The Swiss: From William Tell to No Tell

0:00Oh, yes, we can start. Anybody have anything I'd like to bring up, or shall I just go away? I was going to talk about some of the little points I missed, like I wanted to go back to King Solomon, and we know in the Bible that he put a yoke on the people. But I thought one of the most interesting stories of King Solomon that said that as he got older, he grew mad in the love of women. and that his lusts knew no bounds. He had a thousand wives, according to the Bible. I'm always wondering how he made the rounds. I don't know.

0:45You can get away with that. A thousand of them. Well, of course, you know, maybe that's what killed him. He only really loved one woman. I don't know. I'm just wondering if the records are accurate. I mean, sometimes those things over the years you'd kind of blown out, the numbers get a little larger than normal. I think 10-wise would have been quite a challenge, not a thousand. It's interesting, too, that it seems that maybe he had a bad opinion of women, because if you read the Song of Solomon or in one of his writings, he talked about, he said who can find a virtuous woman for her prices above rubies.

1:47As in Proverbs?

2:17The other guy was nuts anyway, you know, because anybody of that many wives has got their head examined. But, and it said that, you know, remember in the New Testament, Jesus, he referred to Solomon in all of his glory, you know. And of course, I guess maybe that meant his harems and everything else. And the Bible also says during that period that Solomon put a yoke upon the people. And then he dies, and his son, Rie Boehm, is supposed to be the successor, and so he meets with the elders of Israel, and they're a little bit concerned about the problem they had with the old man and his taxes, and so they counsel him, the older men counsel him to speak good words to the people as to what his policies are going to be.

3:08He said, well, I'll think about it for three days and then I'll let you know. So at the end of three days, it wasn't what he had decided. And he said, well, in so many words, my father used to collect taxes with whips, but I'm going to collect them with scorpions, which is a barb-type whip that rips the flesh. Well, that didn't go over very big. They'd had enough of him, so they proceeded to say that he'll never be a king over them, and that he can have the temple that his father built, and that's okay, but we don't want you around here. And then he tries to calm the situation by bringing out Solomon's chief tax collector.

3:56That was a bad move, because they stoned him to death. For Salerno's like concubines, a lot of those were more or less a form of tribute, didn't they? Well, it did say that he brought in lots of foreign women, and the problem with that was they brought in their idolatry, you see, that was the problem with the foreign women is the corruption of the religion, they were worshippers of idols and so forth in that period of time. It's been a long time since I've read it, but I think what caused the great taxation under him was he spent so much money trying, part of it was trying to build temples for the men and his wives.

4:48How old was he when he died? I don't know. Did he cause it? I don't know. Was it how the movie was? for that many wives would have killed anybody. You know, a lot of things we don't know. We don't have a lot of facts on some of the details, but he was something, I'll tell you, and it's just that he grew mad with his love of women. But he did have a tremendous tax system, obviously, and it was a tremendous yoke on the people, and when they counseled his son to not pursue that the way his old man did, He was going to hang in there and be as tough or tougher than his dad was. And scorpions didn't go over very big with the people. So anyway, he fled and then the kingdom split because that was the end of him.

5:36And kind of a sad ending, I don't know if any of you have ever been to Salt Lake City and seen the lion house? Well, the lion house is the building where Brigham Young had all his wives. So these little apartments, you know, one right after the other going down the line. And he had fifty, I guess, or fifty-two, and that was quite a... But a lot of those were charity cases. If a senior member died, Brigham Young took in their wives to provide for them. Well he did have a lot of kids. He was a busy guy and just a cute little story on that.

6:28In my family, my great-grandfather and great-grandmother came across the plains of Salt Lake City in around 1865, I guess. My great-grandfather was a very successful businessman in Salt Lake City, and they made him a bishop at one of the local churches, and so then they decided, and this I got from my grandmother, they decided that it would be nice if he had another wife. And so the brethren went to my great-grandmother and put pressure on her to consent to another wife, and she put her foot down and dug in her heels, and there was no way that she was I was going to have her husband Tomcatting around Salt Lake City looking for free felines.

7:15And she was very bitter. According to my grandmother, she never attended church after that. She never put her kids in the church or the boys on missions. She just, she was very bitter about it. And of course she saved him a lot of trouble because it wasn't too long after that that the federal government moved in and arrested all those guys and charged them with unlawful I guess my great-grandfather, she would have been kind of grateful that she was a stubborn one that she was, so that was the story, and of course now we have some interesting accounts of polygamy up in Utah, which is quite, they're finally starting to come up with some specials on television about them. I got one the other day, I recorded it for my daughter, and it was a very interesting story.

8:06Just on that light, the church abolished polygamy theoretically in 1890, but a splinter group broke off called the fundamentalists. We like the word fundamentalists, look what it does in the world, look at the Arabs and so forth. Anyway, and they still practice polygamy and they say there's as many as 80,000 of them in the state of Utah, that multiple wives. But anyway, then I thought a little bit about Nebuchadnezzar. I mentioned in my little outline, I said, you know, that good guy Nebuchadnezzar, the one who went in and breached the laws of Jerusalem and took the people off into captivity.

8:51What had happened is that the Babylonians defeated the Assyrians and took over what we'll call the eastern part of the Middle East at that time and they of course made their pitch into the area and they came up to Jerusalem and they wanted tribute and the Jews agreed to pay tribute and so they thought that was just fine. And that's the way international politics worked in those days. They didn't bring in controls politically. They didn't bring in new leaders. All they did is wanted you to bring in a tribute once a year, usually, and you bring in a tribute, you can run your own show. But these are the numbers. This is what you pay.

9:36Well, it seemed that the Jews did it for a while, and it said that they bought their piece with money, and then they had enough of that, and so they rebelled and stopped paying the taxes. Well, Nebuchadnezzar was really unhappy at that during the event, so he came back with his big battalions, and they surrounded Jerusalem and the Jews and sued for peace because they knew they couldn't win. Nebuchadnezzar said, well, I'm going to put my own man in charge. So a fellow named Zedekiah was his hand-picked ruler over the Jews. And so Zedekiah said, yeah, I'll be a good boy. I'll collect the taxes. And so he did for a short season. And he said, this is no good.

