At 55 percent, the top U.S. inheritance tax rate is second highest in the world.[i]  According to the American Council for Capital Formation, only Japan has a higher top rate, and it applies to estates of more than $15.3 million, whereas the top U.S. rate hits at just $3 million (See Figure 1).[ii]  Family members or other individuals receiving inheritances of over $675,000 effectively pay 37 percent of each additional dollar to the federal government.[iii]  Even with the exemption amount scheduled to rise to $1 million by 2006, the estate tax necessitates the break- up of many small businesses and family farms in order to pay the tax man.

The death tax brought in only 1.4 percent of all federal revenues in fiscal year 1998.[iv]  Yet the costs of maintaining this punitive tax are immense: the Death Tax wastes resources by discouraging work, savings, and investment.  Inheritance taxes force Americans to spend billions of dollars per year on estate planners, accountants, and lawyers that could be much better spent on some useful activity other than compliance with complex estate tax regulations.  In fact, economists Alicia Munnell and Henry Aaron estimate that the costs of complying with estate tax laws in 1998 ($23 billion) were about equal to the revenue raised by the tax ($23.1 billion).[v]  The moral case against the inheritance tax is strong as well.  The Death Tax represents double taxation of assets that were already subject to taxation during an individual’s lifetime.  Worst of all, the concept behind the Death Tax is the Marxist notion that the government – rather than your family – is entitled to your property. 

4. Confiscation of the property of all emigrants and rebels.

Marx knew that the “despotic inroads on the rights of property” necessary to implement the communist program would cause capitalists – and their capital – to flee to jurisdictions with lower tax rates and a more business-friendly climate.  He therefore proposed that the government expropriate the property of citizens who attempted to escape communist economic oppression.  Tellingly, the U.S. operates a program based on this notion.  American law subjects people renouncing U.S. citizenship for what the government terms “tax avoidance purposes” to U.S. taxation for ten years after renunciation, no matter where in the world they have moved.[vi]  As Llewellyn H. Rockwell, Jr. has written, this Marxist idea “implies that the citizen is an indentured servant of the state, and the expatriate a mere fugitive slave to the tax police.”[vii]  

The U.S. is an active participant in the Organization for Economic Cooperation and Development (OECD), a group that focuses largely on combating “harmful tax competition” – the natural flow of people and capital from high-tax countries to low-tax ones.  With U.S. backing, OECD bureaucrats want to set up a global tax regime that would effectively deprive individuals of the opportunity to invest their assets in low-tax jurisdictions.[viii]  The OECD’s solution to “tax competition” is to eliminate it by supporting punitive sanctions on countries that do not raise their tax rates to an acceptable (noncompetitive) level.

5. Centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.

Created in 1913, the Federal Reserve is America’s national bank.  “The Fed” controls the infusion of new money into the economy – and thus the level of both interest rates and inflation.     The Fed is often accused of acting for political rather than economic reasons.  For example, Fed Chairman Alan Greenspan, a political appointee, expressed concern about the over-expansion of the money supply throughout 1998 and 1999, but kept the money flowing and good times rolling throughout President Clinton’s impeachment.   At the very first Fed meeting after Clinton’s trial in the Senate had been wrapped up, the Fed raised the funds rate.[i]   Empowered to purchase the debt of any institution in the world Under the Monetary Control Act of 1980,[ii] the Federal Reserve is literally the world’s buyer of last resort, bailing out debt issuers around the globe by socializing the risks taken by large lending institutions.[iii]

Government-Sponsored Enterprises (GSE’s) Fannie Mae and Freddie Mac (originally created to help the poor get home mortgages) are able to borrow at lower rates than private firms because the capital markets believe the federal government will bail out their $1.9 trillion in mortgage loans.  Fannie and Freddie compete against private banks, yet they:  a) can borrow from the U.S. Treasury, b) are exempt from state and local income taxes, and c) enjoy lower capital requirements than most other financial institutions.  According to the Congressional Budget Office (CBO) the sum of these subsidies totals nearly $6.5 billion per year.[iv]  A recent study predicted that by 2003 Fannie Mae and Freddie Mac will have assumed the risk for almost half of all the residential mortgages in the United States.[v]

The U.S. government funds the International Monetary Fund (IMF) and World Bank, institutions that have a long history of cronyism and making bad loans to prop up tyrannical regimes.  American taxpayers shelled out $18.2 billion for IMF programs in 1999.[vi]   Additionally, Uncle Sam operates the Export-Import Bank and U.S. Agency for International Development (USAID).  The Export-Import Bank provides corporate welfare in the form of loans, guarantees, and insurance for companies selling goods to often-insolvent nations.  “There is no case too big or too small,” says Ex-Im Bank President James A. Harmon, whose agency spent $17 billion in fiscal 1999.[vii]  While the Ex-Im Bank seeks repayment of debt, USAID simply issues “development” grants to virtually every country on the globe.  USAID is seeking $7.5 billion in funding for fiscal 2001.[viii]

