A WEEKLY COMMENTARY
Year Twenty-One ... Number Twenty-Eight ... July 12, 1974
THE CONTRIVED EVOLUTION
OF REGIONAL GOVERNMENT
PART ELEVEN
KARL MARX'S SECOND PLAN
The Sixteenth Amendment to the United States Constitution contains but 30 words. They are: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
This amendment was most popular at the time of its adoption. It was approved by the Senate 77 to 0, and by the House of Representatives 318 to 14. It was ratified by more than the necessary 36 States and therefore certified by the Secretary of State as a part of the Constitution on Feb. 25, 1913. Of the 48 States in the Union at the time, only six failed to ratify it. They were: Connecticut, Florida, Pennsylvania, Rhode Island, Utah and Virginia. At the time, thanks to the propaganda accompanying the campaign to have the Marxian amendment adopted, it seemed a small and harmless way for the Federal Government to meet its ever-mounting expenses. People were told that, due to the graduated scale of taxation, the people with small and medium incomes would never feel the pinch; only those making very great incomes would ever be affected by the new income tax, and they by never more than three or four percent of their net incomes. Besides, this was a sure was of preventing the public debt from getting out of hand, and it was a sure way of balancing the budget and guarding against inflation. So, few leaders objected to the ratification of the sixteenth amendment, and the great majority demanded its ratification.
There were a few voices raised in opposition. One of those was the voice of Richard E. Byrd, Sr., who prevented its ratification by Virginia, and who told the Virginia House of Delegates that the Sixteenth Amendment:
"... will of necessity have inquisitorial features; it will provide penalties. It will create a complicated machinery ... business will be hauled into distant courts. Many fines ... will constantly menace the taxpayer. An army of Federal Inspectors, spies, and detectives will descend upon the State. They will compel men of business to show their books and disclose their secrets. ... They will require statements and affidavits . ... The inspector can blackmail the taxpayer. ... "
Time has proved the first Senator Richard Byrd to have been a true political prophet in this respect. For, as Martin A. Larson has written in the book Tax Rebellion, U.S.A.: "The Internal Revenue Service, like the Inquisition,
There are only thirty words in the Sixteenth Amendment, but they have given power to a thing called the Internal Revenue Code. And, frighteningly similar to the beasts described in The Revelation given to St. John while imprisoned on the Isle of Patmos, there has been raised an image of the beast which is called the Social Security System, by which each citizen is given a number destined to become an identification number in a Central Data Bank File; and it has become difficult indeed to buy br sell, or even to work and receive wages, in the market places of the Nation.
However, nothing was said of such future developments at the time of the ratification of the Income Tax Amendment, and the whole Nation was deceived. History had given its warnings: During the War Between the States the Lincoln Administration had levied an income tax to help support the costly civil war. But it had been a temporary measure and a matter of expediency; it was found to be an odious experiment and was allowed to expire as soon as the war ended. Then, in 1893, an artificial money panic was created, bringing about widespread unemployment and the foreclosure of thousands of farm mortgages. As a synthesis, there was elected a Democratic-Populist Congress and this Congress immediately passed an Income Tax Act. But this was an Act of Congress and, when brought before the Supreme Court the Act was immediately decdared unconstitutional, was assailed as part of a "socialist-communist conspiracy" and copied directly from the second plank of the Communist Manifesto.
This established the pattern that would be followed by the Planners: A Federal tax on incomes was considered essential; but such a tax had been declared unconstitutional by the Supreme Court.; Therefore, it would be necessary to amend the Constitution itself, so that such a tax would no longer seem to be unconstitutional. And, just as planned, less than ten years after a Congressional Income Tax Act had been declared unconstitutional an Amendment had been ratified, providing for a graduated and unlimited income tax levy.
