Exchange Of Property Tax Revenues: Fill & Download for Free

The word “homeowners” includes people who have Mortgages. Mortgages have been bound up in Mortgage Securities (Bonds) for many decades. Fannie Mae and Freddie Mac exist to create such financial instruments (and unfortunately guarantee them).The investors who buy these bonds are effectively lending money to the mortgaged homeowners. When the homeowners pay mortgage payments, the investors get that money in exchange for the eventual full equity ownership of the home as their mortgage is paid off over time.Investors who buy shares of stock in banks that engage in mortgage lending (without selling off the mortgages to MBS packagers) also reap profit from homeowners by the same process: the mortgaged homeowner pays their mortgage loan payments which the bank collects. Some of that money pays bank expenses (employee salaries, rents, utilities, depositors, taxes) and whatever is leftover is profit to the shareholders (investors).Even homeowners who own their homes outright (no mortgage loan) can end up paying investors through their Property Tax if that property tax revenue is used by the government that collects it to pay off bonds that government sold to investors to raise cash for … whatever (infrastructure projects if they’re prudent, but many governments borrow money for all kinds of imprudent purposes).

Surplus value is an invention of Marx deriving from his interpretation of the obsolete (by the time he wrote) labor theory of value. Not even Marx claimed surplus value was expropriated by threat of violence. Only Marxists still think about surplus value, and Marx may have dismissed the concept after learning of the work of Jevons and Menger.Everyone who thinks clearly realizes that income taxes and property taxes are taken by threat of violence. Some other taxes, such as sales taxes, are not - one can always not purchase something.Not all libertarians consider that even all income and property taxes are theft, though they are like theft in that they are taken by threat of violence. Some would consider the theft to be in how the taxes are used - receipts given to someone without that person providing anything in exchange. Walter Williams, for example:“No matter how worthy the cause, it is robbery, theft, and injustice to confiscate the property of one person and give it to another to whom it does not belong”– Walter E. WilliamsA sentient being would recognize that Williams does not say it is the taking that is robbery, theft, and injustice but the taking in order to give.Some libertarians are more general than Williams, but most followers of the Philosophy of Liberty, from before Locke down to today, realize that liberty cannot exist without government to protect rights and liberty, and that government cannot exist without revenue. Sometimes taxes are the only practical source of revenue, though the U.S. government existed for 130 years without taxing incomes.