6. Centralization of the means of communication and transport in the hands of the state.

The Federal Communications Commission (FCC) oversees communication by telephone, radio, television, and the Internet.  Literally every new development in the communications industry must receive FCC approval or die without reaching the marketplace.  Although the Constitution gives Congress the sole power to levy taxes, in 1997 the un-elected officials who run the FCC imposed a Universal Service Charge of about $1.50 per month on every phone line in America to assure “affordable” phone access for everyone.[ix]  This tax, often referred to as the e-rate, will bring in $10 billion annually by 2003. 

The federal government owns and maintains a massive transportation network.  In 1998, Congress enacted an elephantine $220 billion highway bill, the Transportation Equity Act for the 21^st Century (TEA-21) that funded everything from the obvious (Interstate highways) to the non-essential (bicycle paths) to the ridiculous (a Greyhound bus museum).  Congress larded on an additional $21 billion in TEA-21 transportation pork in 2000.  Subsidies to the federally operated Amtrak rail system have cost taxpayers $23 billion since 1970, including $3.6 billion in the last three years alone.  Amtrak lost over $940 million in 2000, beating the record it set in 1999.  For all the taxpayer money pumped into Amtrak, the rail line carries less than one percent of all intercity passengers.[x] 

7. Extension of factories and instruments of production owned by the state; the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.

The U.S. government operates the Tennessee Valley Authority (TVA), the nation’s largest public power system.  Wholly owned by the federal government, the TVA was established by Congress in 1933 primarily to provide flood control, river navigation, and agricultural and industrial development.[i]  Poor management caused the TVA to build up a staggering debt of over $27 billion that left the agency paying 35 cents of every budget dollar for interest payments, over twice the 16 cents on the dollar the average power authority spends on debt service.  Despite generous tax breaks, subsidies, and regulatory exemptions, the TVA power monopoly charges higher rates than other power providers in the Southeast.[ii]  

The United States Department of Agriculture (USDA) runs programs from Food Stamps to forestry to crop subsidies for farmers (See Table 2).  According to the government’s own budget, these activities cost taxpayers $71 billion in 2000.[iii]  USDA programs affect virtually every American. The Agriculture Department runs the Food Stamp program, in which more than 20 million people participate.[iv]   One fourth of all new mothers participate in the Women, Infants, and Children (WIC) food program.[v]  27 million students get free or subsidized breakfasts, lunches and snacks through the $5.5 billion National School Lunch Program.[vi]  The USDA also runs price support programs, purchasing huge amounts of fruits, vegetables and dairy products in order to keep prices artificially high.[vii]   There are 105,000 USDA employees for only 1.1 million farmers, a ratio of about one USDA bureaucrat for every ten farmers.[viii]

8. Equal obligation of all to work.  Establishment of industrial armies, especially for agriculture.

Federal labor law forces eight million American workers to pay union dues to get or keep a job.  These employees may currently be fired for refusal to pay dues or “fees” to a union whose mandatory “representation” they may not want.  This explains why inflation-adjusted union income – despite a steady decline in union membership – has more than doubled over the past 30 years.  Under their federally granted coercive powers, union officials collect some $4.5 billion annually in compulsory dues.  Much of this money is funneled into unreported campaign operations to elect and control Members of Congress dedicated to higher taxes and increased government spending.[ix]

In 1986, Congress passed the Immigration Reform and Control Act (IRCA).  This measure gave amnesty – legal forgiveness – to all illegal aliens who had successfully evaded justice for four years or more or were illegally working in agriculture. As a result, 2.7 million illegal aliens have since been admitted as legal immigrants to the United States.  In addition, this group has so far brought in an additional 142,000 dependents.  Almost 1.1 million of the IRCA amnesties granted between 1989 and 1996 were for agricultural workers.[x]  President George W. Bush made his first foreign visit to Mexico, where he signaled his willingness to consider extending legal residency to the estimated 2.5 million Mexicans currently living illegally in the U.S.   Bush has said that immigration should be seen as an “opportunity” and spoke with Mexican President Vicente Fox about the latter’s desire “to open the borders to the free flow of people.”[xi

9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country.

