How to Get Rid of Socialism: And Solve the Fiscal Problems of the United States of America

By Dr. Patrick R. Colabella CPA, EdD

How to Get Rid of Socialism is book borne out of the frustration of teaching taxation and spending countless hours preparing tax returns amidst the ever-increasingly complexities of tax laws. I discovered too late that too much human capital was being expended on figuring out what we owe the government and painfully questioning why. The answer was simple when I discovered that the origins of the internal revenue code were based on a socialist ideology and the law was designed primarily to redistribute wealth. This book is the culmination of my examination of the detrimental effects of creeping socialism from the progressive era Economic Security Act and culminating with the abominable Affordable Care Act. The conclusion is that it has to go and this book is my road map to recapturing American freedom!

This book makes the case for the eradication of socialism and the income tax code that is its cornerstone. I introduce a new, fairer, and simpler automated tax system called the withdrawals tax that is not the flat tax or the fair tax and give you my recipe for fixing the shadow economy with perishable currency and finally how to tackle the woes of social security the national debt. Its fresh and new and I hope you like it!

• Language: English
• Publisher: Xlibris US
• Release date: Mar 14, 2016
• ISBN: 9781514468692

Dr. Patrick R. Colabella CPA, EdD

Dr. Patrick R. Colabella is a CPA and a professor of accounting and taxation at St John’s University in New York and the chair of the Global Institute for Taxation, a research institute dedicated to alternative taxation models.

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Copyright © 2016 by Dr. Patrick R. Colabella, CPA, Ed D.

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Rev. date: 03/14/2016

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CONTENTS

Preface

Chapter 1—The Case for the Eradication of Socialism

Step 1—Recognize Socialism for What It Is

Chapter 2—The Power to Tax Is the Power to Destroy

Step 2—Limit the Government’s Power to Tax

Chapter 3—Progressives and the Taxation Solution

Step 3—Turn Back the Progressive Movement

Chapter 4—Understanding Taxation

Step 4—Get Rid of Tax Illiteracy

Chapter 5—The Withdrawals Tax

Step 5—Replace the Income Tax, Estate Tax, and Sales Tax

Chapter 6—Changing Paradigms

Step 6—Address Political Implications

Chapter 7—Currency

Step 7—Create a Perishable Currency

Chapter 8—The Shadow Economy

Step 8—Get Control of the Shadow Economy

Chapter 9—Economic Security

Step 9—Revamp Social Security

Chapter 10—The National Debt

Step 10—Restructure the National Debt

Summary

Epilogue

Selected Socialism Quotes

Appendix

To my loving wife, Donna.

Without her loving inspiration, this book would never have been written!

One of the great mistakes is to judge policies and programs by their intentions rather than their results.

—Milton Friedman (1912–2006)

PREFACE

We are being seduced by an anachronism of the nineteenth-century Progressive movement. We are in danger of once again falling for the same demagoguery that promoted the misconception that we can attain social justice nirvana without the forfeiture of our basic freedoms or, as a hidden conundrum, the expense of freedom. The overreaching hand of the left has once again come to near worldwide power and has brought with it a new bolder form of Socialism¹ that is now in high definition and directed by the emboldened radicals of the sixties. Defeating it will not be easy. The first step is just to talk about Socialism with the purpose of educating the most uninformed of our present generations.

Fortunately, in 2015, Americans are now coming to understand more how the free enterprise system really works and are now seeing the contrasting threat that unbridled Socialism poses to our way of life. Maybe for the first time, Americans see how masterfully our Constitution was drafted so as to protect us from such forces that fester from within. This book will show how Capitalism built America and warn of its possible demise, unless the evils of creeping Socialism are addressed. An eclectic mix of Progressive/Socialist political fixes highlights serious flaws in our system of public finance, and it is imperative for us to correct it. Hopefully, it is not too late.

