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Thursday, April 14, 2005

Socialism and the Inheritance Tax

Socialists used American preparations for World War I to extort massive new taxes.

Yesterday the House of Representatives voted overwhelmingly to repeal the inheritance tax (aka the death tax) permanently.  If the Senate doesn’t also vote to repeal it, this socialistic tax will spring back to full, virulent life in 2011.

A little background puts the inheritance tax in true perspective.  It was a major element in the socialistic platform from the inception of socialism in France in the first decades of the 19th century.  American socialists after the Civil War continually pushed for such a tax.  They were joined by the Populists in the 1880s, then by the Progressives who took up the cause after the Populists essentially went out of business following William Jennings Bryan’s defeat by Republican William McKinley in the 1896 election.

When Democratic President Woodrow Wilson asked Congress to authorize increases in our army and navy to defend the nation, as World War I became an increasing threat to the United States, the socialists and Progressives saw their opportunity and pounced.

Beginning with the followers of Saint-Simon and Comte in the first three decades of the 1800s, socialists became known as social engineers.  The term arose from the fact that some of the most influential and effective champions of socialism in France were themselves industrial and military engineers, men whose mindsets led them to believe that every human activity should be organized and planned with mathematical precision.  They believed that they could see clearly exactly what the structure of political society ought to be in order to achieve social justice.  To them it looked like paradise on earth.  To those who later experienced such a planned society in Fascist Italy, National Socialist Germany, and Soviet Russia, it looked more like life in a prison.

For those social engineers, the goal was to create a homogenous society in which everyone had as nearly equal income and wealth as possible and in which everyone looked to government planners for all basic needs such as education, housing, jobs, food, and clothing.  Engineering planners would decide what products were appropriate and would restrict production to authorized goods; there would be no waste of social assets on frivolous goods, just because some people might want them.  Such an egalitarian society, they believed, would both maximize production of useful goods and services, and would bring about the greatest degree of harmony and peace the world ever had seen.

This basic mindset was what came to pervade the American socialists and Progressives, who remained a strong political force into the beginning of the 1920s, just after World War I.  The socialists’ and Progressives’ strength was in the intellectual and academic communities of the Northeast, and in the great farming regions of the Midwest, the Southeast, and the Far West.  Their numbers in Congress during the lead-up to 1917, when the United States entered World War I, were sufficient to influence and in some cases to control legislation coming before Congress.

Like their French social-engineering predecessors, American socialists and Progressives were the impetus behind what was called reform, a series of measures to restructure state and municipal governments and to bring an increasing array of functions under the wing of the Federal government.  Many things that we take for granted today, such as California’s extensive use of state-wide referendums to compel changes in the laws and taxes, came about under socialistic and Progressive pressure.  Many of their measures were improvements, both in local and national government.

But the fundamental effect was to accustom the general public to the belief that intellectuals and experts in Washington were better than local citizens at planning and organizing political and social life.  The way was thereby prepared for Republican President Herbert Hoover, himself professionally a mining engineer and politically an advocate of social engineering.  His successor, Democrat Franklin Roosevelt, merely had to enlarge Hoover’s programs, such as the Reconstruction Finance Corporation, for the final transformation of the United States into a socialistic welfare state.

In was in this roughly fifty-year span from the end of the Civil War into the First World War that socialism gained sufficient following in the general public to bring about both the progressive income tax and the inheritance tax.  Neither tax was necessary to finance preparations for our entry into World War I, but the socialists and Progressives in Congress demanded them as their price for agreeing to authorize military preparedness.

To understand this we need to highlight another basic mindset of the socialists and Progressive: their conviction that wars are unnecessary and that they are trumped up by wealthy munitions and armaments makers and other industrialists solely to increase their profits with the blood of workers.  This is the same sloganeering we saw in liberal-socialists’ opposition to military actions in Afghanistan and Iraq. 

In 1914, when the First World War broke out in Europe, the Socialist International called on all socialists to give their first allegiance to the brotherhood of the workers of the world and to refuse to work in military production or to serve in military forces of their native lands.  Defending the socialists and anarchists who heeded the call in the United States led to the creation of the American Civil Liberties Union (ACLU).

Many Senators and House members in Congress either shared those socialistic convictions or were under pressure from their constituents to oppose America’s entry into the war.  The issue was forced by Germany’s stepped up use of submarine warfare in the Atlantic and her declaration that neutral shipping bound for Britain from the United States and other countries would be sunk without warning.  When such sinkings began to occur, the American public’s mood began to shift toward belligerence and support for entering the war on the British Allies’ side.

In 1916, shortly into his second term, President Wilson asked Congress to authorize expansion of both the army and the navy.  The required expenditures would be enormous compared to the level of spending by a then rather limited Federal government.  But Treasury Secretary McAdoo was assured that Wall Street could easily finance it with a new issue of government bonds.  At that point, socialists and Progressives declared that they would block the entire war preparation effort if it were not financed with taxes on the rich alone.

What we hear from liberal-socialists in Congress today is thus nothing new.

As Arthur S. Link notes in his “Woodrow Wilson and the Progressive Era: 1910-1917,” a typical position was that of Seattle’s Central Labor Union, which called for seizing the bank accounts of capitalists, defined as those with investment securites of more than $5,000, because they were causing the war and ought to pay for it.

Eastern Progressives led by John Dewey formed the Association for an Equitable Federal Income Tax, based on the socialist plank that any one who inherited money didn’t deserve it and anyone would had more money than the average worker could have got it only by stealing from the workers.  The public responded favorably to such appeals.

Congressional leaders informed President Wilson that American military preparedness could proceed only if Congress enacted both a large increase in the income tax and instituted for the first time an inheritance tax.  Progressive Senators like George W. Norris and Robert M. La Follette openly described the inheritance tax as, not a revenue raiser, but simply as a way to “soak the rich,” as a way to end “the undeserved privileges of the wealthy.”

In short, the inheritance tax has always been nothing more than a socialistic measure to engineer an egalitarian society in which all of us would be financially equal, but increasingly poor.

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