THE IRS CONSPIRACY. By Henry J. Hohenstein, Los Angeles: Nash Publishing, 1974, 307 pp., $7.95.
If you've never been audited, you obviously aren't making any political waves!
This proposition is illustrated by Hank Hohenstein in the best book to date on the subject of taxes, The IRS Conspiracy. This new book shows how the political "bully-boys," with the aid of IRS Special Agents and Auditors, have fine-tuned the machinery of coercion to produce fear and quiet the wave-makers. And if you say "it can't happen here", you've been asleep too long, because it is happening here.
Beginning with the milder horror stories of legalized extortion, such as the case of John Grismore and the federal judge who told him that "the Constitution is irrelevant in my Court," and going on to cases of men and women who have been totally ruined financially and socially by the tax system, Hohenstein systematically turns the light of cold, moral certainty upon the actions of taxing agencies and condemns compulsory taxation as being nothing more than legalized theft. Mr. Hohenstein dissects, inspects and rejects the premise that the tax-takers are operating in the name of the public good. With total alacrity, he has examined the national premise that "taxation is a necessary evil", found it lacking in moral and practical stature, and rejected it out of hand.
Given a wide enough reading (it should be available in paperback), this book could do more to revolutionize ideas about government financing than any other book ever written on the subject. And if it is read widely enough, it will change the tax structure of our nation as surely as did the dumping of tea into Boston Harbor in 1774. I predict that The IRS Conspiracy will set the standard to which newcomers will aspire as they begin to analyze and reject our carnivorous tax system, and in particular, the income tax. Mr. Hohenstein has left no area or moral premise unturned or unexamined.
Do you really want to understand the conflict between the 1040 form and the 4th and 5th Amendments to the U.S. Constitution? Or the conflict between tax producers and tax consumers? It is all spelled out in these pages. But by far the greatest virtue of the book is its stand for liberty and property rights based upon natural law. In the chapter entitled "The Noncoercive Society," Mr. Hohenstein discusses the nature of Man, and, like Ayn Rand, links the case for political freedom to its metaphysical roots. It is an enormously lucid piece of writing and justifies the price of the book in and of itself.
The length of The IRS Conspiracy, 307 pages, is just enough to give the beginning student of tax theft a working knowledge of the subject. And the bibliography, which is a Who's Who of libertarian thought, contains enough references to interest and challenge those who are well into libertarian readings. The flaws, fortunately, are mostly those of the printer and/or the proofreader: spelling and typographical errors, 14 by my count. Certainly, subsequent editions will correct these problems.
Nash Publishing Company should be highly commended for their courage in publishing this book. I predict that their profits, should the book get wide distribution, will more than compensate for the audits that will surely follow its success. All factors considered, I heartily recommend that The IRS Conspiracy be included in every libertarian library. I believe that a talented craftsman in the usage of libertarian ideas has been discovered.
HISTORY OF THE INCOME TAX
What was the initiation rite which motivated the production of The IRS Conspiracy? Hank Hohenstein was one of the now famous "San Diego 10" who, in the Spring of 1973 as part of a protest demonstration, were arrested along with John Heck, owner of the Heck Transfer Company, and charged with "forcible rescue of seized property" and "resisting federal officers in the performance of their duty." The protest demonstration, which occurred when IRS Special Agents attempted to seize the Heck Transfer Company without a court order, was the setting in which Mr. Hohenstein and dozens of others found themselves as they peacefully protested a gross violation of "due process."
The whole affair claimed national attention with articles in Time and other news journals. The arrests, trials, bargains, dismissals, and appeals have consumed much time and effort, and legal entanglements still exist for some of the defendants. However, Mr. Hohenstein, the first defendant to act as his own attorney and the first to have the charges dropped against him, has been fully vindicated. Hohenstein's close association with the numerous injustices of the "San Diego 10" provides the beginning of his indictment of the Internal Revenue Service. His thesis that a conspiracy exists to deny property rights and build the machinery of a powerful police state is persuasively argued.