It is interesting to note the use of the Hegelian formula in this instance. In his excellent The Decline of the American Republic, the late John T. Flynn notes, without comment, the "switcheroo" that was utilized to secure ratification:
"As it (the agitation for passage) became stronger, the 16th Amendment was offered, strangely enough, -- in what they thought was a completely objectionable form by the enemies of the income tax, and opposed by its friends. Senator Nelson W. Aldrich offered the amendment believing it would be defeated and thus end the agitation. Sereno D. Payne, who offered the bill in the House, denounced it from the floor, and Cordell Hull, the leading advocate of income taxes, denounced the measure as a fraud. Thereafter, to the amazement of everyone, the amendment was approved by the States with unparalleled speed. It became part of the Constitution just as President Wilson was being inaugurated as President of the United States. Thus the enemies of the law proposed a constitutional amendment in its most objectionable form permitting the federal government to impose income taxes without limit, expecting it would be defeated. They actually offered a plan for unlimited income taxes in order to defeat a proposal for a four percent income tax."
If the above seems confused or unclear, here is how they worked it: The proponents of an unlimited and graduated income tax objected publicly to such a measure, and offered, publicly, a more moderate proposal that would limit income taxes to four percent. And because the big moneyed interests seemed to be against it, the democratic majority was for it! It was broadcast publicly that a graduated, unlimited income tax would penalize the wealthy and absolve the "common man."
And this would have been true, except for a gimmick that the people knew nothing about: the system of tax exempt foundations that was to be written into the Internal Revenue Code. This would allow these wealthy men to escape the increasingly confiscatory taxes.
It is significant that almost immediately after the ratification of the 16th, Income Tax Amendment, the Rockefeller Foundation was chartered. This does not mean that this was the first great foundation. From the time the Income Tax Amendment was first proposed, foundations had been established. In 1901 John D. Rockefeller, Sr., had set up the Rockefeller Institute for Medical Research. This was followed by the Carnegie Institute of Washington in 1902, Rockefeller's General Education Board that same year, also the Rhodes Scholarships began in 1902. Carnegie founded his Foundation for the Establishment of Teaching in 1905. The Russell Sage Foundation was established in 1907. The Carnegie Endowment for International Peace was established in 1910. And there were many others. But, after 1913, these and similar foundations were no longer a financial burden on their donors. Instead, money that otherwise would have gone to the U.S. Treasury now could go into a foundation where the donor could still have control over the money and how it was to be spent. As one commentator remarked:
"Since the founding of the Illuminati, each generation of Insiders has visibly followed, so far as they were able, Weishaupt's stated and aggressive policy of pulling within their conspiratorial circle the sons of the very powerful and the very rich. In the United States this policy, combined with the income tax squeeze on one side and the foundation loophole on the other, has gradually brought fantastic wealth into the service of the conspiracy, while putting even greater handicaps and stronger brakes on the acquisition or the uses of money by those who might oppose their (the conspirators') plans.''
Lest there be any misunderstanding, the preceding should not be construed as a general indictment of all foundations and taxexempt organizations. Our reference is to a few among thousands, those that use this tax loophole for nefarious and conspiratorial purposes.
The concept is above reproach: tax-free enterprises are permitted because private philanthropy plays an important role in our society. Philanthropists can provide private financial aid in areas which should not be entered by government. Section 501 (c) of the Internal Revenue Code provides that a corporation or foundation qualifies for exemption from income tax if it is organized and operated exclusively for religious, charitable, educational, scientific, testing for public safety, or literary purposes, or for the prevention of cruelty to children or animals, etc....
Then there are tax-exempt foundations and tax-exempt organizations, and the difference can be important. Tax-exempt foundations are usually endowed by one or more original donors who reap certain personal tax benefits by contributing their funds to establish the foundation. The Ford Foundation is an excellent example.
The tax-exempt organization, on the other hand, is seldom endowed by original donors with large sums of money- Instead, such organizations usually receive their incomes from grants and donations, sometimes from tax exempt foundations. the Center for the Study of Democratic Institutions being an example. It receives most of its money from the Fund for the Republic which, in turn, is supported by the Ford Foundation. The Council on Foreign Relations is another pertinent example; it receives most of its funds from the large corporations in which the Rockefeller brothers have financial interests or important influence.