10:22So he stopped collecting the taxes. And I guess Nebuchadnezzar just blew his top, because even his own hand-picked man couldn't be trusted. That's when he came down on Jerusalem and breached the walls and took the Jews into Babylonian captivity. Babylon was a pretty advanced place at the time, and I think the Jews probably enjoyed it there. From what we can tell, they probably had a pretty good time there. And then the last king that followed, named Cyrus, I guess was his name, He must have realized that here he had these potential taxpayers there, you know, living in Babylon, so maybe I'll send them back to where they belong and then I can start collecting some money out of them.

11:09I think the Jews look upon it as kind of a divine movement, but I think it was probably more just a tax game than anything else. Well, that's an interesting story. I like the stories of taxation that make this subject interesting. When we went up to the Greeks, there were a few people who asked me some questions on the Greeks. And I guess the one point that I missed is that among the wisdom of the Greeks, and they were a wise bunch, they looked around the world in which they lived and they decided that civilization and tyranny went together and why was it that a tyranny prevailed among all the civilized societies like the Egyptians and the Hittites and the Persians and the Assyrians and they concluded that the cause was direct taxation and direct Direct taxation was what brought about the tyranny in this particular region, and that was a truism, so that if you were to have a free society or a free civilization, the first thing you had to do was get rid of direct taxation.

12:27Now, direct taxation was taxes directly on the land or on the production and so forth, and that's why the Greeks backed off and liked to focus on tax on commerce. Direct Taxation is with us today. Nobody seems to have been too concerned about it except the founders of America. The Constitution talks about direct taxation and if you read the notes, there was a question asked during the Constitutional Convention, I mentioned what is a direct tax, and unfortunately nobody answered it.

13:15But the direct tax is a term that the British had used for years to define income tax. So when you read old British writing, they talk about direct tax, they're talking about income tax. So it is a tax on the individual. Indirect tax is a tax that is not on the individual. It's usually on a sale, like a sales tax or an import duty or things like that. So those are indirect taxes, but when they tax a person directly, that the direct tax, or his land directly, for a poll tax is the obvious and most common example of a direct tax. So it's a tax on the individual or his property? Yeah, a land tax, it's considered a direct tax. You see, and that was the problem in the famous income tax case when it came with the United States Supreme Court back in 1894.

14:08Was the income tax a direct tax? And the majority of the court said a tax on the income of real property is the same thing as a tax on real property, therefore it's a direct tax. Therefore, the Constitution has to be allocated proportionately on the state's unpopulation and that was the rule in the Constitution that they felt that it had to be applied that way and so they held it unconstitutional and they did it because it was a direct tax and that's the way they reasoned. Now, I want to talk a little bit about the come of the day. Well, actually, here, let's stay with the direct tax because it kind of goes in, if the Greeks believe that direct taxation was the destruction of liberty then that was pretty much what their theme was.

15:05And not a bad theme, I was going to say, you know, the Greeks were pretty wise. I think we've seen the great destruction of our liberty today because of the income tax, which is kind of a direct tax. But during England's time, right after Cromwell or back in the beginning with Cromwell, the British introduced the excise tax. And the excise tax was sort of like the Greeks were. They felt that you couldn't have excise taxation and have liberty, it is a very destructive tax on liberty. They came up with that same conclusion. The excise tax, there's some lovely illustrations in the big book that are showing an excise tax man and he's just a horrible looking guy.

15:56But they really hated, the British hated the excise tax, and they fought it, and one of the reasons they fought it is because they felt that it was a very destructive tax among the Dutch, because see the Dutch took over after Spain collapsed and became the superpower of the day, they couldn't maintain the financial obligations of being a superpower, they had to maintain wars and they had to protect themselves. The Sea Lanes and the result was that they had increased taxes, and the more they increased taxes, the more trouble they got in. How different is the sales tax from the excise tax? Pretty much the same thing. It's a type of an excise, if you want to call it that.

16:44Well, we have excise taxes occasionally. Sometimes we'll have them on jewelry, telephones, Bush introduced... Cigarettes. Yeah, yeah, excises. And Bush introduced it, and he said no new taxes, but one of the taxes he introduced was a tax on boats. And you remember that? And he ruined the boating industry. He then put an exercise on automobiles that were over, what, 30,000 or some number like that. And so exercises are these that show up every time. The thing is, on the continent, with the Dutch and the French and the Germans, the exercise covered everything in sight.

17:29And the British just kind of didn't like that, and they just didn't want a strong exercise. The first prime minister, so the word goes, of England was Sir Robert Walpole, and he's considered the first prime minister. Now, why was he the first prime minister? What was peculiar about him that made him a prime minister? Do you have any idea? Well, he was the first Lord of the Treasury, so he was a taxman. He was Chancellor of the Checker and first Lord of the Treasury, and that became the prime minister because the king needed money and obviously the minister in charge of taxes was the one who would become prime minister and that probably continued to some degree down to the present time.

18:19But the excise was just hated by the British and the people used to travel around with placards and cards in their hair that said Liberty, Property and No Excise, or Liberty, Property and No Wooden Shoes, meaning the Dutch of course. So they fought it and the funny thing is it was a tough tax because if you became an excise tax collector you were a targeted man and they made a study and they found that in the In the case of a few years, there were, I think, 260 assaults on excise tax collectors and there were six of them who were murdered.

19:07And in one place, they broke into this guy's house and they dragged him out of bed and they murdered him in front of his family. So, it was not a popular tax. The British had a long struggle for a good tax. They struggled with excises, but eventually Walpole had to back off and cancel from them. He finally realized that there were revolts going and he said to his staff, he says, well, the dance will go no further. I'm not going to collect taxes with blood in England. So that's when the exercise ended. They had some other taxes during this period that were interesting. They had the chimney tax, which was the number of hearths in a house.