From the contemporary history of the case of the "San Diego 10," the book logically leads us to an examination of history of taxation and of its evolution and growth in the United States. Taxation upon the exports of the Southern States by the industrial North was a major factor in the disputes between the states which resulted in the Civil War; the rapid escalation of the fighting in 1861 led to the creation of our first Internal Revenue Agency in 1862.
And, contrary to the historical theme that holds Abe Lincoln to be "The Great Emancipator", it was he who signed, on July 1, 1862, the bills outlawing polygamy and authorizing the first income tax collection. The first income tax bill was a progressive tax with graduated features and withholding, and as such, served as a model for today's income tax system. The income tax of 1862 even paid collectors a commission on what they collected!
The end of the Civil War ended most of the tax bite, but the precedent was set. In 1894 and 1895, social experimenters revived the progressive income tax as a means to financing a rapidly growing governmental apparatus. The U.S. Supreme Court of 1895—which, in today's terms, would be considered "ultra-reactionary" promptly struck it down as unconstitutional.
But principle gave way to pragmatism in 1913 when a "tax the rich" fever and prospects for foreign intervention assisted in causing the ratification of the 16th Amendment (Income Tax Amendment). The income tax we are saddled with today was placed on our backs in those dark days of 1913 along with the creation of the Federal Reserve System. (Apparently, bad legislation comes in bunches.)
Today, the IRS employs over 70,000 persons, has an operating budget of over a billion dollars per year, and extracts everything you earn between January 1st and May 15th of each year. And this doesn't count another 25 percent of your income taken by indirect taxes each year.
A conspiracy by definition involves two or more persons who plan and/or carry out an illegal scheme to gain values which could not be gained lawfully. Now, what federal agency is the most flagrant violator of the 4th, 5th, 6th, 9th, 10th, 13th and 14th Amendments to the U.S. Constitution? And what federal agency collects more money and accrues more powers at a faster rate than any other federal agency? You get no prize for guessing it to be the IRS. But unlike the books holding forth the thesis that powerful groups of international bankers are conspiring to rule the world, Hohenstein's view is that incorrect philosophical principles—not individual conspirators—ultimately align and direct human activity. In a logical, step-by-step fashion, Hohenstein demonstrates that the Internal Revenue Service is one consequence of the deeper philosophical failures of most 19th Century thinkers.
For the past hundred years the taxpayers of the United States have been conditioned to accept the omnipotent State and, consequently, most have come to think that their rights to liberty and property are creations of the State. Once this pernicious concept has been imbued in the minds of the electorate, little dissent is heard when the state demands that you incriminate yourself each year on a 1040 form. And it is one more small step when the State requires the electorate to keep records for it and turn over those records to an IRS Auditor on demand.
Forgotten is the idea so dearly held by the colonists and early revolutionaries that a person is innocent until proven guilty, and that he cannot be required to furnish evidence of his guilt or innocence. Taxpayers today think nothing of paying the salaries of their inquisitors and tormentors, and even of paying for the jails to which they are sent when they fail to state their true taxable incomes.
But now Mr. Hohenstein has written a book to refute the doctrines and conditioning of the State. In Socratic fashion he asks of the taxpayers: "Would you really permit your children to grow up in ignorance" without state run schools? "Would you really allow a helpless man, woman or child to starve" without a welfare system run by the state? "And would you really permit the highways to wear away into mud tracks, your telephones and radio communications to fall apart or become clogged with vulgar nonsense? Would you really permit the stagnation of science and the withering of agriculture? Would you, indeed, even resist the fighting of a war—provided it were a war to protect your homeland, family and society?"
The failure of most citizens to entertain and understand these questions is caused largely by their belief that people must be controlled for their own good. But how do the controllers become good enough to control anyone? No answer. And no statist has ever been able to come up with a good answer, because none is possible. Only the individual has the right to ultimately govern his own behavior. And so, the case against taxation really involves the task of proving that people are fit for freedom. When libertarian principles to this effect win in the contest of ideas, taxation will die a natural death.
