This article originally appeared on the Investing: Canada topic site at About.com. Investing: Canada is no longer a topic at About.com but the original site was reformatted and can be found at The New Investing: Canada.
One of the by-products of the American Civil War was the abolition of slavery. Well sort of!
The Civil War resulted in the elimination of formal slavery. However, it did not get rid of essential slavery. What does this mean? Let's go back to pre-Civil War America to find out.
The Southern U.S. states were not sophisticated slave states. Slaves were held as chattel. The plantation owner literally "owned" his slaves. They were his property. He kept them and cared for them just as he kept and cared for cattle and other domestic livestock. He housed them, fed them and clothed them, and, of course, he made them work for him. If they did not suit him, he sold them.
Suppose slavery was not abolished but rather it evolved into a more sophisticated system. How might it have changed? First a slave owner might have thought "Hey, what if I can get the benefit of slave labour without the exorbitant cost of feeding, clothing and sheltering them?" Some slave owner may have taken the first path to sophistication by paying his slaves a nominal wage (less than it cost to keep them on the plantation) and told them "I'm going to start paying you for your work but you must go and find your own food and shelter. You are free to go about your own business except that you must come to the plantation to work every day. After all, I still own you."
Other slave owners notice he's saving a bundle on costs and also adopt the practice. Soon the entire society has adopted this new mode of slavery.
The slaves have so much free time on their hands that some start moonlighting. While it's still nickel and dimes, the slave owners look the other way. But after a while they notice something quite unexpected. The slaves are not the stupid backward people they thought they were. Some used their spare time to get educated and now earn as much if not more off the plantation as on.
A very sophisticated slave owner puts two and two together. "My slaves can generate more wealth on their own time than working for me," he reasons. "Why don't I give them complete freedom to choose their own line of work and develop wealth in their own way. Instead of having them work on the plantation, which would under-utilize their skills, I'll let them do what they are best suited for in the marketplace. I'll hire some poor white trash and slaves who can't find other work for the fields. And as for my slaves, they will give me 50% of all they earn. After all, I still own them."
If the slave owner is really sophisticated he will notice that skills and aptitudes vary greatly among his slaves. The unskilled ones will not be able to survive on the small remuneration he pays for farm work. The original concept was to save on the costs of feeding, clothing and sheltering his slaves by paying them and letting them fend for themselves. He decides that he will not demand any tribute from slaves who can do little besides farm work. He decides to graduate the tribute demanded according to how much the slave earns. The more they earn, the greater the percentage they pay to the slave owner. He carefully crafts the rates of tribute so the slaves still have an incentive to better themselves and earn more. He calls this sliding scale a "progressive" tribute system.
Soon other slave owners follow suit and the slave society reaches it's ultimate level of sophistication. The slaves are formally free to do what they want to do. Formal slavery has been abolished. But essentially, they are still slaves. They must pay a tribute based on their earnings to their masters. The essence of slavery is working for the benefit of others than yourself, not by choice (as in supporting your family or giving to charity) but by force. To paraphrase Frederick Douglas, who escaped from slavery in 1838, a slave is someone who "toils so that another may reap the fruit."
The American Civil War resulted in the end of formal slavery. But it did not end essential slavery. In fact, over the years, essential slavery has expanded to include not just former slaves, but everyone. And everyone is a partial slave owner as well. We have, to paraphrase Abraham Lincoln, a system of slavery "of the people, by the people and for the people." The instrument of its implementation is the income tax!
Until we abolish coercive taxation, the forced taking of the fruits of the labour of those who have earned it for the benefit of those who have not, we will not have abolished the essence of slavery. Until we see the rise of another great emancipator who can educate the world to the evil of slavery down to its essential core, we will not be a truly free people!
Some Notes & Quotes on Taxation and Slavery
The April issue of Individual Investor Magazine features an article called "Freedom Markets". It notes that one can effectively use a measure of a country's economic freedom to determine where investments are likely to yield rich rewards. Specifically, they note that countries who are moving ahead on the Index of Economic Freedom published by the Heritage Foundation of Washington (a similar work is published by the Fraser Institute), are more likely to be sites of booming profits and share prices. The magazine recommends Ireland, Peru and the Philippines as areas to watch. Taxation is one of the variables the Index measures to determine its rankings.
From Lysander Spooner in No Treason: The Constitution of No Authority (1870)
It is true that the theory of our Constitution is that all taxes are paid voluntarily, that our government is a mutual insurance company, voluntarily entered into by the people with each other…
But this theory of our government is wholly different from the practical fact. The fact is that the government, like a highwayman, says to a man: "Your money, or your life." And many, if not most, taxes are paid under the compulsion of that threat.
From P.J. O'Rourke in Parliament of Whores (1991)
All tax revenue is the result of holding a gun to somebody's head. Not paying tax is against the law. If you don't pay your taxes, you'll be fined. If you don't pay the fine, you'll be jailed. If you try to escape from jail, you'll be shot. Thus, I - in my role as citizen and voter - am going to shoot you - in your role as taxpayer and ripe suck - if you don't pay your share of the national tab. Therefore, every time the government spends money on anything, you have to ask yourself, "Would I kill my kindly gray-haired mother for this?"
From Brad Thorstinson in West Coast Libertarian, April 1997:
Frederick Douglas (1817-95), who escaped from slavery in 1838 and became one of the prominent abolitionist speakers, described a slave as one who "toils so that another may reap the fruit." A taxpayer is conceptually similar to a slave as he or she also "toils" so that others may reap the fruit of his or her labour. The Fraser Institute estimated that in 1996 the average Canadian family worked until June 24th to pay the tax bill imposed by all levels of government.
William Lloyd Garrison (1805-79), a prominent leader of the abolitionist movement who founded and edited The Liberator, said "no man has the right to imbrute his brother…every man has a right to his own body - to the products of his own labour." Up to 54% of what a taxpayer earns today goes to the provincial and federal governments. Then on top of that there are a variety of other taxes (i.e sales, property, etc.). Conceptually, a taxpayer is like a slave because he or she does not have the right to the "products of his (or her) own labour."