Zephyr Magazine - Issue 53

                              T H E
  
                           Z E P H Y R
  
                  __     M A G A Z I N E
                 {__]++++++++++++++++++++++++++[] 
                 Issue #53                2-05-88
 
            A weekly electronic magazine for users of 
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                    (Mesa, AZ - 602-894-6526)
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                    Editor - Gene B. Williams 
 
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                            (c) 1988
  
THIS ISSUE:

Once the religious, the hunted and weary
Chasing the promise of freedom and hope
Came to this country to build a new vision
Far from the reaches of Kingdom and pope

Like good Christians some would burn the witches
Later some bought slaves to gather riches

And still from near and far to seek America
They came by thousands, to court the wild
But she patiently smiled, and then bore them a child
To be their spirit and guiding light

And when the ties with the crown had been broken
Westward in saddle and wagon it went
And till the railroad linked ocean to ocean
Many the lives which had come to an end

While we bullied, stole and bought our homeland
We began the slaughter of the red man

But still from near and far to seek America
They came by thousands, to court the wild
But she patiently smiled, and then bore them a child
To be their spirit and guiding light

The Blue and Grey they stomped it
They kicked it just like a dog
And when the war was over
They stuffed it just like a hog

But though the past has its share of injustice
Kind was the spirit in many a way
But its protectors and friends have been sleeping
Now it's a monster and will not obey

The spirit was freedom and justice
Its keepers seemed generous and kind
Its leaders were supposed to serve the country
Now they don't pay it no mind
Cause the people got fat and grew lazy
Now their vote is a meaningless joke
They babble about law and 'bout order
But it's all just echo of what they've been told

Yes a monster's on the loose
It's put our heads into the noose
And just sits there watching

The cities have turned into jungles
And corruption is strangling the land
The police force is watching the people
And the people just can't understand
We don't know how to mind our own business
Cause the whole world's got to be just like us
Now we are fighting a war over there
No matter who's the winner we can't pay the cost

Yes a monster's on the loose
It's put our heads into the noose
And it just sits there - watching

America, where are you now
Don't you care about your sons and daughters
Don't you know we need you now
We can't fight alone against the monster

"Monster" - Steppenwolf (John Kay, Jerry Edmonton)