The twentieth century saw waves of collective ideologies vie for superiority worldwide. Each push of Socialism, Fascism, and Communism gave way to societal and political changes in countries around the world and, most significantly, in the United States. The Progressive movement brought about some massive and seemingly irreversible changes that we have been living with since the turn of the century. While Socialism has failed, around the world, the remnants of the Progressive movement are embedded in our social culture. Over the decades, the remnants of the Progressive movement remain. The economic security laws, the income tax, the estate tax, Social Security, and now the Affordable Care Act—these systems and programs seem like unshakable foundations in American society, but they are Socialist based, and left untended, they will continue the ruination of America. How to Get Rid of Socialism is an attempt to present not only the striking issues Socialism confronts us with but also the viable ideas and solutions to defeat it by replacing Socialist programs and systems with more efficient free market–based solutions.

For example, we are operating under an Industrial Revolution vintage type of income tax system in the age where cyber commerce gives us the unique ability fashion a much more efficient and fair tax system. We have the technological capability to manage enormous amounts of accounting data, and it is incomprehensible that taxation has not morphed with the technology. I believe that the main reason for this is the Socialist underpinnings of the income tax law. This book will clearly address this issue.

What we are certain of now is that modern but arcane income tax is more than just a funding mechanism for government but rather a social engineering and wealth-redistribution hammer that abuses basic American freedoms. It was Socialist philosophical arguments of demonized wealth that brought the income tax to a constitutional amendment, which was an event that put America back on its heels as an innovator contributing to modern society. Current technology now enables us to restart the debate, presenting a new look at the whole of taxation that can be dissocialized. This book stokes the debate by proffering solutions to the taxation issue and other Socialist programs. The hope is that a new worldwide debate is started, critical of the Socialist point of view, and yields a different outcome that keeps Socialists from realizing any more of their ill-fated agendas.

Perhaps modern politics ties the heart and hands of our elected officials, making them politically unable or rather fearfully unwilling to make truly historic choices at these crossroads. Again, this book hopes to open the minds of all who read it and that we must not fear change with well-thought alternatives.

This book uncovers the singular foundational tool of the Socialist ideology in the government’s power to tax. This power was perfected by the Sixteenth Amendment to our Constitution and was a worldwide model for sustaining Socialist wealth redistribution. But our continued success as a nation may be intrinsically connected to our willingness to accept taxation reformat, its foundational core, which is contained in an unlimited power to extricate resources from the productivity of its citizens.

It is fiscal strength that enables the US government to stay militarily prepared and in front of the technological frontier. Of course, any radical alteration of the network of tax systems that maintain the source of funds feeding our military strength will not be easy to overcome, particularly for those in government with well-meaning ideologies of all the good that strong government can or should accomplish. However, many are beginning to see a nightmarish undertow of creeping Socialism, and they are becoming more and more uncomfortable with it.

It is the government’s power to tax that has evolved into a highly complex web of intrusive social and economic engineering devices. This has unwittingly come upon us and we now blindly accept a Socialist tax system. Consequently, charges of social engineering may not be enough to spur a change in the system, but perhaps the abyss of the unmanageable national debt caused by socialistic programs may now indeed force us to rethink all of the programs that secretly hinge on the power of a socialistic income tax.

Social Security, health care, welfare, and defense are ingrained with social justice perks and remedies that taxpayers largely approve of, and government really does not want to face having to fix these programs. It is the tax system that conveniently feeds the broad spectrum of socialist programs. Oddly then, I now realize that the income tax itself has a unique basis for maintaining itself, and we are in a real danger zone where the tax law legislates itself and renders legislators more and more powerless to really change it.

Having to deal with Socialist entitlements is, by far, the most difficult aspect to defeating Socialism. The dependence on these programs and the pressure of servicing the national debt caused by these programs are huge fiscal clouds that threaten the very core of American exceptionalism. This book offers solutions to the debt issue, rethinks Social Security, and addresses the shadow economy, the latter being a vexing by-product of anti-Socialist shadows. It is this economy that hides the productivity that is a bubbling fiscal volcano that will erupt when true assets and incomes are free to be made public rather than be hidden from the income tax collectors.

