At 10 a.m. on May 26, an agent of the Internal Revenue Service knocked on the door of one of the most articulate tax rebels in the country. The agent had little idea of what to expect. He knew only that he was about to audit a man whose angry, 100-page long income tax return said nothing about earnings.
When the agent left about an hour later, he had seen none of the tax records he had come for. Instead, he had been grilled before an audience of bagel-munching reporters by the taxpayer he had hoped to audit. During the questioning, the agent had bumbled out an apparent admission that the IRS had no right to force taxpayers to incriminate themselves. The agent afterwards found himself subject to formal complaint charges at the U.S. Attorney's office as a result of the audit attempt, on grounds of conspiracy to violate the civil rights of a taxpayer.
The taxpayer was Irwin A. Schiff, a feisty, balding insurance expert living in Hamden, Connecticut who has won increasing attention for his book, The Biggest Con. Schiff views the scrape with the IRS auditor as just one milestone in his fight against a bloated, criminal government. His complaint to the U.S. Attorney—that the IRS agent and his boss conspired to relieve him of his Fifth Amendment rights—is concerned with a relatively minor outrage, at least compared to those that Schiff sees pushing the United States closer towards economic ruin every year.
Schiff was not always so pessimistic about the economy. During the Depression years, he grew up in New Haven and then took courses at the University of Connecticut, where he graduated with a degree in economics in 1950. The times seemed appropriate for business ventures in 1960, so Schiff launched his own insurance agency. His research into the subject soon proved disquieting.
In testimony before the Senate Banking Committee in 1968, Schiff told the senators about his conclusions regarding government intervention in the lives of citizens. "When a widow asks me if she should take the proceeds of a life insurance policy in cash or as an annuity for life, I am not being asked any mere theoretical question, but upon my advice and judgment rests the possible welfare or deprivation of a small family unit," he said. "Obviously, if I am to sleep comfortably at night, I had better know something about U.S. money and the subject of inflation when I am called upon for this sort of advice.…Any impartial study of this subject can only lead to the inescapable conclusion that there are many government officials who, by all laws of justice, should now be behind bars."
The Banking Committee did not appear to be swayed by Schiff's arguments for keeping gold reserve requirements for American currency, despite his prediction that after removing the requirement inflation would soar, price controls would be imposed, the price of gold would rise to more than $100 an ounce, and the dollar would be devalued. The predictions proved correct. As syndicated columnist John Chamberlain observed, "Prophets who are right can be annoying, and some of the things that Irwin Schiff said at a congressional hearing in January of 1968 must be causing such luminaries as Senator William Proxmire and former chairman of the Federal Reserve Board William McChesney Martin, Jr. a great deal of pain these days."
In The Biggest Con (Arlington House, 1976, $9.95) Schiff makes predictions far more disconcerting than those in his 1968 testimony. Unless Americans start standing up to bureaucrats, he says, the country will slide into economic collapse and national socialism within five years. Underneath the deliberately inflammatory phrasing, which Schiff uses to shock readers out of complacency, lies a well-documented and tightly-argued case.
Schiff argues that the government has been guilty of outright criminal misconduct by destroying the value of money and understating the debt burden on the taxpayer. The economy will collapse, he says, as the result of reckless increases in the money supply. "I don't think the politicians are doing this deliberately," he says. "They're just stupid. Politicians the world over like to play Santa Claus." Pursuing the phantom of the free lunch has also led politicians to set up a huge Ponzi scheme, the Social Security system. Schiff puts the unfunded liabilities of Social Security and other programs at $5 trillion— almost 10 times more than what the government admits to be the national debt.
Curiously enough, in the face of such political behavior, Schiff remains an optimist. "Conservatives and libertarians, inspired by the meaning of the 200th anniversary of the American Revolution, must throw themselves whole-heartedly into the growing tax rebellion," he says. "The effort that this involves is nothing compared to the effort and risks undertaken by those who won for us our freedom."
For Schiff, the effort consists of not paying taxes, thwarting IRS attempts to make him bear witness against himself, documenting the fraudulent activities of the government, promoting his book, and appearing on television and radio talk shows and in numerous newspaper articles to rouse the taxpayer. Throughout, he keeps a sense of humor as well as of mission. At Schiff's "catered" tax audit last May, even the IRS agent rose to the spirit of the occasion. "You really put me through the wringer," he confessed with a smile.