Conserve What?


Perhaps many readers of Lew began their political lives as conservatives. Even today, many of us find the "conservative" position on many issues more agreeable — or less disagreeable — than the "liberal." But what is it that conservatives are conserving? I have never seen that question answered — or even asked — but isn’t it a good question?

If it be assumed that conservatives wish to preserve and protect the principles of government espoused by the founding fathers, we can only bid the conservative movement Rest In Peace, for those principles have long since vanished. The rule of law, due process, habeas corpus, the division of powers, etc., simply are no more, unless the government sees fit to grant them.

I was reminded of this when, by fortuitous accident, I came across a legal reference that I had all but forgotten: Bailey v Drexel Furniture Company, 259 US 20. The decision, handed down in 1922, concerned child labor laws; but what makes it significant is that it dealt with an important, but almost always overlooked, aspect of law: the difference between laws that tax for revenue, and those that tax simply to regulate human behavior, under the guise of taxation. Admittedly, there is an element of regulation in all laws; it is unavoidable. In some cases, however, the regulation aspect ceases to be secondary, and becomes the primary focus of the law, and that, according to the Supreme Court, is wrong.

For example: suppose that the government decided to tax births. A tax of 50 would be paid upon the birth of the first child, and the second. The tax would rise to 75 on the birth of a third child, 100 for a fourth, and 150 for each succeeding birth. If a tenth child were born, the tax would be 1000!

Would this tax raise revenue for the state? Of course, but it is obvious that the increasing levels of taxation would act as a deterrent to large families. Its purpose, clearly, would be to regulate human behavior, with revenue enhancement being secondary.

I don’t think a tax on births is immanent, but how about the gas-guzzler tax? The government doesn’t want you to drive large, gas-hungry vehicles, even if they are as efficient in the use of gasoline as small cars. The gas-guzzler tax is clearly a form of punishment, not fund-raising.

Another blatant example of attempted regulation of human activity under the guise of taxation is the cigarette tax. In 1998, Senator Kennedy proposed boosting the cigarette tax from 1.10 per pack, to 1.50. He said it was "about saving lives." The good Senator is worried about the baleful health effects of smoking (although smoking isn’t as dangerous as being a passenger in a car he’s driving!) and wants to discourage smoking by boosting the cigarette tax.

This is precisely what the Supreme Court declared unlawful eighty-four years ago! Is anybody paying attention? Does anyone want to conserve the legal precedents of the past? The Court didn’t just make up its opinion, but based it upon numerous similar cases preceding it.

Moreover, in 1945, the CEO of the Federal Reserve Bank of New York, Beardsley Ruml, addressed the American Bar Association. His speech was entitled "Taxes for Revenue Are Obsolete," and he pointed out that any government that can grant legal tender status to its "obligations" is a government that doesn’t need to tax — for revenue. If Mr. Ruml was right, as he obviously was (indeed, Benjamin Franklin made a similar observation about the Continental dollar), then ALL taxation is unlawful. Ruml, incidentally, was the inventor of the "withholding" tax, so it’s safe to assume he knew what he was talking about. He outlined a number of reasons why governments tax, but none of them had to do with providing economic sustenance to the government.

And it’s not just the feds. Missouri’s Constitution states (Art. X, Sec. 3): "Taxes may be levied and collected for public purposes only…." The state’s Comprehensive Annual Financial Report lists, on page 140, "Revenue by Source and Expenditure by Function." For the year 2005, "excess Revenues" are shown as 2.144 billion. That’s not a fluke. The "excess revenues" for 2004 were 2.17 billion. For 2003, 1.82 billion (a bad year!) and for 2002, 2.67 billion. I don’t know the precise definition of "public purposes," but I can’t believe it includes the accumulation, by the state, of such gargantuan profits.

Does anybody care? Uncle Sam, every year, collects billions that he does not need to sustain himself (as long as people accept what comes from his printing press). That’s not supposed to be lawful. The proof that his taxes are unnecessary is easily shown: despite a tax shortfall of billions every year, the government sails serenely along, decade after decade: a clear impossibility if it depended upon tax revenue for its operation.

The state, on the other hand, is dependent upon tax revenue; but although limited to taxing for public purposes, taxes to such an extent that it has billions in surplus every year, which can hardly be construed as a public purpose. Again, this is clearly wrong.

Ah, well, so what! Rules are made to be broken, and who better to break them than those who make them! If I were a conservative, though, I’d wonder if such a system were worth conserving.

Dr. Hein [send him mail] is a retired ophthalmologist in St. Louis, and the author of All Work & No Pay.