your life help. the you're causing heartache and anxiety to people

or be free of that it means it's one of the bad things about the income tax man I don't like any taxes but I guess if we have to pick out one to be the worst it's this because it's inquisitorial you know in earlier in American history whenever somebody proposed the income tax

the word inquisitorial was always used no we can't have such an inquisitorial tax which applies to basically everybody You know, even people who don't pay taxes, you know, face some risk because the government that went to check to see whether those people maybe really should be paying taxes, right? Like earned income tax credit, they may want to check up and see whether the person's abusing the earned income tax credit law and maybe should be paying some rather than getting some

money from the government. So even at that level, there's no, you don't have any guarantee that the government won't start looking over your shoulder and asking for documents. You know, just the idea that every year you have to account to the government for your income activities, income earning activities, is offensive. It ought to be considered, you know, unacceptable. It is. It's completely totalitarian.

It's crazy. You have to account for every nickel and dime to the national government. They want to know what you did. Like they're your dad and you got to show them how you spent your allowance or something. Who the hell they think they are? Sorry, hang on just one second. Hey, y'all, Scott Horton here for Tennessee Hot Sauce Company. Man, this stuff is so good.

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It's good to have a routine And it's good for your eyes too Because with regular comprehensive eye exams at Specsavers You'll know just how healthy they are Visit Spexavers.cavers.cai to book your next eye exam Eye exams provided by independent optometrists The whole thing is insane In fact, you look at how much money that they just type out of thin air all day long.

Why do they even need this at all other than a form of totalitarian control over the American people and every one of our businesses and everything we do? Well, I guess there would be consequences if every bit of revenue they got, they got purely through borrow them because the, you know, the interest, first of all that had an influence on interest rates would increase the demand for the loans. in the first place and competing with private borrowers so this gets back to an earlier point you made

that would What's the total revenue they make a year do you know like ballpark how many trillions one or two or three that they bring in?

Yeah they yeah that the IRS successfully takes from people every year oh yeah offhand I don't know what the total

is that they bring in I mean the budget is what what's the budget these days four trillion yeah something like that four or five

but last year I misspoke actually last year the 2021 fiscal year, the deficit was $2.77 trillion was like moving into $3 trillion. Now, it was a little high historically because you did have all that spending, you had COVID spending under Trump and Biden, and so you get like a spike, which I guess won't be sustained.

But it's still obviously very high. The debt is about the size, isn't the, the debt is about the size of the country's GDP, right? 30 trillion. I'm not sure what the GDP is these days, but it's in the neighborhood. Maybe it's over 100% of GDP. It doesn't seem like it's sustainable. We've managed this long without a catastrophe, but I'm not confident that there won't be a catastrophe in the future. I hate to be a doomsayer, and we try to look to the bright side. But I don't see how that is sustainable. Entitlement spending is on automatic pilot, out of control.

Of course, you have all the military spending with the worldwide network of bases and troops and all that stuff. And there's no real political will to take a look at that stuff and begin to cut. It's, you know, I promise my kids, I leave them a better world. I'm really worried.

I'm not going to live on that promise. Yeah. Well, we know you gave it your best shot anyway. You wrote a book about why we ought to have a ball. the IRS back, what? I did in the 90s, in the 90s the Future Freedom Foundation published, it's called Your Money or Your Life Why You Must abolish the income tax. And the updated version, the Kindle version is updated because it takes on the people who

say, you know, the income tax doesn't apply to us regular wage earners. You know, there's a whole group out there that says, the technicalitarians, yeah. The laws, they actually say it's not just that they missed, they didn't write the law well. they say they wrote it to exempt regular wage earners now no judge has ever believed this i i looked at the stuff and it makes no sense but i don't hear from those people too much anymore but they don't want yeah they didn't like i mean and here's the thing too like for those people who are interested in that kind of stuff even if you grant that the way the law is written here or there some court decision from 1912 says this or that you can't stand on that in court you know there's no law there

judge can do whatever you want. That's where all that stuff breaks down, right? Even if you're right about your reading of the law, they're still going to do whatever they want with you. In fact, Peter's father, Irving Schiff, pardon me, his father, Irwin Schiff, was, you know, they imprisoned him. He taught people how to file a zero return and this kind of thing. And he died in prison shackled to the hospital bed. He died in prison. Yeah, I mean, and in the most, again, I'm sorry to abuse this term, but what are you going to call it? It's totalitarianism, what they did. Again, let the guy, the guy's got to be

chained to his hospital bed as he's dying. Why? I'm pretty sure he dying anyway. He used the Fifth Amendment. First of all, there's a lot of grounds that the people have. Right, they're all different ones. Yeah, and they don't, and none of them like

