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Message from the Executive Director: Opposing Legal Plunder

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Message from the Executive Director: Opposing Legal Plunder

Legal plunder is as old as government itself. In fact, most governments in most times and places are little more than glorified gangs of robbers. To blow the whistle on the kleptocracies of his day, the English philosopher John Locke explained that "the injury and the crime [of theft] is equal, whether committed by the wearer of a crown, or some petty villain." The only difference is in the fate of the perpetrators: "Great robbers punish little ones, to keep them in their obedience, but the great ones are rewarded with laurels and triumphs, because they are too big for the weak hands of justice in this world."

Today’s kleptocrats are craftier than the kings and dukes of Locke’s time. Whereas the princes of old stole in the name of their own prerogatives and privileges, today’s political class steals in the name of "compassion" and "social justice." The result is the systematic fleecing of the unwary taxpayer, the unorganized consumer, the isolated property owner, and the small entrepreneur. Organized thievery has become so pervasive that it is no longer a case of government robbing Peter to pay Paul. Thanks to "middle class" entitlement programs like Social Security, Medicare, and "free" public education, government increasingly robs Peter to subsidize -- Peter!

This ubiquitous self-subsidy system is what makes it so hard for reformers to downsize the federal establishment. One of the more ingenious efforts to expose the horrid wastefulness and injustice of legal plunder is the Cost of Government Day campaign, spearheaded by Americans for Tax Reform. Cost of Government Day (COGD) is "the date of the calendar year, counting from January 1, on which the average American has earned enough in gross income to pay off all his direct and hidden taxes (total federal, state, and local government spending plus the cost of regulation)." COGD for 1996 is July 3. That means Americans work more than half the year just to pay the costs of government.

How did this happen in the Land of the Free, and what can be done about it?

A chief source of the problem is the federal income tax. It is sobering to learn that the main sponsors of the 16th Amendment believed (or professed to believe) that the income tax would be used only in war time and would only apply to earnings above $100,000 a year (in today’s dollars). The Founding Fathers did not think the federal government could be trusted with the power to tax personal income. How right they were!

The 16th Amendment created a vast wealth-transfer machine. But the income tax is a relatively obvious means of picking people’s pockets, and kleptocrats found that taxpayers rebel if pushed beyond certain limits. So political plunderers have resorted to deficit spending -- a form of deferred taxation -- to finance government expansion. But this approach has political limitations of its own, because annual deficits in the $200 billion range smack of gross fiscal irresponsibility and evoke fears of insolvency and collapse. So kleptocrats increasingly prefer to achieve their aims through political regulation of private enterprise. Not only are regulatory costs hidden from the general public, they are imposed by unelected -- hence unaccountable -- bureaucrats.

Several reforms would help curb the politics of plunder. Replacing the current tax system with a low flat tax or a national sales tax, adopting a balanced budget amendment, and ending regulation without representation (requiring Congress to vote on and approve proposed regulations before they can become law) are all sensible steps in the right direction. However, there is little hope of achieving these reforms as long as people believe that "social needs" give politicians a license to steal.

In the final analysis, restoring what Friedrich Hayek called the "constitution of liberty" will require a sea-change in public opinion. Only when Americans recover the understanding that "the crime and the injury" of theft is the same, whether perpetrated by public officials or petty crooks, will we see a dramatic decline in the cost of government.

--Marlo Lewis Jr.