19:55and I like the there was a little rhyme that went along with that and let's see if I can find it here Here it is. I get this with a ballad. There is not one old dame in ten and searched the nation through, but if you talk of chimney men, well spare them a curse or two. Now the chimney men were private people, but they had to go through the house in order to count Window-and-Door-Tact

21:08I think that that particular ethic in British history was interesting because it came to America and the Americans hated the excise and so when the whiskey tax was introduced with the Alexander Hamilton's tax, the big argument was that this was an excise and it was, it was an excise on whiskey and it brought up all those hatreds of European taxes that aroused the Americans to go out and tar and feather all those whiskey taxes Tax Collectors. So the excise taxes finally died, in that sense. Today we don't seem to care about it, but it was hated with a passion, yeah. I think the hanging for the excise tax seems mainly that the authorities focused on one item, one item, and people were angry that what you're taxing are this or that versus a sales tax, which we covered broadly.

22:07Yeah, yeah. That's what angered him, you think? That it focused particularly... Well, they just hated the excise. I think it was irrational. I don't think it had a lot of basis in it, but you see, they could look over to the continent and see Netherlands, and Netherlands was in terrible shape because of the excise tax. And France was in terrible shape, and so there was really a hatred for it. And the way it came about, Walpole particularly, it was a way to curb smuggling. Because all the coves around England, you know, and they were smuggling wine and tobacco and everything was smuggled in and avoiding customs. So they said, okay, we'll solve that problem. We won't have a tax on customs.

22:57We'll have an excise tax, and that we can enforce and that we can control. And they made quite a study of it. I think they found that there was four million pounds of tea that was consumed by the English people and there was only about 600,000 that was paid through customs. And so they then decided, well that's the solution, we'll just have an excise tax and then we can really control it. And I guess it worked pretty well. But we don't have that today to speak of. It's funny how at one age a tax would be so intolerable and so hatred. Right now, you know, we hate the income tax.

23:42And we've hated it for a long time. So I don't know, it'll be interesting to see if they ever get rid of it. There were a number of groups about 10 years ago on abolishing the income tax and adopting a sales tax, a national sales tax, and yes, still, here's the noises on it. I've got an iterative letter in my file from Bill Archer, who was chairman of the House Ways and Commends Committee, inviting me to come to the committee and talk about getting rid of the income tax. And so I had a great time down there, and it was fun. But it would kill that. There was a lot of great inertia and testimony there that came out. I was the only one. Bill Clinton sent one of his flunkies down and they said he liked the tax the way it is, so that was the end of that.

24:31But that was an interesting contrast, because Jimmy Carter had written, back when he was President, he thought the income tax was a disgrace to the human race, and he was the Democratic President. What do you think of the value-added tax?

25:15The other thing, we have it in Canada. It's got a goods and services tax. It's the same idea. It's clever. It's clever because the taxes are set along the manufacturing process. And it is a kind of an excise sales tax. It's in that same field. Now, the Europeans have it. In fact, in order to get involved in the EU, you have to have a VAT. It's mandatory. Now, you can have your own style, but they require it. The continent in England is always like that size. They have a long history of that kind of taxation.

26:02So the value added tax is just a more modern, sophisticated form of taxation. My problem was that if you're going to have it, then you ought to get rid of the income tax. But don't put it on top of the income tax. And that's what really happened in Canada. Brian Mulroney, who was so-called conservative Prime Minister, introduced the VAT, you can call it that, on top of the income tax, and of course the government just loved it. I mean, now they really had a marvelous source of revenue, and he was thrown out of office with a tremendous vote against him.

26:47And the liberals who once said that they would get rid of the value-added tax, and of course they had no such intention, so once they got in and then it died, it was just a political pitch. I don't know if this is the perfect time for you want to wait until Friday. I'd love for you to expand upon what do you think would be more ideal if we could implement? What should we get rid of, currently, in the U.S.? What is, regardless of how practical? So, sometimes, either it's a day or a Friday. I tell you, any tax is okay if the rates are okay. And that's it. If you have moderate rates, people will pay anything.

27:44Okay, fine, we'll pay it. You got a 3% sales tax, 2% sales tax, people will pay it. You got a 3% income tax, people will pay it. So it's the rates of the tax, to me I think, that is where the problem lies. When I lived in the Cayman Islands years ago, we had a poll tax. The only tax on the island was a poll tax. All males had to pay, oh, it was peanuts. Nobody cared, but what if we had to pay $1,000 apiece, you know? Then it wouldn't have gone over very well, because, you know, a lot of the fishermen were poor and things like that. But I think it was $10 a year after $20 a year, so I might have. That brings up, you've got to fight on the spending side. Yeah. That's right. You can spend yourself to death, but then what are you going to do? Well, you can print money and you can do all kinds of things to cover your deficits.

28:44So, but aside from a reasonable rate, we're burdened with this obscene code, you know, 10 feet high, versus a reasonable flat tax, or the sales, if we could get rid of all those regulations, that's an additional benefit. Oh, yeah, the complexity of the income tax today is mind boggling. In fact, there isn't any man, in my opinion, who could become an expert on the Internal Revenue Code, on the whole code. Nobody could do it. It's just beyond comprehension. In fact, the flat tax is an interesting tax.

29:33It was one of the main proponents of the guy named Rabushka at Stanford University, and he wrote the book, The Flat Tax, and I had mentioned it in that book. I had an interesting experience with him. When I was writing for Good and Evil, I was doing some work on Israel and on their tax policies that I had. He had written a few things. I had written 22 books at that time. And so I called up the Hoover Institute at Stanford and wanted to know if I might talk to him. I kind of like to know a little bit about what his latest is on Israel, in modern Israel. And so they gave me his phone number and I called him.

30:20And this is one of those great bits of encouragement you have sometimes in your life. So I started to say, I gave you my name. I said, I'm trying to find out, you've been writing these annual reports on the financial policies and taxes of Israel. And I said, I stopped here, but I'm trying to get the next one. I can't seem to find it in the library. So he then said, are you the Adams that wrote the tax book? And I said, yeah. He said, and that's that one. He said, that's the finest book on taxes ever written in the English language. Boy, did I nail him for the preface in the new one. But the thing is, that was such a jot in the arm because I had become so discouraged with this book.

31:11Because it was just difficult to sell it, you know. And so I was just, I was feeling pretty bad about it, although I was now moving ahead with the new one. and that really amazed me because one of the great tax dollars in the world would say that and we became good friends after that we talked on the phone we spoke in the other certain places he's a very bright guy I'm telling you he really is and he can spell that flat tax out in the most impressive ways but I guess when you when you've battled in this field for all those years you get kind of discouraged I've read that the Russian tax system that they've implemented in the last few years will be a model tax system.

