Wednesday, December 16, 2009

Imagine for a moment, a Utopian land. One where the leaders of the government require their subjects to remit only ten percent of earnings for the maintenance of peace and order. Where the supreme ruler is bound by the responsibility to prudently steward those funds, to not abuse the right to tax his subjects. A land where abuse by the leader would result in sanctioned rebellion by the people because the leader (in breaking the bargain) lost his divine mandate to rule.

"Not possible!" you quickly reply. "No such land has or ever will exist."

But it did my friends. Established by Confucius, Chinese tax wisdom established the ideal tax at 10% and required the ruler to maintain this Mandate to maintain his rule. The Mandate was considered a divine contract that, if broken, would result in rebellion--"The Change in Heavenly Orders." The system lasted over 2000 years.

Confucius studied the previous centuries of tax abuse and determined that emperors should not have a free hand in tax policy. 10% was considered the just amount of tax. Confucius was followed by Mencius, the Second Sage. According to Charles Adams in For Good and Evil,

"Mencius wrote for the Chinese the doctrine of the sacred right of insurrection against bad government, as Thomas Jefferson did for the United States. Mencius regarded all government as coming from Heaven, which meant that all rulers were responsible to God and the people. The aim of government was to promote the happiness and well-being of the people. A heavy tax would not do that. And any ruler that left his subjects in misery deserved to be deposed. People were the most important element of a nation; after them came government workers, and finally last of all, came the emperor (48).

Look how far we've come. With unemployment hovering at 10%, our government will raise the national debt ceiling by $2 trillion to $14 trillion this week. According to the Wall Street Journal, that increase will last one year before another will be required. Since the democrats took over Congress in 2007 the debt ceiling has been raised by 39%. This next increase will add another 15%. More frightening, the federal budget has increased 50% since Obama has been in office. A bad combination: rising spending and increasing debt.

According to White House projections (which lean toward optimism), this year's debt will reach 61% of GDP and will rise to 68% in 2010. Consider your own balance sheet. How long could you sustain a debt to income ratio so large and so quickly rising? Remember, next year's 68% debt to GDP is before the Health Care and Cap and Trade bills, each requiring trillions of dollars of spending. There is only one solution to the problem if our representatives refuse to stop spending--more income. In this case more income means higher taxes on an already burdened citizenry.

Our founders considered the imposition of taxes without consent a reason to rebel, to declare "unalienable Rights" to Life, Liberty, and the Pursuit of Happiness. Yet, we may have to put those pursuits on hold for a bit. Our friends in Washington are digging a big ole hole and we are going to have to work hard--for generations, perhaps--to find our way out of it.

Aah for one Confucius in Congress.

(image courtesy of: )

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