QUESTION: Martin – Just read your latest on Lewrockwell.com, regarding taxation. I think the most basic, simplistic explanation you can put forward about income taxation, now in 2019, is that governments are taking directly out of our paychecks, while at the same time, printing money like deranged lunatics. Why tax my labor income if you (the government / CB’s) can just print as much fiat as they need? What do they need to dip into my paycheck for 30% before the money even hits my bank account, when they can just print what they need. Maybe it is because of their greed and lack of morality know no bounds. We are being ruled by tyrannical, Marxist inspired lunatics.
CN

ANSWER: That is my point. When money was precious metals, then taxation made sense. However, most taxes are initially implemented with such modest amounts like 2% for the first income tax in Britain back in 1799. People accept such modest levels. Even the American Revolution was fought over a tax of about 7%. Today, under the influence of Marx, taxes have risen to insane levels. A woman may have fought for the right to work with the Suffrage Movement, but today, it now takes two incomes to support a family because of the levels of taxation. The burden of direct taxation is seriously reducing our standard of living.

Taxes should be fixed because they can raise taxes at will. This is why you also have lobbyists who then fund their campaigns for loophole

In Berne, Switzerland, there has been a redistribution in occupational pensions which has revealed that it too is not a funded pensions plan as people previously assumed. For at least twelve years, pension fund monies have flowed from the employed to the pensioners. The amount has reached a tremendous scale with funds in the order of more than 90 billion francs being redistributed during these years. This is the result of data collected by PPC Metrics, the pension advisor for the SonntagsZeitung.

The AHV pension scheme is heavily redistributed in the pay-as-you-go system, but the occupational pension schemes should have been fully funded. With low-interest rates, the presumed fully funded occupational pension plan is now also operating as a Ponzi scheme. The prospect of future payments has been called into question

UBS will charge a 2 franc fee for withdrawing cash at the bank counter beginning in July, be it a withdrawal in CHF from a UBS private account or from a UBS current account. Thus, UBS stands (at least for now) pretty much alone. A survey of various institutions revealed that hardly any banks charge cash for cash withdrawals at the counter. One of the few exceptions is the Zürcher Kantonalbank (ZKB). Exceptions to this rule are customers with a private or savings account of the “ZKB inclusive base” package. These customers pay 5 francs for payments at the counter in francs or foreign currencies. However, industry observers expect other banks to follow UBS’s example soon, given the pressure on earnings.

QUESTION: You do a lot of comparison to the Roman Empire. What was the size of the government relative to GDP? Can you estimate that?

GY

ANSWER: The Roman economy was more like the USA during the mid-19th century in that it was pre-industrial. About 80% of its inhabitants worked in agriculture, which was about where we were in 1840. There was no social agenda of trying to redistribute wealth from one class to the other. Still, there were social programs. But the socialistic agenda that was adopted by modern governments has sought not merely to redistribute wealth among the classes, but it has justified bigger government on a grand scale never before witnessed in history. The tax rate in the ancient Roman Empire was about 5% with some paying as little as 2%. The actual cost of government during the Roman Empire was minimal compared to the modern standard. The Roman Emperor Trajan (98-117 AD) formalized the alimenta, which was a welfare program that helped orphans and poor children throughout Italy. It provided general funds as well as food and subsidized education. The program was supported initially out of Dacian War booty, and then later by a combination of estate taxes and philanthropy. So there were programs to take care of people who needed help.

Virtually all the taxes and rents raised by the imperial government were spent on the military, which came out to be about 80% of the imperial budget in 150 AD. This military spending constituted about 2.5% of the empire’s GDP. Obviously, we do not really see separatists movement until the mid-3rd century when Valerian I (253-260 AD) was captured by the Persians. With the cost of the military coming in about 2.5%, this explains the lack of tax rebellions. The tax enforcement was nowhere near as intrusive as we see today. The US military budget comes in about 4% or twice that of the Roman Empire. The Roman Empire lasted far longer than any modern state for it seems to have been much more tolerable of a burden, whereas the U.S. military budget will be around 20% at times of total expenditure.

The primary purpose of my investigation into the monetary system of the world is very simple. The political unrest ONLY rises when there is economic tension. Turn the economy down and you will get historically civil unrest. Additionally, it is interesting to see what policies produce the best and worst results. Augustus (27-14 AD) created a real land boom as he issued a tremendous amount of coinage creating a booming economy. He was followed by Tiberius (14-37 AD) who imposed austerity and issued very little coinage by comparison. That resulted in an economic depression in 33 AD and this was in part reflected in the Jewish rebellions over taxes. Remember the story that Jesus asks whose picture is on the coin and he replies to give to Caesar what is Caesar’s? So we can see the impact of austerity throughout history to extract the best policies under which we should live to promote like Rome – Pax Romanum.