31:59Pardon? The Russian tax system that they've implemented in the last couple, three years will be a model system. Yeah, I read about that, yeah. What's your opinion on that? Was he involved in that tax? He could have been. He's international and very famous in it. In fact, I remember reading about that and I was wondering if that was his baby It's the old Chinese story. You bring the rates down and people pay the tax. In fact, one of the theories of the tax in ancient Greece was to keep the rates low, so the evasion wasn't worth the trouble.

32:48So the evasion wasn't worth the trouble. That's a good expression if your rates are low, evasion isn't worth the trouble because you can live with it. We don't seem to have people believe that way. I think the Democrats, you know, soak the rich, soak the rich, and all that nonsense and so forth. The rich pay in too much as it is. Everybody's paying too much in that sense, but there isn't much we knew about it. It's really on the expenditure side, and I think that's where the big problem with the income tax is, the expenditure, with any tax. I mean, even if we had a VAT, or even if we had any tax, whatever it is, if the rates are too high, the tax stinks, and people will rebel, and people won't pay it, and people will find ways to get around it. Go ahead.

33:34In Houston, we've got a Texas group that I mentioned, we've got 20,000 signatures to change the city charter to limit the amount of money they can tax and in turn spend to an index of inflation and population growth. a combination of those two, so that might add up to 3 percent, but normally they'd want to go up 5 to 10 percent every year, and it's going to be on the ballot in November, so we're fighting to get that in from there, and I think they need to cop, some other states or cities have that in place already, it's kind of, it limits the...

34:31The Feds are doing stuff. They really are. It's like Proposition 13 in California, and then that took off everywhere. But the Feds, it's too wrapped up in politics. I guess, you know, when you listen to these guys, they're going to soak the rich and soak the rich. The rich pay most of the taxes anyway, so the problem is, and again, maybe had, But if you go back to the Constitutional Convention, it was very clear in the debates they wanted taxes to be uniform and equal. And they explained that that way no faction could get control and could overburden another faction. They likely used the word faction. If the rates were uniform and equal, there was no possibility of that problem.

35:19Well, you could have an income tax, the original income tax, I had a flat rate, you know, originally and And I said, well, you know, that's the first real praise I have received for 15 years almost in terms of that study.

36:24So it was a, I just couldn't believe my ears. I didn't feel I was a failure, but I felt I was a failure in the sense that nobody seemed to appreciate it. Might I suggest, if you have some spare change, whatever spare copies that you're willing to part with, in every new convening of the House of Ways and Means Convention in Congress, you ought to send a copy to each of those members. Actually, they all were given a copy, yeah. In fact, the whole Congress was. Some fellow, when that book came out, donated a copy, it'd be 93, 94, he donated a copy of that to every member of Congress.

37:17The guy from the West Coast someplace, I later on found out who he was. It was a good idea, but they don't read it of course, but it was a good idea. I thought it was pretty good. Another thing I wanted to pick up going back, as I kind of go over what we talked about and see what holes I thought we left, was many of you are probably familiar with the book on the Roman Empire, The Fall of the Roman Empire, Edward Gibbon, besides the fact that it's a big six volume or whatever it is, there's also some short versions, you know, abridgments if you call. I really think that's worth reading. Gibbons talked about the fall of Rome and he zeroed in on the tax system a number of ways. One of the things he says is instead of wondering The Peace of Augustus was the greatest period of peace and prosperity ever enjoyed by the human race.

38:30Rome was quite miraculous at that time. But then when they get into the tax system later on, you know, he had a wonderful command in English language, he said it developed into a perpetual struggle between the powers of oppression and the arts of fraud. Isn't that wonderful? And of course he's talking about the taxpayers on the fraud side and the government on the oppressed side. And so given it is certainly worth reading, he got some great stuff. The other one that he said, I think is probably the best one, when he talks about the collapse of Rome, he uses the analogy to cloth, and he says the stupendic fabric yield to the pressure of its own weight.

39:17In other words, the bureaucracy was so heavy that it caused the system to collapse. So Gibbon's worth reading, and he, I just remember, perpetual struggle between the powers of oppression and the arts of fraud still flies, doesn't it? Doesn't it, the Internal Revenue Service? You can say arts of fraud, the only difference is that it isn't just fraud, we have what we call tax lawyers, you know, and what you call tax planning, you know, that's, tax planning is a substitute, well a lot of them use fraud, but go ahead. What issue of the free market had a little essay on the nature of bureaucracy in some of the last years, and that explains just the natural insidiousness of what bureaucracies feed...

40:28I remember I mentioned how the people tried to avoid the tax system, one of them was they fled to the New World, and the other one was they became aristocrats, and the third one was they became civil servants. Well, from the writings in that time, we read that it said it would take 25 men were doing what one man could have done. And literally, you find it in the book. Oh yeah, the bureaucracies are really so powerful, but as I said, the stupendous fabric will yield to the pressure of its own weight. Also during this period I mentioned Boudicca and her And I wanted to read you, it's on page 107, at least in the new book, the two quotes there.

41:27And I think that they are the best statements about tax rebelliousness and tax compliance. The rebelliousness is what Boudicca says, but the Roman general, Serialis, who put her down and destroyed her, and also one in France, he gives a little speech as to why you shouldn't do this. And those two contrasts, so interesting. Here's what Boudicca says, and it says, it describes her, the Romans described her, they said she was very tall, appearing most terrifying, around her neck was a large golden necklace, she now grasped the spear and spoke as follows, and you'll see the picture that's in my book on that.

42:26And then she said, besides pastoring and tilling for them all our other possessions, do we not pay yearly tribute for our very bodies? How much better it would be to have been sold to masters once and for all than possession empty titles of freedom? To have to ransom ourselves every year, which we do, you pay your income tax, Renfra, every year, how much better it would have been to have been slain than to go about with a text on her head. Now that's about it. She roused 200,000, you know, people. Then, after she's put down and after this Roman general, Serialis, he then gives this little speech to the people in France after he destroyed their rebellion.