   One the reasons behind the founding of our country was to 
escape the crushing taxes placed on our ancestors. They had 
little or no say in the matter. As far as England was concerned, 
the people in the new land were still British subjects. Those 
subjects had benefits from all services offered. There was 
military protection. There was the use of new inventions. There 
were so many fine services available to the citizens, and those 
services had to be paid for. 
   The so-called Boston Tea party was just one violent act to 
protest "taxation without representation." There were represent-
atives, of a sort, but they tended to be self-serving and rarely 
listened to the people. (Sound familiar?)
   After other similar riots, in 1776 we told the government to 
take a hike. The Revolution began for real. This is what is 
usually considered to be the birth of our nation.
   It wasn't until 1791 that we finally had the Constitution and 
the government as it is today (more-or-less). With that came a 
means to support the government. Taxes were placed on distilled 
spirits, refined sugar, tobacco, property sold at auction, 
corporate bonds, carriages and sale of slaves. (Yes, Virginia. 
Our country was founded on the principle and practice of 
slavery.)
   Then came the War of 1812. It was an expensive conflict. To 
meet the costs, the government levied sales taxes on gold, silver, 
jewelry and watches. With the war over, in 1817 ALL internal 
taxing was cancelled. From then until the Civil War, the 
government operated on money brought in by tariffs on imported 
goods.
   In 1862 the first income tax was created. The Act of 1862 
created the office of Commissioner of Internal Revenue and 
gave this commissioner the power to access, levy and collect 
taxes - and to seize property or income to make sure that the 
taxes were paid. 
   During the Civil War taxation was fairly simple. Anyone with 
an income of between $600 and $10,000 paid a flat rate of 3% 
of all income. Those earning more paid a slightly higher rate. 
Also put into effect were more sales taxes, some excise taxes, 
and an inheritance tax.
   The Civil War ended. In 1872 income taxes were dropped along 
with many other taxes. Concentration went back to the luxuries - 
liquor, jewelry, tobacco, etc. 
   In 1894 Congress once again tried to bring in an income tax. 
It was struck down in 1895 by the Supreme Court after they 
declared it to be unconstitutional. 
   Congress wasn't about to be put off by such legal shenanigans. 
They had certain things in mind they wanted to do, but didn't have 
the funds to do these things. More money was needed. In 1913 they 
put through the 16th Amendment. At that point income taxing 
became a part of the Constitution.
   Net income for the government jumped from $675 million in 
1910 to $683 million in 1915 (with $80 million of that amount 
being in income taxes) to nearly $4 billion in 1920 (with more 
than $2 billion being in the form of income taxes).
   With the exception of years around the Depression, this 
remained fairly stable for more than 20 years. Then came World 
War II. By 1943 the net receipts came to $22 billion, with a 
little over $16 billion coming in from income taxes. (In other 
words, in a period of a couple of years, the amount collected in 
income taxes quadrupled after more than 20 years of stability.)
   In 1944 the amount of income taxes more than doubled again - 
to $34.7 billion, and increased again the next year to $35.2 
billion. (Net receipts during these years was $43.6 billion 
and $44.4 billion, respectively.)
   It seems logical that a major world war is an expensive 
proposition. And it seems logical that expenditures during such 
a time would be considerably higher than during a time of 
peace. Following that logic, those expenditures SHOULD go down 
after the war, as should the need for high taxes.
   It worked that way in 1862. There was a war. Money was needed. 
So a modest income tax (3%) was brought into play. As soon as the 
war was over, the income tax was dropped and everything went 
along just fine as before. 
   With World War I in the offing, an income tax was brought 
back, this time permanently. But at the end of the war, the 
taxing continued at the same high rates. At least they did 
until 1929 and the Depression. After decades of the rich getting 
richer and the poor getting poorer, millions were put out of 
work. By 1933 the federal net receipts had dropped to $2 billion, 
or about half; and the amount of income taxes collected dropped 
from $2.3 billion to $746 million - about a third. 
   Some have suggested that if money had been siphoned out by 
income taxes, more would have been kept in the marketplace and 
would have prevented or softened the Depression. (Others say 
the opposite.)
   Taxes increased again, so that by 1939 the net receipts and the 
income taxes collected were back to the pre-Depression level. World 
War II caused the need for more money. (The figures are above.) The 
war ended in 1945. 
   By 1950 the money collected from income taxes decreased to 
$28.3 billion, mostly because of problems in employment due to 
the return of so many soldiers. 
   But the trend had been set. Despite relative peace, taxes 
continued to increase, as did government spending. If Congress 
needed more money, all they had to do was allocate it, increase 
taxes again. 
   By 1956 IRS generated income had doubled again - to nearly 
$57 billion (with total net receipts being $74 billion). By 
1960 they'd gone to $67.1 billion (net receipts - $92.5 billion).
Over the next ten years those figures more than doubled again, 
to $138.7 billion in IRS collections, and $193.7 in total net.
   Another decade - from 1970 to 1980 - it all doubled again 
(to $359.9 billion and $520 billion, respectively). 
   It continues to rise. Despite some sweeping tax reforms, the 
trend continues. Many experts say that the reforms are nothing 
more than a smoke screen and just a shifting around of items 
so that on the surface it seems that the tax payers are paying 
less, while in fact most are paying more.