Federal subsidies to U.S. businesses now cost American taxpayers nearly $100 billion a year.[i]   Corporate America feasts on a steady diet of pork that includes direct grant payments, below-market insurance, direct loans and loan guarantees, trade protection, contracts for unneeded activities, and special breaks in the Tax Code.[ii]  Agribusiness giant Archer Daniels Midland Company (ADM) receives a taxpayer subsidy to produce ethanol (a corn-based fuel additive that costs more to produce than it can be sold for on the market, necessitating a 54-cent per gallon tax subsidy).[iii]  Ethanol also has a powerful constituency among Midwestern farmers who grow corn.  The ethanol tax break and other corporate welfare programs add up to $400 million per year in handouts to ADM.  $3 billion of the total $5 billion in ethanol subsidies doled out during the 1990s went to ADM,[iv] and analysts reckon that at least 43 percent of ADM’s annual profits are from products heavily subsidized or protected by the American government.[v] 

Taxpayers have also been forced to ante up hundreds of millions to subsidize mergers between defense companies such as Martin Marietta’s 1993 acquisition of General Dynamics’ Space Division and the subsequent merger with Lockheed that formed Lockheed Martin.[vi]  The government gives $1.4 billion in subsidies to sugar growers (42% goes to the largest producers such as Flo-Sun), which has the effect of jacking up sugar prices.  The USDA spends $85 million on overseas consumer marketing campaigns for Chicken McNuggets, Miller Beer, and Campbell’s soup.[vii]

The U.S. Department of Housing and Urban Development operates the Section 8 housing program that pays the lion’s share of rent for low-income people to live in private complexes to achieve the goal of “income integration.”  Taxpayer-subsidized rents in these units often cost well over $1,000 per month.  Uncle Sam spent $15 billion for 3 million units of Section 8 housing in 1996.[viii]   A 2000 investigation of HUD uncovered $935 million in overpayments last year, some of which was used to “throw parties and buy gifts.”[ix]

10. Free education for all children in public schools.  Abolition of children’s factory labor in its present form.   Combination of education with industrial production, etc.

Nowhere in the Constitution is the federal government delegated the power to regulate or fund elementary or secondary education.   Yet Washington now pumps $75 billion in tax money into educational programs run by the Departments of Education, Agriculture, Defense, Health and Human Services, Interior, Justice, Labor, and Veterans Affairs.[x]    The largest share ($36 billion) is spent by the Department of Education.[xi]  This massive infusion of tax dollars on public education has not produced the expected results: while average per-pupil spending in public schools grew 212% from 1960 to 1995 and real-dollar teacher salaries have risen 45% over the same period, SAT scores have steadily declined.[xii]  

Politically powerful teacher unions control the education agenda, which mainly has to do with expanding government programs.  In fact, the 2.5 million-member National Education Association (NEA) supports $906 billion per year in new spending.[xiii]   Although public schools are not doing the job, education unions support strict regulation of home school students (who tend to perform better academically than public school children), such as licensing of parents and barring home schooled kids from extracurricular activities that take place on public school grounds. [xiv]  Teacher unions are the main force opposing vouchers and tuition tax credits that would introduce competition to the public schools.   After the privately-run Edison school in San Francisco showed the third highest improvement in test scores out of San Francisco’s 71 schools, teacher unions stepped up efforts to force the city to revoke Edison’s charter.[xv]  The public school monopoly not only harms taxpayers, it acts as a means of national socialization that promotes the values of the state (“diversity,” extreme environmentalism, etc.) at the expense of parents and communities.

The U.S. has done away with children’s factory labor, but minimum wage laws hurt employment opportunities for youth by subverting the fair market value of labor.  Because of artificially inflated wages, many students have more difficulty than they should in finding part-time or entry-level work.   Child-labor laws also prevent many teenagers entering adulthood from putting in as many hours as they would like – or their family may need.

Conclusion: We Are All Marxists Now

In the twentieth century, America expended vast sums of blood and treasure combating Communism.  We both fought and subsidized the fight against communist governments around the world that stole property, trampled on individual rights, and murdered tens of millions of people in the name of Marx’s noxious ideology. 

Yet modern America in no way resembles the Old Republic of Washington and Jefferson.  It is a super-state in which leaders – and the citizens who vote for them – worship at the altar of limited government and individual responsibility but steal money from the collection plate to finance an ever-expanding managerial state.[xvi]   The poor (Food Stamps), the middle class (subsidized student loans), and the rich (unneeded entitlement benefits), are the targets of programs designed to win their support for an ever-expanding government.  All classes have gladly accepted these handouts.

Marx believed that “the proletarians have nothing to lose but their chains.”  By voluntarily trading liberty for security, Americans have made the chains that bind us thicker and heavier.

Mark Schmidt is Director of Programs for NTUF.

His e-mail address is mschmidt@ntu.org