43:19The tranquility of peoples cannot be had without armies, nor armies without pay, nor pay without taxes. There will be vices as long as there are men, but they will not be everlasting, and they are compensated by the interval of better times. Let the lessons of fortune in both its forms, good and bad, warn you not to prefer rebelliousness and ruin to obedience and security. Pretty good comment about rebellion. You could apply that to a lot of rebellions over the time of history. I like that, because I think it kind of says it all, and I don't have an answer to it, but as I have mentioned, most rebellions fail, and we don't appreciate that.

44:18We seem to think, because of the American Revolution, that they succeeded, but then the South rebelled, wanted to withdraw from the Union, that was a horrible thing for the South and the North. It was a disaster, as I've said in my book, it was a disgrace to civilization, because everybody in Europe had looked upon America as this new country where brotherhood and commerce and so forth would prevail, and here they were tearing each other's throats and slaughtering everybody like flies. So it turned out that we were kind of a disgrace to the world for having lived up to what they saw for us.

45:04The other thing I wanted to bring up, I mentioned the Swiss, and there's a 189, there it is here. This guy is on the Swiss National Council. Banking Secrecy is a major component of the wall of discretion that must protect the individual with his privacy if liberty is to be defended with success against the dominance of the state. This, and no less, is what is at stake, and the frightening thing is that it should be necessary to state it.

45:56And, of course, now, you know, we don't have any of that stuff, you know, that's long gone. But I thought that was worth the price of admission, so to speak. I wanted to then go and kind of catch up to where I was last time. Let's talk a little bit about Henry VIII, and he had the name of Bluff King Howe. You have any idea what that meant? It meant he was Bluff King Howe. It means that he was kind of a sharpie. I thought that was an interesting name for him. He tried to collect taxes without part of any consent, and then finally he repented and said he was sorry, and he wouldn't do it again. And in the meantime, he calls in all of the shillings and he melts them down and starts adulterating them with pot metal and copper and stuff like that.

46:49And pretty soon, of course, the merchants knew what was going on. But that was one of his ploys. And then he decided, and I know he wasn't such a religious guy, he made his breach with the Pope. He wanted an annulment. And the Pope said, forget it. And he said, okay, that's fine. I'll just throw all you guys out and seize the Catholic Church in Britain. And they were big properties. They had enormous estates and things, and he swiped them all. So that was, I think why they called him Bluff King Howe, was because he wouldn't bluffing on that thing. and so he swiped all the church. There were some interesting problems. What are you going to do with the poor and things like that? Because the church took care of the poor, and the sick, and the widows, and the orphans, and so forth, and there was no problem. We just had the local towns do it, so the burden shifted over to the towns, and of course the merchants loved this because one of their great problems in commerce was that England didn't have any

48:03of Money, Precious Metals, and so every month there would be so often they were shipping off the money to the Pope, and it was called Peterpence and so forth, and so when they stopped that the merchants were happy as well, so that was, yes? I have a question, about the church taxes. Church taxes, building the machine, the stuff like that? No, back in the European history. I would assume the churches were exempt from tax, they still are. The Church Taxes You mean the churches were taxed, is that it?

48:50Churches were taxing the people. Oh, the church, oh, okay. The people taxed. Yeah, I was thinking of the government taxing the churches. Or was it donations by the town people? I think it was more than that. What's your... I don't have much on that. And I know that churches need money, and they have a way of putting pressure on the congregation to pay it, as well I know, and that's true today as ever. Because anyway, so then we have our dear friend and our lovely wise and noble woman, Elizabeth shows up, and let's see, I love some of her, some of the sayings she made.

49:51One of the saying about Elizabeth was just the opposite of her father. The solvency of her government was the miracle of the age. But all the other kings in Europe were going broke. She wasn't. And nobody could quite figure out. Like I said, the miracle of her age is she was sovereign because she didn't burden the people with taxes. In fact, she definitely reduced them. And she stayed out of Europe's wars. What do you think of this lady? I don't have enough ladies in here to attack their brain. She reaped a great advantage from being a woman. She was not tempted by the idea of military glory. Now, does that transpose into testosterone?

50:41But anyway, that was some of the wonderful things about her. What didn't she make the privateers, her navy, and also they were pirates against the Spaniards or all that?

51:06And wasn't she?

51:15She didn't have to go to all that trouble to raise the money to build ships, she could just send out Sir Francis Drake and some of his boys and they would just prey on Spanish shipping and yet the funny thing about her being a pirate, because some writers, as I told you, I wrote this article in the Washington Post and they had a nice picture of her and so forth and I got all these nasty letters from people that hated her and one of them was she was a pirate because she preyed on Spanish shipping, you know, through Sir Francis Tray. Studies were made about the number of Spanish ships that were captured during this period and the Dutch were number one and the French Huguenots were number two and she was number three.

52:07Well, if it was all right for the Dutch to do it and the Huguenots, what was so wrong with her doing it? It seemed to me that was the game at the time. And so she was so clever that she could do these things without taxes. See, she didn't have to tax the people to build a ship. She just said, okay, fellas, go out there and do your stuff and we'll divide up the spoils. Which they did. So I think one of the interesting comments about her was from her successor, James I. James is the one who gave us the King James Version of the Bible. I don't know of you that have a chance to deal with the Bible, but it is a beautiful piece of literature. It is just so superb. I've read some of the revised versions and later versions and missing versions, and they really lose all the beauty of the King James Version.

53:02Maybe they've correct a few things, but they just lose the beauty of it. Well, James, believe it or not, his mother was Mary Queen of Scots and Elizabeth's government chopped off her head. Now, you would think that James would be a little pissed, wouldn't you? Well, he said that Elizabeth was the greatest monarch since Augustus. So, for him to say that to the lady who was somewhat responsible for his mother's shortening, they shortened her a little bit. It shows you just how remarkable she was, I just like to keep, and when she was old, Elizabeth said this I count as my glory, the glory of my crown, I have ruled with your love, and the British did love her, and that's why they called her Good Queen Bess.

53:59But, of course, her fiscal policies, as we mentioned, were remarkable because she saved the carnage, she restored the currency, and it said that that set the British commerce on the road to dominate the world because they had this wonderful shilling that was pure silver, the same thing that the Greeks had, they had a pure silver, denarius, drachma, and they guarded it The way we should have guarded ours. Now we have pot metal and we're up in the Roman League. It's going to be interesting to see what's going to happen. There are some pretty smart guys, I think some of the people here, talking about going back to the gold standard.