   Some of the doubling and doubling again can be explained as 
wage increases. That hardly takes care of all of it. Wages do 
not double in a decade (nor have they). They haven't quadrupled 
in two decades. The only sector of the population where this 
has happened is among the highest government officials. (For 
example, Congress voted themselves 27% pay increases in 1987 
alone.)
   The explanation lies more with the other side of the coin - 
that of expenditures:
   In 1800 the government income and expenditures balanced out 
at $11 million in and $11 million out. Despite the expense of 
the war of 1812, the subsequent addition of taxing, then the 
dropping of them again in 1817, by 1820 the budget was still 
balanced, with $18 million coming in and $18 million going out. 
And there was still no income tax. 
   The Civil War was very expensive. In 1860 there was a 
deficit of $7 million. By 1865 the deficit had jumped to $964 
million. But, by 1870 our country was showing $101 million to 
the plus side of the ledger. Income taxing became a temporary 
part of American life, to help foot the bills of the war. This 
modest tax lasted for 10 years. The deficit was paid off, and 
a surplus was shown. And then the tax was dropped.
   By 1880 there was still a surplus ($66 million). By 1890 
the plus had grown to $85 million.
   Then came the move by Congress to reinstitute income taxing 
(in 1894), which was knocked out by the Supreme Court. By 1900 
there was still a surplus of $46 million. Ten years later, in 
1910, we were facing a deficit, this time of $19 million. 
   Along comes 1913 and the official enactment by Congress of 
the IRS (by the 16th Amendment). Despite this - or possibly 
because of it? - by 1915 the federal deficit had reached 
$63 million.
   World War I came along at about that time. When it was all 
over, by 1918 the federal deficit had hit a whopping $9 billion, 
most of which was due to an increase in military expenditures 
of 2400% (from $202 million to almost $5 billion). 
   It took a while to recover from the expenses. But with Congress 
now able to access new taxes at will, there was no incentive to 
balance the budget. It wasn't until 1929 that the government 
showed a surplus again - just in time for the stock market crash 
and the Depression. Many people were thrown into poverty. 
   By 1939 and the beginning of World War II, the deficit was 
reaching the $4 billion mark. The deficit peaked in 1943 at 
about $58 billion, dropped back to $51 billion at the end of 
the war, and dropped even farther to just $3 billion in 1950.
   Another surplus, of $4 billion, showed up in 1956; and 
another, of $269 million, in 1960. 
   From there things get depressing. 
   More and more taxes began to be applied. Tax rates increased 
at a phenomenal rate, with the net taken in by the IRS doubling 
every decade (as above). 
   Military expenditures went from $51 billion at the end of 
World War II, down to $6 million in 1950, back up to $44 billion 
in 1960, almost doubling to $78 billion by 1970, doubling again 
to $136 billion by 1980 and almost triple that today.
   Meanwhile, the national debt is approaching the trillion 
dollar mark, and threatens to at least double during the 1990 
decade. (Some experts are expecting it to triple in just that 
decade, unless something is done immediately.)
   In 1800 the per capita debt came to $15.87. Just before 
the Civil War the national debt could have been paid off if 
each person had chipped in $2.06. The expense of the Civil 
War brought that to $75.01 per person, which decreased to 
$16.60 per person by 1900. (All without any income taxing.)
   In the next decade, the national debt increased to a per 
capita level of $131.51 - an 8-fold increase (792%). By 1940 
and the beginning of World War II it had jumped to $325.23 per 
person, then to $1848.60 per person at the end of the war in 
1945. 
   In the next 15 years it remained fairly stable, decreasing 
to $1572.31 by 1960, despite the Korean War, the beginnings 
of the space race, and the ever growing "Cold War."
   In the decade between 1960 and 1970 and the VietNam War 
(excuse me, the VietNam Police Action) the national debt 
increased so that to pay it off each person would have had to 
chip in $1807.09. In the next decade - to 1980, and a 
period of peace - it had more than doubled. The per capita 
debt reached to just shy of $4,000 ($3969.55).
   In the next 5 years it doubled again (to $7598.51 per 
capita). That debt is now getting very close to $10,000 per 
person.
 