CONDITION OF THE COURTS
The decay of the sciences of ethics and law is today mirrored by the condition of the courts in the United States. For example, how is it that the U.S. Supreme Court in the late 19th Century could declare direct taxation unconstitutional, and another U.S. Supreme Court, just a generation later, find it constitutionally proper? Obviously, the change reflects altered conceptions of the proper relationship of the citizen to his government, and it further reflects the degrading notion that all citizens are candidates for unlimited plunder at the hands of government. (And sadly, most of those who have challenged the tax system in courts in the last 50 years have suffered economically, as well as legally. For some persons mentioned in The IRS Conspiracy the losses have included prison sentences; this, of course, is the possible penalty for pioneer action of this sort.)
By constantly expanding the areas of private business into which the IRS can search and seize, instead of acting as bulwarks against executive tyranny the courts have led the way towards the world of 1984 as described by George Orwell.
The creation of the so-called "tax courts" is the ultimate perversion of the exalted concept of separation of powers; it has resulted as much from judicial default as by executive encroachment. Imagine the justice you will get in a "tax court" staffed by judges hired by the executive branch and unhampered by the concept of "innocent until proven guilty." You end up being prosecuted, judged and sentenced by IRS employees. What a sweet game for them!
But some civil libertarian thought is at last creeping into the courts. And perhaps the most important changes in the amount of personal freedom for all of us will soon come about as a result of court decisions such as Miranda v. Arizona. Maybe the day will come in the not too distant future when you'll see the "Miranda Warning" printed on the 1040 form and you'll know that putting figures on it will mean that you are voluntarily submitting to possible criminal prosecution—and making it possible by giving the prosecutor his evidence.
The past decade has produced a growing number of news stories dealing with the battle between the tax-takers and the tax-producers. This battle has grown considerably in the last five years due to the courage of people like Phil and Sue Long of Washington State who took the IRS to court in order to make public the IRS's secret rules and procedures. The IRS Conspiracy relates the stories of many of these heroes, sung and unsung, who have taken their battles into the courts instead of the streets.
The value of such actions is that a growing number of people are leaving the ranks of the apathetic and are instituting challenges which are cutting into the grey areas of tax law. It is becoming more difficult for the auditor to arbitrarily disallow deductions in those borderline areas. Mr. Hohenstein describes the process whereby you as a taxpayer may climb your way through the maze of administrative bodies until you reach a legal body with some constitutional authority. It is just such climbing and many more such challenges of the arbitrary authority of civil servants which will show the attentive public that there is a gap between what is and what ought to be.
Using the court system is certainly one way to enlarge the scope of libertarian political dissent and in the process gain the attention of the media to inform others of the small dents being made in the superstructure of the superstate. It is probable that the courts and governmental bodies in general will be the last places to reflect libertarian ideas, but a growing assault on the legality of the whole tax system, one statute at a time, is in order and is underway.
A FINAL WORD
From his opening acknowledgement that the "American Revolution has been the only true revolution to occur in the history of the world", to the ending paragraphs in which Mr. Hohenstein says, "It's up to us. To me, and you and all of us. We can have any world we want—or none. The responsibility now is where it always really was, no matter the lies and the circumlocutions; the responsibility is on us, is our own. The road is there. It lies ahead.", the tone and character is consistent: We thinkers and doers set the standards of the world. And now is the time to move civilization upward one more notch…move it upward by freeing people, once and for all, from the greatest social failure extant in our world: coercive government. Hank Hohenstein has a mind that operates like a scalpel in the hands of a skilled surgeon: it cuts and exposes cancerous tissue. I predict the operation will ultimately be successful.
Karl J. Bray is an author, tax attorney, candidate for Congress in Utah, and member of the executive committee of the Libertarian Party.