54:49And that it can be done. And in that sense, then of course you wouldn't have this inflation problem that It's so easy for governments to do, they just have to restrain themselves. Will, let's see what else I got here for you. Oh yeah, I want to talk a little bit more about Frederick the Great. He set up an exercise tax, and he had the army collected. So it was said that Berlin was, that the tax system, I have the exact words that they used, it was not an army with a state, but it wasn't a state with an army, it was an army with a state, and the war office in Berlin was a tax office.

55:46The interesting thing about him is when Napoleon went to his tomb and he gathered in with his generals and he said, Men, gentlemen, hats off. If he were alive, we would not be here, which says a lot about his military genius, as a ruler. Anyway, the one thing about him, I suppose, is you have to remember that as the George Washington of Germany, he was not very happy with the Jews.

56:35And it wasn't too hard for Hitler to find a lot of support, in fact, the dislike, the anti-Semitism in Europe is really deeply ingrained, it's really ingrained. My wife is Russian, and she grew up in the Soviet Union and then eventually came to Canada, and boy, is she anti-Semitic, and she is anti-Semitic. And she has reasons, because as a little girl, she remembers in Russia, the way the Jewish people were, and some of the things that she witnessed. For example, if you know Russia in the old days, you're always standing in line. If you've ever been there, you're always in line.

57:22And the pregnant women were permitted to go to the front of the line, And the Jewish women would put pillows in their gut and show that they were pregnant and then later on they were discovered and then any time they'd come up there they'd punch them to say it was for real. But those little things to a young girl in Russia, you know, they made an impression on her. She has some Jewish friends, but she's representative of the way that people feel over there and grew up with it. Frederick the Great, he even passed the law making it so that Jewish people couldn't get married, because then they wouldn't have any children, at least that was the theory.

58:17So he took, he made quite a deal out of that. But why would he do that if you're saying that he invited Jews to come back to Germany to receive special tax privileges and favors? Yeah, I guess he needed their services. But yet he didn't want them to reproduce. He didn't want them to reproduce, no. Well, the, let's see how that goes, he didn't want them to reproduce, is that what you're reading? Yeah. by Inviting Jews and French Fuginites.

59:04Where are you reading? Page 212, the third paragraph, the second paragraph, the first couple of sentences. They said that how can you, if they knew that they weren't going to be able to repopulate, they probably wouldn't want to come. The first sentence is, the great elector tried to re-doctor the great elector. The great elector was not Frederick. Frederick? I think it was... Frederick William is not Frederick. Yeah, yeah. Frederick William of Brenton.

59:51Yeah, he was the first great elector.

1:00:27Today we mostly hear about Christians persecuting the Jews and not the other way around. It didn't justify it either way, and oftentimes the Christians, particularly in the latter years, had the upper hand more often.

1:00:57And they got the job that the Christians didn't want. Bankers manage money, things like that, and of course that was stupid because that's where the power is, you know. So we built the Jews up and then they decided to steal it all on the grounds that they acquired their money by sinful means, and so then they gave a periphery license to swipe all the Jewish wealth. There was a multiple professor calling usury sinful. Yeah, well actually the Arabs had that same problem. Just redefined. Yeah, well that's one of the things that you saw here in my book in France, how they were able to make loans by avoiding usury. It's clever the way they did it.

1:01:44Well, I want to talk a little, I guess I want to talk a little about Walpole's excise tax. We've touched on it a little bit and how he abandoned it. And then we had, I think, I have a trap here called the Parliament searches for a better tax. And in it, the British never could find a good tax.

1:02:29But they had a good system because everybody participated in it. And what was very unique about the British system is the rich were not exempt from taxes. Throughout all of Europe, you know, the aristocracy, the rich, even the clergy paid no tax, it was really the commoners that paid the tax, but under the British system, there wasn't that exemption of the rich. The landowners paid tax, but they protected themselves by real low assessments, and as you'll remember, every landowner made his own assessment, and that was what Elizabeth came up with. They had the merchants pay taxes on excises and on customs, but there was tremendous amount of smuggling, so they were protected. They didn't get clobbered too much.

1:03:19The housewives did pretty good because of the window and door tax, which exempted the poor. So actually the system was balanced pretty nicely, but it was full of a lot of what we would say, I wouldn't say frauds, but there were little loopholes and things that ran around, and not a bad idea, something that we have. The Dutch, you see, made a terrible decline because while they were the superpower of the world, they taxed themselves into death. And there's one little statement there, one writer on the Dutch Republic said, War meant expense, expense meant taxation, and taxation meant the strangling of trade.

1:04:13And we found that in the Netherlands the taxes were so high it was just unbelievable. I like this one comment where a British writes home, he's an economic agent, he's in Hague. And he says, it is strange to see what readiness this people do consent to extraordinary taxes be yet as great as they were during the war with Spain. I have reckoned that a man cannot eat a dish of meat in an inn, but that in one way or another he shall pay 19 excise taxes out of it. Boy is this strange, but true. And then another one wrote in and he said, well, you know, in England, this would never happen.

1:05:00We'd have revolution after revolution with the taxes that the Dutch paid. So the Dutch, you know, they paid their taxes and then they ruined their country. Just that simple. Question- Did that coincide with the Dutch or the great maritime power? Did that coincide with the rising taxation of their empire declining? It is said that the tax is what destroyed the Dutch Empire. In fact, in my book, on page 411, you'll see a picture of some sailing ships, which was a placard that was nailed up around Amsterdam calling for people to book passage to the New Amsterdam.

1:05:59And the title to it is Freedom in Dutch. And it says that when you get to New Amsterdam, you won't have any taxes, and that's how the Dutch settled in New York and set that up, so it's kind of sad what happened to them, and the British were so far ahead of them, they weren't about to introduce taxes like this, let's see where that one thing is.

1:06:34When you've gotten into the Dutch, on your book you talk about how the taxes increased so much, especially between 1610 and 1650. And that was the time when the pilgrims were living in Leiden. I always heard they left because they were being, it's almost too freed in there, their morals were being enticed by the Duchess, so they left and first went to Plymouth and then on to the New World, but I wonder if some of them were due to taxes? Probably was. I don't know if you had any, when you were doing your research, if that was any part of it, if that was the time when the taxes were increased, it's kind of interesting, they left right there.