   What it comes down to is this.
   In the first 100 years there was internal taxing only in a 
limited sense and never on a permanent basis. We fought a 
number of battles, including the one that won us our freedom 
from England. We took 13 small colonies on one seashore and 
extended clear across to the ocean on the opposite side of the 
continent. 
   And the public debt came to $2 per person.
   Then comes income taxing during the Civil War, which is 
dropped, brought back into effect, dropped again and 
made a part of the Constitution. All this happened in the 
50 years between 1863 and 1913 when income taxing became a 
permanent part of our lives. By 1920 public debt skyrocketed 
by a factor of more than 100 (that's 10,000%). The actual 
factor is 110.79 - or 11,079%.
   In essence, public debt went to about $2 in our first 100 
years, with no income taxes. Once Congress gave themselves the 
power to access taxes, the debt in the last 75 years went to 
nearly $10,000 per person. That's an 5000-fold increase, or 
500,000%.

   It can be argued that things today are more complicated. That's 
a true and valid argument. In the first 100 years we were basically 
isolated. Travel was difficult, especially overseas travel. The 
transport of troups from one country, across the ocean, to fight 
on the soil of a second country. But think about it. 
   All through that first 100 years America had its own continuous 
battles of expansion. We pushed the Spanish, French, English, 
Mexicans, Dutch and Indians off their land so we could have it. 
In a few cases we bought land from the various groups. If anyone 
got in the way of our Manifest Destiny, they had to go, one way 
or the other.
   Then all those lands had to be tamed. Trains and roads had 
to be built. Services had to be provided for the people. With 
the loss of slavery in the 1860s, economics took a tumble. Not 
only was there less free labor, there were also a whole lot of 
people "out of a job." (It could have been worse, but along 
came the Industrial Revolution. All that free labor was replaced 
with machinery. Unfortunately machines also replaced quite a few 
workers. Machines didn't join unions, didn't go on strike and 
didn't make expensive demands of management.
   Unemployment went up. 
   In short, America had its share of problems all along. Life 
may have been less complicated in those first 100 years in 
some respects. It was extremely complicated in others. And 
yet the country was conquered and built without income taxes, 
and without going into massive debt. 
   With the beginning of income taxation, and ever increasing 
sales taxation - internal taxes of a wide variety, actually - 
the national debt began to climb. 
   Give a person an allowance and the knowledge that this is 
it. No more will be coming. He's going to at least TRY to live 
within the boundaries of that allowance. 
   Tell that same person that if he needs more all he has to do 
is take some more from the pot and what happens? Give this 
person the ability to determine the size of the pot, and how 
much everyone is to chip in, and the reason for living within 
a set budget is diminished, or done away with altogether. 
   It becomes the proverbial snowball. Let it grow a little and 
it's bound to grow a little more. The more it grows, the more 
likely it is to grow ever faster. 
   This is just what has happened. 

   For over 100 years there was very little internal taxing 
(with the exception of the decade surrounding the Civil War, 
and once that was over the taxing was dropped again). And we 
built the most powerful country in the world. 
   Then Congress gave itself the right to set then collect 
taxes. They also gave themselves the ability to raise those 
taxes, or to extend them, at will whenever more money was 
needed. On the surface it sounded pretty good. Even logical. 
   The 3% flat rate to recover the expenses of the Civil 
War is now bound up in rules, regulations and loopholes that 
require a tax specialist to even sort of understand. Then 
states jumped on the bandwagon, both for income tax and for 
other internal taxes. 
   Income taxes on all levels take directly fairly close to 
25%. (In other words, you work until some time in March for 
free to pay your direct taxes.) Indirectly they take much 
more. Total it all up and close to 50% (and some experts put 
it even higher) of your income goes for various taxes. 
   When a business pays a tax, they have to raise their 
prices accordingly. Do business with that company and you 
end up paying their tax as well.
   For example, assume that the raw materials for a product 
cost $5. To get those materials into the country there is a 
25c tarriff. Straight labor costs $3, but there is also the 
various employment taxing (say 50c). All other costs come to 
$1 for the item. Now the $5 of materials has become $8.75. The 
manufacturer has to charge at least that much just to break 
even. The end buyer pays that, and more. 
   Say that the manufacturer pays another 25c in corporate 
taxes because of profits earned. The end cost of the item 
goes up by that much more. 
   The manufacturer needs a profit. He can't do that unless 
the item can sell for more than it costs to make. With all the 
taxes and other charges, that item is costing the manufacturer 
$9 to make. To that he tacks on $2 for profit. 
   Now it goes to the middleman. He also has taxes to pay, 
which he in turn passes along to the end buyer. And his 
own profit. 
   Then comes the dealer. He also has to make a profit, and 
he also has to pay taxes (which are passed to the end buyer). 
That $5 of raw material ends up costing, say, $25 to the 
end buyer. About $5 of that is eaten up in paying the taxes 
of those up the line. 
   On top of that there is the direct sales tax (6.5%), which 
is based on the final retail price. That's another $1.63. 

