Steve G.

From Freedom To Fascism

In Civil Liberties, Constitutional Rights, Libertarian, Libertarian Party-US, Media on July 29, 2008 at 5:08 pm

I saw Aaron Russo’s “America: From Freedom to Fascism” for the first time the other night. Russo was my second choice for the 2004 Libertarian presidential nomination, and a lot of people had recommended the film, so I was eager to see it at last.

I had mixed feelings about it. In many ways it was several short films glommed together, and Russo seemed to make only a modest attempt to tie it all together. The first third was largely about the history and legality (or lack thereof) of the federal income tax; the second third about the rise of the Federal Reserve; and the final part about radio frequency identification tagging, the move toward mandatory national identification, and the loss of privacy. There was also a clip from Lou Dobbs about the “North American Union” that even the film itself says was just kind of thrown in there.

On the income tax matter, Russo makes a pretty strong case for the argument that no law exists compelling individuals to pay. He is careful to point out that corporate income taxes are indeed legal, but that even the IRS is unwilling or unable to point to any law passed by Congress and affirmed by the Supreme Court that requires mandatory taxation as it now exists. While the argument presented is pretty one-sided, to be fair to Russo that is only because the “other side” refused to offer a rebuttal. The clearest summary of the situation came from Rep. Ron Paul, who in an interview with Russo said that while there is no written income tax law, there is a de facto law in that the government expects you to pay up, the vast majority of the populace is willing to do so, and big guys with guns will haul you off and take away everything you and your family own if you do not.

I thought the film’s segment on the Federal Reserve was its strongest portion, primarily because the Fed is a subject I know next to nothing about. The history of its creation and impact is told in some detail, but Russo did not convince me that I was getting the full story. He did make me want to learn more about the subject for myself, though, and I intend to do so.

The portion on privacy, RFID tagging, and the like dealt with the subject I am most familiar with, and I don’t feel like I learned much that is new. I consider the Democrats’ capitualition on FISA, the entirely predictable abuse of the PATRIOT Act in the investigation of allegations having nothing to do with terrorism, and similar post-9/11 abuses to be a bigger (though obviously related) pressing matter. But Russo’s look at the privacy issue is an important one. I’ll deal with that in my next post.

  1. Russo was my second choice for the 2004 Libertarian presidential nomination

    Who was your first choice?

  2. On the income tax matter, Russo makes a pretty strong case for the argument that no law exists compelling individuals to pay.

    Depends on what you call law. Presenting those type of arguments in court is much more likely to land you in jail than not. Yes, I know there are exceptions.

  3. While the argument presented is pretty one-sided, to be fair to Russo that is only because the “other side” refused to offer a rebuttal.

    The other side claims that is because they do not want to give credence to “no tax law” arguments by discussing them. Draw your own conclusions.

  4. Yes, I see the giving credence argument, but it did seem odd that no one could present a written law. I pay federal taxes, in large part because (like most other folks) I’m scared of what would happen if I didn’t.

  5. Yes, I see the giving credence argument, but it did seem odd that no one could present a written law.

    Title 26 of the U.S. Code

  6. I think the argument the film was making — and I am not saying I agree with it, I really don’t have the facts — is that there is no record of a law being passed to create the authority to do what Title 26 requires. Or something.

  7. I don’t see where the author of this article is identified. LFV has a lot of writers, right? But I don’t see where it says who wrote this piece.

    I liked the idea of auditing the gold reserves, which apparently has not been done in a long time. And supposedly the Fed is holding the US govt’s gold.

    The call to general civil disobedience is pointless. I think the only effective ways to resist include:

    – using alternate currencies exclusively.
    – non-payment of income, entitlement (payroll) and other taxes.

    But this is highly inconvenient and actually very dangerous. Imagine the lifestyle changes you would have to make to implement these two ideas.

    I reviewed the film about a month ago:

  8. It’s by me. My name’s up top on the homepage version. For some reason, when you click over to the post’s own page, the name disappears.

  9. You guys should fix that. Knowing who is speaking is very basic. Let me know if you need any help, I do a lot of WordPress work.

  10. I’m reading—-000-.html

    And I see a lot of:

    “There is hereby imposed on the taxable income of … a tax determined in accordance with the following table:”

    Not finding a definition of income yet, though.

  11. For some reason, when you click over to the post’s own page, the name disappears.

    That’s on all the posts.

    You guys should fix that. Knowing who is speaking is very basic. Let me know if you need any help, I do a lot of WordPress work.


  12. Without testing it on the theme you’re using, I would expect you could just drop the following bit of php into the single.php template, wherever you wanted that information to show up, within the loop.

    (Can’t post here, WP won’t show it.)

    And you would be all set.

  13. Russo’s film has been shitloads of downloads on google video for the past two years. I’d estimate that it has been well over 5000 per day, or more.

    I’ve run into people at family picnics who’ve seen the film and were raving about it, as well as young college girl temp employees where I work.

    Before google video, this would not have happened, Russo’s film is making an impact.

  14. Russo makes a pretty strong case for the argument that no law exists compelling individuals to pay.

    This was my impression after watching the film, too, but it’s a crock.

    There is a law for individuals to pay.

    Tom Knapp can provide you with more links that prove beyond any reasonable doubt that there is in fact a law.