1:07:20Well, more people came to the New World than the Old World to escape Europe's taxes. Yeah, that's what I wondered. Yeah, any other reason? They could have it like the L Group is true, but then there's some other... Well, there's the Irish. I remember in my book there, there's an Irishman that writes home from Ireland, writes home from America to Ireland, and he said, boy, you guys got to come here. You know, he says, we don't have any tax men here. And he says, everything a man makes is his own. So he was telling his family to pack their bags and come to America, which it was, of course, the land of no taxes.

1:08:06And that was the main motive to come here. And certainly with the Spanish, we know that was true. I think it was true with the English as well. OK? I'm just curious, I see you have some indexes to Hitler. How much of a tax or taxes did Hitler impose to do what he did? Was it heavy?

1:08:46What about the German pockets? What kind of taxes were they paying?

1:09:16When you live in a world that is anti-Semitic, sometimes you have to bring it up and talk about it. I've worked with Jewish people all my life, you know, because most tax lawyers are Jewish. I don't know if you know that or not, but certainly. When I went to UCLA Law School, we graduated class of 84, and 68 were Jewish. We only had a dozen Gentiles. That's UCLA, that's a big university. So they like law and they go into taxes too. A number of the big ones have come to me many years ago when I was inactive and they wanted me to show them how it was done. When I lived in the Cayman Islands, I had a couple of them show up, I didn't show them, no.

1:10:02Trade secrets, I guess, at the time. I did want to ask you this question. I say in my book, when I talk about rebellions, when the rebels won, the taxpayers lost. Have any idea what I meant by that? I know you view the examples of the Dutch when they had to increase the taxes to pay. Example number one was when they kicked out the Spanish and got rid of the 10th penny. They had to turn around and introduce excises that were higher than the 10th penny.

1:10:48So the rebels won, but the taxpayers lost in Holland. Okay, try another one. What was it? American Revolution. Hamilton taxes were higher than they were today. Sure, they were. Absolutely. American Revolution is a perfect example. Americans raised hell and were all upset with the Stamp Act and tax on tea, which was peanuts. I don't know if you ever look at the numbers on that. And then as soon as they get rid of the British and they have to pay for government, then they have to increase taxes. Marco taxed higher than we had taxed in the Philippines, Marco raised the taxes in the Philippines.

1:11:35Well, they lost after they got their freedom.

1:11:52In history, why were we so fascinated with the tax rate of 10%?

1:12:22It was in China, we know it was in Greece, the Summa, it seemed that it was with the Mongols, the Golden Horde, it seemed that ten percent, the biblical tie set the standard for what tax should be, probably not a bad idea, you know, I mean the flat tax people were talking about ten percent, so maybe we should think that the biblical tie isn't so bad after all. Are you going to go back? You mentioned yesterday about the French Revolution. Are you going to cover any more of that? No, I'll get to it. What more would you like?

1:13:07Well, I guess after reading your discussion on all that went on in France between 1750 and 1780, I'm just amazed there weren't more French that left and went to the New World. And there doesn't seem to be that many. I just wondered, were they in some way abandoning or leaving, like they did with the British and the Germans, or what was the reason? There had been a flood out of that. Well, a lot of them of course went to what we call Quebec, you know, and the French North America covered all through the northern regions, you know, all through Buffalo.

1:13:53Buffalo? You know how the buffalo got its name? Buffalo? Not from Buffalo. There's no Buffalo there. There never were any Buffalo there. It comes from the fact that that was part of the New France at the time. And the French word was that as the water comes down over the Niagara Falls and then runs down into Lake Erie, it was called a beautiful flow, Buffalo, a beautiful flow of the water. So it was the water flowing down in the Lake Erie from which the word buffalo came. But I mention it only because that was part of New France, you see, New France was pretty big and it extended all through that region out to the north. Of course Louisiana was part of New France, so there were places they went to.

1:14:42So they were emigrating with those from Quebec? Yeah, yeah, and of course we still got them up there, you know, if you ever go to Quebec In fact, make sure they know you're an American, really, because if you go up there as just an Anglophone, you might be from Toronto or some place, boy they hate your guts, they'll give you bad time up there, I found it much better off as an American and they'll treat you pretty good. That's probably true, of course you've got to remember too, the French had other colonies The New World in the West Indies, Martinique, and many of those.

1:15:29So maybe they did immigrate a lot, maybe it just hasn't been publicized.

1:16:04Well, maybe we'll just have some fun talk. In the event that there has to be a government, is there an alternative to taxation? Can there be? Is there something that someone might feel is wrong with?

1:17:00Well, you see, the Greeks were pretty good at it. They had the lethargy, or whatever they called it, in which they went to the richest people in town and in the cities, and they would tell them, we need this, we need that, we need this. And then they would supply it, and they would actually struggle for the honor, and they would be honored for it.

1:17:52On page 66, the Zenophon, a Greek writer and a student of Socrates, he recalls a dialogue between Socrates and a rich citizen, in which Socrates reminds his wealthy friend, I noticed the city is already laying heavy expenses on you for keeping horses, financing plays, gymnasiums, and important functions. And should war broke out, I know they will impose on you the cost of naval vessels, soldiers' pay, and contributions so great that you will find it hard to comply. So that's the way the lethargy worked. And apparently they competed for the honor. And today we don't honor people who pay huge taxes, you know, we say, I don't know.

1:18:42A couple years ago I had the opportunity to visit Jamestown Colony for a day. Yeah. They had a nice program there, but they didn't get any taxes right away to pay the city councilman. A lot of it was paid in the backup. Yeah. I thought that was really interesting, how quick they were doing it. Everybody ought to pay up to serve on the city council. You can get volunteer labor, which was very prominent in ancient Greece, but it didn't last. Unfortunately, they went in the tax system and then they went in the tax farmers. and see the way that the tax farmers destroyed Egypt at the time of the Rosetta Stone is that the tax farmers were the Greeks and they were really good at their job.