   Most people don't stop and think about it in this way. So 
often you hear people griping about how corporations aren't paying 
enough taxes, as though this would mean that the common person 
would be paying less. 
   Not true. The system will getcha no matter what. If the 
corporation is paying an additional $1 per item of tax, and 
if this comes back to the average taxpayer in a reduction, that 
reduction will be more like 5c (due to the number of taxpayers 
versus the number of corporations). But, the price of the item 
itself has to go up by that dollar at the manufacturing level 
so that they can still make their profit. 
   That means that the middleman has to pay more, and hence 
pays more tax, which means that the cost of the item goes up 
still more, which means that the dealer has to charge more . . . 
and so on. 
   For saving 5c the item could easily cost you an additional 
$2. 
   Not much of a bargain. 

   Keep in mind that any time a tax is applied to a product 
ANYWHERE, it gets passed up the line to the end buyer. And 
that includes services. 
   And don't forget to add in the taxes on taxes. There are 
property taxes, for example. You're taxed on the money you earn 
to buy the house, pay all the taxes of everyone who worked to 
build the house, and then spend the rest of your life paying 
taxes (with yearly increases) on the ever increasing "value" 
of the house. 
   Then you die and leave the house to your mate - someone who 
has paid those taxes with you all along. Now there comes the 
inheritance tax (of up to 50%, and more in some cases). A tax 
on what you already own, and which you've paid for, and which 
you've paid taxes on all along. Now your spouse dies and you 
have to fork over half of everything - and then you continue 
to pay property tax on what's left.

