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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Robert Mueller and Floyd Ferris


When they couldn’t get Al Capone on booze charges, they resorted to the income tax to get him. That’s what all too many people fail to realize — that the income tax not only funds the gigantic welfare-warfare state that the federal government has become, it, along with the regulated economy, also provides an excellent means for going after people.

That’s what special counsel and former FBI Director Robert Mueller is doing with former Trump campaign manager Paul Manafort. Mueller’s team, which is supposed to be investigating some supposed unlawful conspiracy between President Trump and Russia, is instead spending its time prosecuting Manafort for income-tax violations.

What do Manafort’s supposed income-tax violations have to do with some illegal conspiracy that President Trump supposedly entered into with Russian officials?

Nothing. Paul Manafort’s supposed income-tax violations have absolutely nothing to do with the supposed Trump-Russia conspiracy.

So, why is Mueller prosecuting Manafort for income-tax violations?

By securing a criminal conviction of Manafort for income-tax violations, Mueller’s hope will be to squeeze him into disclosing any economic crimes that Trump may have committed as a businessman. If Manafort refuses to sing against Trump, Mueller will inevitably ask the judge to impose the maximum possible jail sentence for income-tax violations.

That’s how the federal criminal-justice system operates. Go after lower-ranking people, squeeze them, and get them to rat out people higher-ranking people.

Here is something else to consider: Have you ever wondered why there are no CEOs of major corporations or banks taking a public stand against the Pentagon, the CIA, the NSA, the FBI, and the rest of the national-security establishment and their forever wars, secret surveillance schemes, and violations of civil liberties?

The reason is this: When businessmen live under a complex system of income taxation and federal regulation (and secret surveillance), they know that the feds can come after them whenever they want, just like Putin and Russian officials do to Russian businessmen who cross them. The rules and regulations on income taxation and regulation are so overwhelming and complex that it is virtually impossible for any businessman to be in compliance with all of them. Thus, at any given time any large corporation, bank, or high business executive is going to be in violation of some income-tax provision or some business regulation (or have personal secrets known by the government’s surveillance machinery). They all know that they are vulnerable at any given time.

That’s also why the U.S. mainstream press is so obsessed with getting hold of Trump’s income-tax returns. No, it’s not just curiosity or envy. It’s with the aim of having a well-trained income-tax team scour the returns for criminal violations. And with the complexity of the tax code, the probability is that they would find several income-tax violations that Trump has committed, even inadvertently.

The situation is even more difficult for businessmen in places like New York and in foreign countries. Thousands of taxes, rules, and regulations to comply with. No businessman could possibly comply with all of them. Moreover, there is always the possibility of bribes that must be paid in foreign countries to engage in business. There is nothing Mueller would love more than to find someone who is willing to testify that Trump approved the payment of bribes to construct a hotel in some foreign city. That’s the idea behind squeezing people on charges that don’t relate to the supposed Trump-Russia conspiracy. The hope is that the person squeezed will disclose economic crimes of the person targeted, thereby enabling the special prosecutor to go after the latter on income-tax violations, insider trading, commercial bribery, building code violations, or any other violation of the (multi-thousand page) IRS Code or for committing one or more of the thousands of economic crimes that are on the books.

The slimy bureaucrat Floyd Ferris in Atlas Shrugged described perfectly how this racket works:

“Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against — then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it. You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted — and you create a nation of law-breakers — and then you cash in on guilt. Now, that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.”

Another real-life person who experienced the full force of this racket is Joseph Nacchio, the former CEO of QWEST. After the 9/11 attacks, U.S. officials were secretly exhorting the heads of various telecoms to engage in illegal activity, including illegally and unethically divulging to the feds confidential information relating to their clients, in the name of protecting “national security.” Nacchio said no. He said that he would never sell his clients down the river by revealing confidential information to the feds.

Nacchio ended up paying a high price for his integrity. The feds knew that they couldn’t put him in jail for his decision, as their counterparts in China and North Korea would. So what did they do? They followed the lead of that slimy bureaucrat Floyd Ferris. They found some economic regulation — in this case, “insider trading” — that Nacchio had violated and used that as an indirect way to prosecute, convict, and incarcerate him.

Keep in mind something important: Before 1913, people like Mueller couldn’t go after people for income-tax violations. That’s because there was no income tax and, consequently, no IRS. When the federal government was called into existence by the Constitution, the last thing Americans wanted was an income tax or any other direct tax. They knew that direct taxes are the essence of a tyrannical system. They also knew that a regulated economy would provide government officials with the power to go after anyone they wanted. That’s why Americans brought into existence a free-market economic system rather than a government-regulated economic system.

Too bad for Trump — and too bad for freedom — that 20th-century Americans adopted the type of income taxation/regulated economy system that exists today in Russia and other authoritarian countries. Isn’t that ironic?

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.