1:19:32And they went to the Ptolemaic kings and they said, well, we'll make a deal with you. We'll pay you in advance for the taxes, make the harbor tax, let's say, and you get the the money now and we'll guarantee a certain amount and we'll bid on it and then we can collect it. No, no, I'm sorry, it's not we can collect it, we will just oversee the collection. Your scribes will do the collecting and we will just make sure that you get every dime you're entitled to. And of course with the muscle of the greats and with the surveillance that they provided The left today in America would love to have a Greek system under coercion to sack the rich.

1:20:41And they were like that, of course, in the rich, but more voluntarily, because that tax part of the scheme actually sounds like something the Chicago School would propose. I think in addition to the rate of taxes, one of the things you echo again in your book is the best tax, which is the least intrusion, You go into your house, which go into your business, I hear that echoed in your book again and again, and you talk again about the excise of a candle, and you go in and see even if the breaking candle doesn't do it well, the officer is there. Yeah, that was interesting. The British excise tax, you know, they were pretty ugly.

1:21:32I don't think you collect a tax with the least intrusion. I mean, maybe you suggested a consumption tax, but something that... Where you don't have to document somebody's income. I don't know how you do it. I know in Canada, I'm sure it's not unusual, that this VAT tax, somebody comes to your house to do work, and they'll give you this price, and you say, Well, if I pay in cash, what would it be, off the books, and it's considerably lower? Well, that's the way the system works. I remember, I've had some things done at my place, and they all want cash.

1:22:17I remember once I had a, how old things is, I had a toilet break. I needed a new toilet. I got the plumber out and he brought in the toilet and so forth. I got out my checkbook, no, no checkbook, cash, he says, I bought that for cash, then he bought the toilet for cash, and he says, I install it and so forth, you have to pay me in cash, and the government just added that little bit, so a few years ago the government, I guess they sent everybody a letter, they were quite concerned with the fact that people were hiring mechanics and artisans and things like that and not paying any tax on it and dealing in cash, Do you speak to the notion that, maybe my notions are not ontarian, but progressive income tax versus a regressive?

1:23:28Is it the holdover from, in the left, Marxism, socialism, class envy, warfare, that they claim to this progressive income tax, and the different notions of fairness, that the flat tax, 10% of the million dollars of income, that's a heck of a lot of money, that's $100,000. Where it's aggressive, they want to hit a higher percentage, 30, 40, 50, 100,000, 200,000, 300,000, 400,000, 500,000. I'd like to have the latter, the flat tax where, sure, somebody making $10,000 might pay $100,000.

1:24:20The wealthy person would pay 100,000 or whatever, but it's hard to overcome this class warfare. Yeah, it was Marx's idea. You know, high progressive income tax. That was what Carl Marx said. Marxist? Yeah, Carl Marx wrote that in The Communist Manifesto. A high progressive income tax. Yeah. I think Marx is giving way too much credit. I think he'd be smarter to blame the intellectuals, Like Bertrand Russell and John Dewey, Marx was a very analytical, very difficult to read sort of person. He didn't have a lot of popular influence when he actually wrote. People like Bertrand Russell had much, much more influence. Well, yeah, they talk about the ability to pay, and if you apply that to other things, if you went down to buy a loaf of bread, and, well, how rich are you, it's $100 for a loaf of bread, you have the ability to pay that, but that's not the, yeah, well, you're right, The thing is, there's no controls on it. It just goes from government to government, or from parliament to parliament, and so forth, and they just jockey up the rates down and up and so forth. There's no controls.

1:25:48I think that's the tragic thing, is that people want constitutional controls on the taxing power. They want it fixed so that it's uniform and equal, and that's what it should be. You've gotten away from that. Yeah, we've gotten away from it, and it is a socialist idea, he's quite right on that, and Marx wasn't involved in it, but it's just Marx. Would you take a combination of a more commonsense Supreme Court and a commonsense Congress, the two combined to try to put the pendulum back in that direction? Well, one of the attorneys that argued the income tax case, the first one, he said, said, once you say that the many can tax the few, it will be impossible to take a backward step. And that's essentially what the income tax was. It was the many taxing the few because what was it, 90% of the people were exempt from the first income tax? Because it was There was a 2% tax on all the income over $4,000, and $4,000 in 1890 was a lot off, by a lot of tacos, you know.

1:27:12And now is it more? It was 50% are exempt right now. The other 25% of them are public servants, so they're in favor of tax. Who said that? Pardon? Who said that? Or once you say the many can tax the few? Pardon? The quote you just said. That was a, I think the lawyer's name was Guthrie, and he was representing, he was challenging the income tax in the 1894 case, which you're probably familiar with, and that was his thing. Once you say the many can tax the few, it's impossible to take a backwards step, and you know that's true. That seemed to be pretty obvious. And that was the thing that Madison was concerned with when the Constitutional Convention, and he was considered the author of the Constitution, but he wrote very hard that once you decide that, say again, that many can tax the few, then they don't want to protect themselves in the democratic society because they have the votes.

1:28:25But if you had a constitution that said taxes had to be uniform throughout the United States, you wouldn't have that problem, right? That's what it says. I mean, I thought you'd laugh at that because the constitution says taxes had to be uniform throughout the United States. And at the convention, they used the word uniform and equal. And throughout the 19th century, everybody believed that, that they had to be the same right for everybody. for Everybody. But the 16th Amendment changed that. Yeah. Of course it did. Yeah, it changed that. If you want to say that, the 16th Amendment gave Congress the power to tax without apportionment because the Constitution said all direct taxes have to be apportioned on the state by population, so it didn't really deal with that issue.

1:29:19I dealt with the fact that it was a direct tax and it didn't have to be apportioned among the states by population. That was the real guts of it. I think it's a fascinating study, the income tax, and I'm going to talk about it probably on Friday. I thought when we come back at two o'clock, we talk about the Enlightenment. I think there's so much wisdom in that period and what was enlightenment and what was their attitude about taxes and government and so forth and it's very revealing because the enlightenment was the age in which our constitution was adopted and so you see the wisdom of those folks and so that'll do it for now.

1:30:08And if any of you guys have stuff you want to talk about, let me know. I'm always interested because you people have some good comments that I learned too. So, okay. Have fun. Have a nice day. Thank you very much.