I believe that Socialism has a significant effect on components of our GDP. Clearly, there is a fearful downside to an unbridled expanse of the income tax system in our lives and an unmistakable awareness that our economic lives are essential elements of our basic freedoms and are being compromised by government’s insatiable need for socially engineering us through a Socialist tax system and tangential government programs. This book hopes to focus the reader on the Goliath before us and show us the way out of the mire we are in.

The income tax, sales tax, excise tax, property tax, and estate tax operating at all levels of government raise the question of whom and what we as a society are truly working for. Is it ourselves? Or is it for the sake of an ever-increasing and unduly intrusive ruling class cloaked as government with an ever-expanding Socialist agenda? We have included in this assemblage of research some scholarly and genuinely new ideas on alternative taxation systems but purposely excluded the flat tax and the fair tax (a national sales tax), which legislators and candidates are very familiar with and occasionally give demagoguery lip service to. What is contained herein is a genuine task of unraveling the taxation maze created by Socialists. I hope to fertilize the seeds of change.

Dr. Patrick R. Colabella, CPA, Ed D

St. John’s University

Global Institute for Taxation

CHAPTER 1

The Case for the Eradication of Socialism

Step 1—Recognize Socialism for What It Is

So what is wrong with Socialism? They have it in Scandinavia, and they are all so happy. Why eradicate it?

It would seem redundant to make a case for the expunging of Socialism when it has repeatedly failed as a political ideology and an economic system. Socialists in America usually recede into the woodwork when the country has enough of big government, but it often resurges as an ideological remedy for newly named political issues like social injustice and income inequality. It usually falls apart on its own weight when society rediscovers the abysmal constraints it places on a free society. The time is right for the Socialists to retreat!

For most of the historically challenged of our younger generation, Socialism looks like a utopia until a fatal conceit is realized and creates a tumult of human distain, even national revolt. When the wealth runs out, it goes back underground, like worms on a hot day, only to rise again to the surface when the social climate is again wet with dissension from the stark realities that free market Capitalism often brings. But what is it that makes it reconstitute itself like a cockroach’s nest? And how can we and why should we eradicate it? Isn’t it wonderful in Sweden? So why should we kill it forever?

The essence of the regenerative staying power of Socialism is embodied in two weed-like human frailties: the lure of power and utopian promise of social justice. For those at the political helm, there is an intoxicating allure for the enchantment of being part of the political elite mainly because you are above the Socialist garbage dump. The promise of social justice tends to reboot itself when the remnants of leftover Progressive programs pervade the pure minds of new generations having no understanding of why Socialism is doomed to failure, especially when the education system keeps the history lessons devoid of topic of Socialism failures.

Socialism is like an accumulated illness. Good examples of this are programs of Social Security and welfare, collectively known as the Economic Security Act of 1935. Not that these programs are totally Capitalist taboos but that they are rather administrative boondoggles left unattended and growing more and more unwieldy with age. It’s like leaving a door open, waiting for an intruder to return. Changing these unattended Socialist programs are the true key to its demise. In order to eradicate Socialism, you have to replace their giveaway programs with something better.

Progressives—and that is an oxymoron for Socialists—often claim, We’ll make it better this time around. When Socialists regained power, as they did in 2008, the litany of Socialism demagoguery resurfaced. It’s funny that in Socialist societies, the citizens/subjects think they are not Socialists. If you ask them what the difference between a Democrat and a Socialist is, you get that cricket sound or the resounding pushback of denial. Invariably, it comes home to roost when they observe the government’s smothering, overriding, meddling in almost every aspect of your life and in what we believe is free enterprise commerce.

It becomes strikingly real when regulation legislation is signed into law for the so-called greater good at the expense of basic personal and market freedoms. This was the case with Affordable Care Act. All this is collectively a disguise, a central design that unfortunately becomes ingrained in the social culture, and it is this that is what makes a country a Socialist country. You gradually become acculturated to it. However overbearing, it is this central design that is the fatal flaw in the Socialist ideology. It is not that Socialist ideas