However, the vast majority of the tax-exempt organizations exist by receiving general donations from the public at large, and by collecting dues from the members of the organization itself. All these sources of income are tax-exempt and deductible for the donors and the members.
It is not our purpose to discuss the pros and cons of income tax-exemption in this letter, or to show how the privilege has been misused, other than to point out that it became an escape hatch for those with wealth who wanted to impose an income tax on all citizens, but who wanted to escape payment of such taxes themselves!
As for the government itself, after the passage of the 16th Amendment, the federal government had the power to impose an income tax in any amount that might be determined by Congress. However, after the manner already made popular by the Fabian Socialists, the power to tax to an unlimited degree, even unto confiscation of property, was imposed slowly and gradually. The first income tax to be levied under the new 16th Amendment amounted to just one percent on incomes of $4,000 and over, with a surtax of one to six percent on incomes starting at $20,000 per year.
The promoters -- really the wealthy few -- had promised that "no portion of any income necessary to maintain a decent contemporary standard of living will ever be taxed," and they further promised that "the income tax rates will never exceed a graduated range of from one percent to six percent, except perhaps temporarily in case of a war."
"So," commented Martin Larson, "naive liberals viewed the Amendment as a signal victory, since it purported to be a progressive exaction upon the rich; but the latter grinned and danced with glee as their experts began devising the exemptions, exclusions, allowances, and deductions destined to make their wealth sacred and immune." And, as we have pointed out, the chartering of foundations to gain tax-exempt status, was the first and greatest of the gimmicks used by the Rockefellers, Sages, Carnegie and Rhodes trustees, Guggenheims, Fords, etc.
And so, by the time Woodrow Wilson had begun to feel at home in the White House, three great victories had been won: The direct election of Senators had been accomplished, the graduated personal income tax had been imposed, and tax-exempt foundations came into existence. The fourth great victory -- the Federal Reserve Act -- would be more difficult. But this was the most important of them all, for, as the First Rothschild had declared:
"Permit me to issue and control the money of a nation, and I care not who makes its laws. "
Actually, the Federal Reserve System would grant much greater power than Rothschild. had considered necessary. For, in addition to the control of money, the Federal Reserve System also was given the control of the Nation's credit, and with the cooperation of the Federal Government there was granted the ability to spend money that did not even exist, and this with increasing profligacy, and the means to steal continuously from the people by means of the debasement of the currency on the part of the Federal Government, thus causing inflation.
Books have been written on the subject, so we shall try to be brief: The financiers of Europe and the United States wanted to create a central bank of issue similar to the Bank of England or the Reichsbank of Germany, a federally established but privately controlled institution whose notes would be legal tender.
First, Congress created a National Monetary Commission to study the situation. Under the leadership of Senator Aldrich (a Rockefeller in-law), 16 senators and representatives toured Europe for two years to learn all about central banking. Soon after their return to the United States, a secret meeting was held on Jekyll Island, Georgia, where the senators and representatives spent 10 days with representatives of the Morgan, Rockefeller and other big banking interests.
Also present was Paul Moritz Warburg, a German financier who had come to the United States to join the banking firm of Kuhn, Loeb & Co., and to promote the plan for a central banking system. Since Kuhn, Loeb & Co. financed Leon Trotsky's invasion of Russia, and since the German High Command permitted the passage of Lenin and his entourage through Germany and into Russia for the Bolshevik conquest of Russia; it is of more than passing interest to know that Paul Warburg of Kuhn, Loeb had an elder brother who was head of the German secret police during World War I.
The Federal Reserve System was born on Jekyll Island, and when President Wilson signed the Federal Reserve Act into law, he named Paul Moritz Warburg a member of the first Federal Reserve Board. This was in 1914, just two years after the Kaiser had decorated Paul for outstanding services to the Reich.
Most important in connection with our present series of letters, however, is the fact that Regionalism first began officially with the passage of the Federal Reserve Act. The United States was divided into twelve regions, or Federal Reserve Districts, for the purpose of controlling the Nation's money supply and its credit.
After that, the idea of abolishing the States and setting up Federal Regions in their place became something of an obsession with the Planners.
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