“Who, in 1913, decided it was a good idea to go against our founding fathers and start our tax system? We parted ways with England over taxes in 1776, and were tax free for over 100 years. What happened? The Federal Reserve?”Wow.The “Wow” above is my immediate reaction to the flatly delusional belief that the United States was “tax free for over 100 years”. In fact, the United States has been collecting taxes since it was the United States. Public Law 1–2 (that is, the second act of the first Congress) was a revenue bill: quite literally the second thing Congress did after it got together was pass a law establishing a system of taxes. And the third act of that same Congress (P. L. 1–3) was also a revenue bill. (The first bill was a law related to the taking of oaths.)Of course, these early revenue bills were not income taxes. P.L. 1–2 was a schedule of tariffs on various importable goods, and P.L. 1–3 was a bulk tonnage duty (essentially a property tax on shipowners). But they were taxes, and Americans had to pay those taxes, either directly or indirectly. For most of its first century, the United States met most of its federal revenue needs through import tariffs, mainly on the importation of finished goods from Europe,although the tariff on rum imported from the Caribbean was also a significant source of revenue, as was the domestic excise tax on distilled spirits (does nobody remember the Whiskey Rebellion?).The reason that the US started looking at taxing incomes, instead of imports, starting in the middle of the 19th century, is simple: industrialization.In 1789, when the Constitution was adopted, the United States did not have extensive manufacturing capabilities. There were a few small manufactories, mainly in New England, and a couple of shipyards here and there, but for the most part the bulk of the trade in the US was colonial exchange trade: the US produced mostly unprocessed raw goods, which it sold to European interests in exchange for finished goods. The US funded government operations for most of its first century through taxing those imports from Europe.However, starting in the early 19th century, the US started to develop its own domestic production capacity for these goods, in part to avoid tariffs, but more so simply because European traders knew that they had us by the balls and could charge us high prices for these goods because Americans could not match their quality or quantity. Industrialization—mainly in the North, of course—led to the development of the capacity to replace European suppliers for large portions of the demand for goods of these natures. At first, the American versions were often quite inferior to those produced by the craftsmen of Europe, but as they were much cheaper and more readily available, that didn’t matter so much. And over time Americans got better at making them.All of this dramatically reduced the amount of revenue the United States could raise solely through import tariffs—indeed, raising tariffs would simply lead Americans to elect that much more to “buy American” even when the American goods were often of lower quality—and eventually it became obvious that the US would need to raise revenue by taxing domestic economic activity. The first income tax was imposed in 1861; it was replaced by a new one in 1862. The need for added revenue here is obvious: the United States was fighting a war at this point (a war which, in no small part, was a consequence of the half-century of steady industrialization that had transformed the economy of the North, but not the South) and needed revenue to fund it. The 1862 Revenue Act proved inadequate at raising enough funds to prosecute the Civil War, leading to the 1864 Revenue Act, which remained in effect until it was allowed to expire in 1873.Congress, in an effort to generate enough revenue for federal operations without having to impose ruinous tariffs on goods Americans wanted to be able to afford to buy, elected to try to raise some revenue through a general 2% income tax in 1894. This was struck down in 1895 as unconstitutional. Widespread recognition that the federal government could not reasonably fund its operations solely on trade tariffs and duties, and indeed that its past reliance on doing so was hampering the ability of the US to fully participate in international trade and commerce and ultimately harming the interests of Americans, led to the adoption of the Sixteenth Amendment in 1913.The United States didn’t split with King George III over the concept of taxation. None of the Founding Fathers would have anticipated the United States, or any of them, to function as states without assessing taxes. The dispute with Britain was not over taxation itself, but over taxation without representation: the imposition of taxes on the colonies, about which the colonies had no say. And, in fact, each of the several states, upon achieving independence (or in many cases well before achieving independence) imposed upon its citizens a range of taxes that were not dissimilar, either in nature or in quantity, to those that had been imposed by the Crown. The only differences are that the revenue thus collected went to the State, to be used by that State, and not to the distant Crown, and the voters could, at least in in theory, vote away taxes that they felt were too ruinous.Addendum: while I’m aware that many people seem to think that the income tax was introduced in 1913 in order to accomodate Prohibition, this argument falls apart on two points. First, Prohibition didn’t take effect until 1920, seven years after the 16th Amendment became law. While the temperance movement had been around for nearly a century by 1913, the motivation to seek the Sixteenth Amendment was not specifically driven by Prohibitionists. Rather, the Sixteenth Amendment was the direct consequence of, and direct reaction to, a 1895 Supreme Court decision. If it was driven by anything, it was driven by incipient globalism and the desire of US capitalists to broaden their trading horizons. The United States had, by the turn of the century, achieved its Monrovian goal of spanning the continent from sea to shining sea. Any further expansion would have to be to frontiers beyond her borders, and that meant tearing down the barriers to trade that the high tariff policies of the time created.It is, of course, true that the adoption of Prohibition forced the US government to considerably increase income taxes (or, more accurately, fail to decrease them as much as they might have otherwise, after the end of World War I), to make up for the revenue that alcohol-related taxes and tariffs would no longer provide, but I find no credibility to the argument that the Sixteenth Amendment was adopted to lay the groundwork for Prohibition, as several people have suggested in the comments to this answer.There is also no causal relationship between the adoption of the income tax amendment and the establishment of the Federal Reserve System. Many of the plutophilic conspiracy theories that tries to link them seek to depend on the fact that the bill proposing the Federal Reserve and the Senate resolution proposing the Amendment were both authored by Senator Nelson Aldrich. But this ignores that Senator Aldrich was the Senate Majority Leader at the time, and thus was the proponent of a large fraction of all Senate-originated legislation, and further ignores that the first proposal to authorize an income tax was advanced by Senator Norris Brown—who wasn’t even a Senator when the Federal Reserve Act was voted upon (he failed in his bid to be reelected in 1912). This is the classic sort of coincidence that is actually meaningless, but easy to spin into a conspiracy if you’re the sort that easily believes in conspiracies. And the large increase in the tax rate in 1917 can be explained without resorting to some alleged need to fund the Federal Reserve. The true reason for that increase is much simpler: World War I.