Tax laws, more than any other factor, determine the socioeconomic
nature of a society. They determine the economic hierarchy of
wealth and power just as surely as chess rules govern what occurs
in a game of chess. A king always wins in a game of chess, and
in Western society, the top 1% always own more assets than the
bottom 90%. Tax laws ensure that Western society remains securely
locked into a social structure based on wealth distribution inequities
that have changed little since the Middle Ages. Presidents now
avoid the nation's scorn by raising payroll taxes instead of income
taxes. By 1990, payroll taxes will have risen by 30% since 1978,
and the majority of the country will be paying more in payroll
taxes than they do in income taxes. Of course, the bottom 90%
as usual are hit the hardest, but they are generally not yet wise
to the switch that has taken place, so the deceit continues at
full bore. {B42}
With regard to the previously mentioned exodus of industry from America to 2nd and 3rd World countries, the fact that American corporations choose to carry on modern day colonial exploitation is not even the issue. The real issue is that corporate America built, and continues to build its foreign factories with the help of corporate tax deduction laws, ...at the American taxpayers expense, and to the detriment of the taxpayer's standard of living.
To add insult to injury, the head offices of many business entities are located in playboy tax havens such as the Bahamas to avoid taxation, thereby depriving the American taxpayer of getting any benefit from having initially paid for the foreign factories. The fact that so many oil tankers owned by the elite are registered in Liberia and not in America (to avoid taxation) should be a topic of concern to those who are being forced to take pay cuts and tighten their belts, ...but it isn't. Americans have been desensitized to this issue and countless others like it.
However, to get an idea of the quantity and nature of tax avoidance loopholes that exist in America today, one has only to read a few issues of Forbes, a magazine which caters to the needs and interests of the nation's economic elite.
Incidentally, every year Forbes magazine compiles a list of the world's richest people, as well as a list of the 400 richest Americans. In its July 24th 1989 issue, the magazine clarified some of the methods it used in determining the wealth of those who qualified to be included in its listings. Part of the explanation it provided is worth quoting:
"Since wealth abroad is sometimes held in complicated ways designed to retain control or bypass various taxing authorities, we count property owned if it is involved in obvious devices for ownership, like family holding companies, or cross-ownership, and sometimes less obvious ones, like certain foundations designed merely for tax avoidance." {B43}
In practically every issue, Forbes "exposes", or at any rate acquaints the reader with, one or more additional schemes devised by clever tax accountants or investment managers to avoid taxation. No doubt each issue must send the super rich scurrying off to call their accountants to ensure that they are not missing out on the very latest loopholes.
One would expect that reading about tax avoidance loopholes for the privileged class could very well upset or anger the average American who for the most part doesn't make enough money to take advantage of the loopholes discussed. But there is little danger of that. Editors in charge of mass media information sources like newspapers and TV news shows very rarely devote any attention at all to this type of material. In contrast, Forbes editors obviously feel free to flaunt it because the magazine is read almost exclusively by the economic elite, and those who aspire to join their ranks. It is alleged that the average worth of Forbes readers is 1.4 million dollars, and that at least 250,000 of its 750,000 subscribers are millionaires. {B44}
It is beyond the scope and intent of this book to launch into a detailed discussion of the tax loopholes currently available, but as was mentioned above, even a subscription to Forbes magazine would serve as an introductory primer. One need only read the article "The bad news about estate taxes", on page 238 of the June 26 1989, or the article "Tax strategy" on page 186 of the Sept 4 1989 issue to see why the magazine is so popular among America's economic elite. {B45} {B46} Due to the extremely complicated nature of tax laws, tax avoidance will remain the exclusive and somewhat secret domain of those who earn enough money to hire the services of a tax specialist. This book will attempt, however, to make the reader acutely aware that tax avoidance privileges enjoyed by the rich, are the root cause of the nation's economic inequities.
A perfect example of class oriented tax legislation, that exacerbated the wealth distribution inequities, occurred during the Reagan administration. With inspiration lifted straight from Sherwood forest, REAGAN HOOD (the well known American folk bandit who can't normally see the forest for the trees) took it on himself to take from the poor and give to the rich. In 1981, he instituted new taxation legislation which dramatically decreased corporate taxes and transferred the burden to the bottom 90 percent. (salary and wage earners)
It is not as important to discuss what the tax changes were, so much as pointing out that the changes were part of a continuing policy to free the rich from corporate taxation.
Statistics taken from the Historical Tables of the Budget of the United States Government, Fiscal Year 1986, table 2.1 indicate that the proportion of Federal Income tax derived from Corporate income tax declined steadily from 32% in 1952; to 23% in 1960; to 17% in 1970; to a low of 9% in 1985.{B47}