the other ones, right? They all think, I don't know, your theory is crap, mine's the right one. His was Fifth Amendment, that the return makes me, you know, possibly incriminate myself. So, of course, they didn't buy that. There's also a great misconception that the Supreme Court once declared that the income tax was unconstitutional, but that's a myth. I mean, I wrote a three-part article in the future. They amended the Constitution. That's the thing about it. Yeah, but even before that, if you look at the 1895 case, the Pollitt case, which preceded the amendment, that was the reason the amendment was

written because of the case. It itself did not declare income tax on wages and salaries unconstitutional. It only said the part of the law, the bill that was passed that taxed the income from rents from land and stocks and bonds. They said that was unconstitutional. Now the reason, the only reason they didn't just strike those parts down and leave the rest of it, namely the tax on the tax on regular incomes, wages and salaries, the reason they didn't, they didn't leave that standing, was that they said, if we only strike down the property side of it, it would conflict with, with Congress's intent. The intent was not to put all the burden on the wage earners. And yet that's what happened if we only strike down parts

of it, so therefore we're striking down the whole thing. And then after the amendment was passed and Wilson passes his, the same year Wilson passes his law, that went to the Supreme Court. under a case called Bruce Shaver. And the court quite openly said, we have never held that the income tax on wages and salaries was unconstitutional. In fact, they said the Constitution, the Constitution now, even without the amendment,

gave Congress the all-encompassing power to tax. I mean, it's an amazing, you read this, if you read this Bruchaber case, it'll make you sick to the stomach. And one paragraph it uses about seven or eight different synonyms for the complete and all-embracing authority to tax, plenary power to tax. And guess who's vindicated by all that? The anti-federalist, because when the constitution was published after the convention finished up its business, the anti-federalists jumped on

the taxing authority and said, this is totalitarian. Didn't use that word. But they said, this is a totally all-encompassing power to tax. This is terrible. And of course, it went through, went through. Don't forget, the Articles of Confederation had no power of attacks. So that we were coming from a Constitution had no power of attacks to one that had this all-encompassing power of tax. Yeah. Yeah, in other words, what the Constitution really says is we the people say there can be a national government, and then that's it. They didn't do whatever they want. It's all implied powers from there. Anyway, I want to get back to the current Biden regime and their war against us. Oh, and we're almost out of time here,

but you make a great point here about how corporations do not pay taxes and from people who sort of have you know what Mises call that anti-capitalist mindset where they just kind of lean left on all things business they sort of look at it like oh yeah rich corporations trying to get away with paying no taxes

they're the ones who should pay more taxes but it's the customers who pay more taxes just like I'm renting this house but when they increase the property taxes they increase my rent buy a couple hundred bucks so who's paying the property tax I am. Not my landlord. I'm not the same thing all the way down, right? And then the other thing is I want to add real quick for you to comment on is that government employees don't pay taxes either. That whatever, if they file at the end of the year in whatever way, that's just some kind of bookkeeping trick. It's all tax money in the first place. They're only giving a little bit of it back. But that's not really paying taxes. That's just taking a little bit less at the end.

Yeah, exactly. No, that's right. And they act like their taxpayers like everybody else would know they're not. Bernie Sanders and the other, pardon the expression, adults like that, think that they can, you know, they sound progressive. But they say, tax corporations, you know, they're all these wealthy. And if you say to them, corporations are people, they think that you're trying to get sympathy for the corporation. Well, you may or may not, but that doesn't change the fact that, you know, metaphysically speaking, They're only people.

So economists differ over the, they argue about the ratios, but three parties get hit, end up paying the tax. The employees, the customers, because you get higher prices because the companies then have less to invest and to cost, you know, in cost cutting and stuff like that. And the third are the stockholders. But many stockholders are not wealthy people, right? Anybody that's got an IRA or a retirement account of some kind has money in the stock market somehow or in some index fund that has underlying stocks.

So if the returns are lower, their return will be lower. So you have these three groups who do not include super wealthy people or they're not certainly 100% super wealthy people, being hit by this tax. So it's one of the biggest acts of political misdirect. to say, we're going to, we're not going to tax you. We're going to tax the corporate, the big corporations, because they sound like they're these disembodied monsters, right, from, like, aliens from another planet that are, I don't know what they're doing.

Of course, I'm producing goods. So it seems to me I ought to get some credit for producing goods we want. But somehow they're sort of these aliens that we can just tax and no one else gets hurt by it. And that's just absolutely ridiculous. I'm sorry. But listen, everybody read this great article. It's killer. It's called The Coming New and Improved IRS.

It's at the top of the page today at the Libertarian Institute. Libertarian Institute.org. The Scott Horton Show, Anti-War Radio, can be heard on KPFK, 90.7 FM in L.A. APSRadio.com, anti-war.com, Scotthorton.org, and Libertarian Institute.org.