Saturday, September 21, 2019

Thomas Jefferson On Taxes

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Jefferson’s view on Taxation
Did you know for the first 140 years of America (1776-1916) there was virtually no direct taxation on American citizens? In 1802 when Thomas Jefferson took office he eliminated all direct taxation on US citizens. Tax-free America.
This was Jefferson’s vision and I have quotes from him to back it up.

There were times in US history, like war, when it came back temporarily but the federal government was established to protect citizens against the burden of government. There were some excise taxes and duties on foreign imports but the government was kept to a minimum and each person was free and responsible for their own life. This was the vision of the founding fathers for establishing the United States of America.

During the tax-free time in America, citizens rich, poor and middle class of the United States grew richer and there was no social state, which was seen by the founding fathers as the road to serfdom. The whole world envied the US and tried to immigrate. If you want to read even more on the history of taxation in the United States including Jefferson’s views on taxation the US Treasury has an article.


Jefferson on taxes: they are wrong
Jefferson’s view on taxes was clear, they were wrong. I think it is better to look at people’s original words so I have put together some quotes by Jefferson on the issue. Jefferson believed large debt and direct taxes were a curse and something to be avoided as it was the source of oppression. Jefferson was one of the founding fathers whose vision of the United States was one of freedom for people to live their lives without the excess burden of government.

And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.

Thomas Jefferson in his state of the Union wrote about the “the freedom of labor from taxation”. He felt the government should protect its citizens from internal taxation.

Thomas Jefferson believed in times of war when a nation was fighting for its survival with enemies at the gate it could raise capital, but it should be paid off as soon as possible and with least burden to its citizens.

I can not but hope that Congress in reviewing their resources will find means to meet the intermediate interest of this additional debt without recurring to new taxes, and applying to this object only the ordinary progression of our revenue. Its extraordinary increase in times of foreign war will be the proper and sufficient fund for any measures of safety or precaution which that state of things may render necessary in our neutral position.



Jefferson continued to write addressing the Nation:

Direct taxation was to be avoided, this could be done by avoiding expense that are not necessary. when merely by avoiding false objects of expense we are able, without a direct tax, without internal taxes, and without borrowing to make large and effectual payments toward the discharge of our public debt and the emancipation of our posterity from that mortal canker, it is an encouragement, fellow citizens, of the highest order to proceed as we have begun in substituting economy for taxation, and in pursuing what is useful for a nation placed as we are, rather than what is practiced by others under different circumstances.

Jefferson even did not like the idea of accumulating wealth for a treasury for times of war in case it happened.

…but sound principles will not justify our taxing the industry of our fellow citizens to accumulate treasure for wars to happen we know not when, and which might not, perhaps, happen but from the temptations offered by that treasure.

Jefferson recommends no internal taxes on the citizens of the United States:

there is a reasonable ground of confidence that we may now safely dispense with all the internal taxes.


Jefferson Vs Hamilton on the role of government

When I was in high school and first read about the Hamilton and Jeffersonian views of America, I thought only hippies and people who did not understand economics would side with Jefferson. Clearly, we needed a strong central bank, treasury and debt to finance the government, centralized financial markets. Jeffersonian views of a libertarian America seemed too radical for me. I was 16 years old in high school when I thought that. Now that I have studied economics and lived in the world for at least 30 years, I realize the opposite. The government that governs least governs best. If the freedom and prosperity of the citizens are to be protected no or low taxes and debt are clearly the way to go.

Economically speaking it is a question of who can spend your money better, you or the government? Why did Jeffersonian America prosper and not fall apart without taxation? The reason is what Jefferson wrote was correct.


Jefferson’s letters and original writings on taxes in the USA

1787 to James Madison about the issue of taxes:

…the fundamental principle, that the people are not to be taxed

Jefferson’s letter to John Jay in 1789 (August 27th):

The embarrassments of the government, for want of money, are extreme.

What does this seem like to you? If you can find Jefferson quotes to the contrary please let me know. Why does the current President not understand this?


Jefferson when on to write to John Taylor in 1789:

I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its constitution; I mean an additional article, taking from the federal government the power of borrowing.

In 1799 Jefferson when on to Edmund Pendelton about:


the disgusting particularities of the direct tax.

In 1801 to John Dickerson Thomas Jefferson wrote on taxes:


You will perhaps have been alarmed, as some have been, at the proposition to abolish the whole of the internal taxes. But it is perfectly safe. They are under a million dollars, and we can economize the government two or three million a year.

Jefferson's views independence

Hand was written by Thomas Jefferson


My view’s on Taxation


As an economist, I think a tax on consumption, is the least offensive as it does not discourage investment and savings and productive effort.
I pay taxes in the EU and the US as I am a dual citizen, I do not like it. I think it is unfair. I agree with Jefferson. The absence of direct taxes made the US great.
‘No country was every taxed into prosperity’ – Ronald Reagan
Government wastes more money than any private person or company ever could.
Taxation is a violation of your life, if you work more than 1/2 (aggregate all the taxes including sales and loss of productivity indirectly related to taxes etc) your life for your neighbor's wife this is unfair. This is what taxes are, working for your neighbor’s wife. How do you feel about that?


Thomas Jefferson was not a saint, but he was enlightened.


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