Principium Volume III, Book 12, Quote 1293, 1294, and 1295

1293. (2-17-2011) In 1848 Karl Marx and Friedrich Engels frankly proposed “a heavy progressive or graduated income tax” as one of the measures by which, after the first stage of the revolution, “the proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeois, to centralize all instruments of production in the hands of the state. “All these measures they described as “means of despotic inroads on the right of property, and on the condition of bourgeois production… measures… which appear economically insufficient and untenable but which, further inroads upon the old social order and are unavoidable as a means of entirely revolutionizing the mode of production.” (Karl Marx - Selected Works.) –F.A. Hayek-The Constitution of Liberty (Clearly he –Karl Marx- expected to use progressive taxation as a tool of destruction.)ATJ But the general attitude was still well summed up in the statement that “proportionality (known as flat tax today) ATJ is a principle, but progression is simply hateful arbitrariness, “or John Stuart Mill’s description of progression as “a mild form of robbery.”

-Friedrich A. Hayek - The Constitution of Liberty, 1960


1294. (2-17-2011) (Why progressive (arbitrary) taxation is bad and proportional (flat) taxation is good was stated this way:)ATJ In 1891, Prussia introduced a progressive income tax rising from 0.67 to 4 percent. In vain did Rudolf von Gneist, the venerable leader of the then recently consummated movement for the Rechtsstaat, protest in the Diet that this meant the abandonment of the fundamental principle of equality before the law, “of the most sacred principle of equality,” which provided the only barrier against encroachment on property. (But because it was such a small amount to begin with…)ATJ The very smallest of the burden involved in the new schemes made ineffective any attempt to oppose it as a matter of principle. (Now let’s go back to the quote by Francesco Guicciardini;)ATJ “It lies in the nature of things that the beginnings are slight, but unless great care is taken, the rates will multiply rapidly and finally will reach a point that no one could have foreseen.” (1538) (continuing with Hayek)ATJ Though some other Continental (European)ATJ countries soon followed Prussia, it took nearly twenty years for the movement to reach the great Anglo-Saxon powers. It was only in 1910 and 1913 that Great Briton and the United States adopted graduated income taxes rising to the then spectacular figures of 81/4 and 7 percent (for the highest income earners)ATJ, respectively. Yet within thirty years these figures had risen to 971/2 and 91 percent. Thus in the space of a single generation what nearly all the supporters of progressive taxation had for half a century asserted could not happen came to pass.

- Friedrich A. Hayek – The Constitution of Liberty, 1960


1295. (2-18-2011) Highly graduated taxation realizes [sic] most completely the supreme danger of democracy, creating a state of things in which one class imposes on another burdens which it is not asked to share, and impels the State into vast schemes of extravagance, under the belief that the whole costs will be thrown upon others.

- William Edward Hartpole Lecky – Democracy and Liberty, 1899

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