   As a tangent, think back a few years and what happened in the 
automotive industry. 
   Gasoline prices skyrocketed, supposedly due to a fuel shortage 
(one that evaporated as soon as the cost hit $1 per gallon). In 
an effort to make ends meet, more and more people turned to 
imported vehicles. It was also discovered by more and more people 
that those imports were not just more efficient, they were also 
more reliable. And they were cheaper besides. 
   For the past decade, the top rated cars have been the imports, 
especially the Japanese cars. The worst rated were American made 
cars. (The same is true in other fields, such as electronics.) 
   So here was a product that was cheaper to buy, cheaper to 
operate, and that lasted longer. 
   American manufacturers suffered badly. The obvious went right 
over their heads, and over the heads of so many others. Want to 
sell more? Make your product better than that of the competition. 
Who's going to buy your car for $1000 more when it costs more to 
keep and will be a pile of rusted junk in 10 years when they can 
get this Toyota over there for less, pay less to run it, and 
have it still running like a fine watch 15 years from now? 
   Instead of making the effort to improve quality, or to 
decrease prices (by increasing plant efficiency) they did two 
things. 
   One was to develop the great "Buy America" project, building it 
to such a state in some areas that some union workers becames 
physically violent towards drivers of imports. 
   The second was a push in Congress to raise import taxes so that 
American manufacturers could compete. The idea was to make the 
price of an import higher than that of an American car. People 
were clammering and yowling things like, "YEAH! Let the Japanese 
pay those import tariffs if they want to sell their cars here!" 
   What escaped their mentality was that the Japanese didn't pay 
a cent of it. Nor did the dealer. The person who paid that new 
tax was the buyer. The American public.
   In the midst of the "Buy America" frenzy, American manufacturers 
themselves turned to foreigners for parts, for labor, and even for 
entire cars. 
   Meanwhile, as soon as the price of the imports went up, so 
did the price of American cars. The reason given was that they 
weren't making enough profit.
   That import went up by $1500. So did the American car. And 
they were right back where they started, with the American 
public footing the bill. So the tariff was increased again, for 
same reason cited earlier. The price of the American car went 
up along with it. This, of course, means that the sales tax you 
pay also goes up. And now there is even a tax on private resale 
of the car.
   What counts here is the taxing. The end cost of imports to the 
American public was driven up artificially by taxation (which the 
buyers paid). This so that an industry (and its employees) didn't 
suffer. Instead of forcing this industry (and its employees) to 
work more efficiently and to come up with a better product (isn't 
that the whole idea of capitalism?), the issue was forced by 
driving the cost up. And up. And up. 
   It doesn't end here, though. It's not so simple. Our society 
and our economics is like some bizarre spiderweb spun by a spider 
on LSD. Everything intertwines in all directions. 
   The cost of a vehicle goes up. Anyone who uses a car now must 
earn more to pay for it. Any business that has to buy a vehicle 
has to charge more which means again that people have to earn 
more. As all this happens, inflation spirals upwards at an ever 
increasing rate. And with higher wages and higher prices go 
higher taxes. 
   The spiral continues. 

   Of course, those who set the rules aren't about to be left out. 
They raise the taxes. They know how prices continue to increase 
ever upwards. So they also make sure that they have the ability 
to give themselves pay raises. 
   In 1987 Congressional pay raises - voted in by themselves - 
came to 27%. Meanwhile the official stance to the general 
public concerned the federal debt and how we're all going to have 
to tighten the ol' belt and sacrifice to get ourselves out of 
trouble. 
   And meanwhile federal spending is still rampant. There are 
still 5c plastic washers selling to the government for $75, and 
$4 hammers going for $600. A few people became concerned and 
began to report such horrible overpricing examples. The official 
response? A new law making it a felony to reveal anything 
"classified or classifiable." Several of the whistle blowers 
are now in prison or in the process of going there. (The cost 
of an item falls under the "classifiable" category.)
   This ruling came down as an executive mandate. It has the 
effect of a law unless Congress acts against it. And Congress 
has yet to do a thing about it. 

   In summary:
   For our first 100 years we went from a disjointed and tiny 
group of colonies to being a major world power, conquering a 
continent and being a force that was never defeated in battle 
with anyone. We became the source of most important world 
discoveries. We displaced every other country in the entire 
world as being the best place to live. National debt was almost 
zip, and no one paid taxes. What you earned, you kept. The 
stimulant to build an ever stronger country was there and it 
made us what we are - or were.
   In the second 100 years taxing came into play. With it came 
ever increasing abuses. Many advances are still American, but 
foreign powers are the ones who actually put them to use. The 
situation of 100 years ago is now in reverse. Quality has all 
but disappeared. Taxation has increased to the 50% level and 
continues to climb. 
   Our country began with revolts against such things as 
taxation without representation. The government raised taxes 
at will whenever they needed more money, and the populace 
had nothing to say about it. 
   Now we have representatives, elected to office by the populace. 
If we don't like what they do, we can elect new representatives 
in 4 more years. 
   Things have changed. It used to be that we had a government 
that didn't listen to the wants and needs of the people, who 
spent more than they had then raised taxes when they wanted more, 
who voted themselves pay increases so they could live in the 
style to which they'd become accustomed.
   Now we have . . . .