    Pretending that there is no law is shilling for the state; acting as if the “illegality’ is the problem and not the immorality of it. Anarchists who are against the income tax but still deal in objective reality admit that there is in fact a “law” that says you have to pay income tax. Russo, I can only assume, selectively omitted anyone who would ruin that plotline.

    The 16th amendment was ratified, and repealing it would NOT take away Congress’s legal authority to tax incomes, anyway — only passive income.

    The quote from Ed Viajo (?) about “they didn’t have the authority before, and it gave no new authority” is a total obfuscation.

    The worst part about the movie is that it makes no strong moral argument against the income tax. All of these “patriots” say “show me the law and I’ll be happy to pay.” Then you show them the law and they invent another excuse.

    As for the Fed stuff: There was a lot of bad information there, too. I encourage you to read up on the subject as written by Ron Paul and Murray Rothbard, not Russo — who had the audacity to approvingly quote mass inflationist Lincoln!

    Russo’s monetary understanding was very, very poor. He fell for a lot of right-wing conspiracy B.S. that discredits the honest-money movement. He thought that the main problem of the Fed is that it’s a “private corporation” — this is probably one of the “best” things about the Fed. It’s certainly better than Lincoln’s dream of purely political currency.

    Overall, the film is entertaining and hopefully inspires people to learn the truth about some of the distortions and half-truths that Russo presents.

  15. Not that the Fed really is a “private” corporation, by the way. Just to the extent that it is, we’re better off than if Congress were in control.

  16. I tried the CSS code you provided, but it doesn’t work. Thanks anyway.

    I’ll just keep looking for a theme which does everything we want it to do. I do have a life outside LFV, though, so don’t expect to see it immediately.

  17. I changed it temporarily to a theme I don’t particularly like, so that the names will show up both on full view and article view.

    Don’t get too comfortable with it, because it’s gone as soon as I find something which I think better suits our overall needs.

  18. ENM: It’s not CSS. 🙂 It’s PHP. Did you put it within the loop on single.php in your theme editor?

    With a little HTML/CSS knowledge and a few hours you can turn the Sandbox theme into a nice custom theme.

  19. I like this theme better than the last one.

    Can we add George as a technical admin? (I don’t know if he is interested in being a writer also, although I would have no objections if he is).

  20. I really like seeing the name of the author with the content. Good change. I am indifferent to the new theme. Sounds like George knows his stuff on WordPress sites, though. Good deal there.

    With regard to the income tax, I think there is a criminal aspect to the IRS which is a reasonable attack on it. Among other things that Russo points out in the film is the questionable constitutionality of any law that could be passed to create a tax obligation on wage earners.

    I went through the Siegel site that GE posted, and it doesn’t answer the questions. One of the key questions is whether the wages a wage earner gets for his labor constitute income as defined by the law. There’s no question that a corporation earning income owes corporate income taxes. It seems clear in the law that income earned by an individual such as dividend income, is also taxed. But are wages income? And if they are income as defined by the law, where is the constitutional authority for taxing wages? There are numerous and consistent Supreme Court rulings to the effect that no such authority exists, and that the 16th Amendment, even if it were properly ratified, created no such authority.

    Freedom to Fascism, volume one, is an excellent film in many ways. It is, of course, not perfect. The original theater release which I saw was very choppy and had bad production values. The online version is better, but still needs editing and many scenes would benefit from being produced again, even filmed again in some cases. The proposed solution to make printing money a power for Congress is insane, misses several important constitutional provisions, and would never work. Quoting Lincoln in support of the greenbacks strategy is, well, madness. Lincoln was an evil tyrant and a mass murdering thug.

    However, there is an undeniable appeal to the information in F2F. Russo does a great job getting the word out that there are many things terribly wrong with government. He builds a case for his views. He quotes many people that I know personally in interviews. And he creates controversy with the film, which by itself draws more attention.

    Rather than bitching about it, maybe members of this site should put together a plan to create a new film giving substantial information about what is wrong with the USA. Maybe even license from Russo’s estate the right to call it “Freedom to Fascism: Volume 2.” I think it would be a million seller.

    Like his views or not, Russo has done a great thing in generating interest and enthusiasm for change. He was a good man, and he did a great thing for the country. Quibble all you want, the death camps are coming.

  21. Obviously, the cost of my labor to me is non-zero.

  22. Jim – Taxes on labor are considered an indirect tax, and thus Congress needed no constitutional amendment to tax them. Congress could not lay direct taxes, unapportioned, and that’s what the 16th amendment was for. For taxes on dividends and rental income were considered direct taxes, and the public uproar would have been too great if labor was taxed and not passive or portfolio income.

    Regardless, this doesn’t matter. The state has a monopoly on interpreting its own laws. This argument gets you nowhere, even if it were true, and it’s not.

    Secondly, I think it’s a lot more than a minor point that Russo’s monetary views are effectively WORSE than Alan Greenspan’s or Ben Bernanke’s. He’s on the same page with Cynthia McKinnney and… Abe Lincoln. And to the extent that people are fooled into thinking that Russo is right about the Fed and his “solution” to the problem, F2F is a destructive film.

    It is my goal in life to make the film you talk about, but instead it would be called American Ugly, or perhaps Give Me Liberty or Give Me Debt.

  23. I believe that the division of taxes between direct taxes and indirect taxes refers to physiocratic economic doctrine, views common in the 18th century.

    The Physiocrats argued that all the revenue in society is generated by land. From the land, it moves from one person to the next through buying and selling.

    So, whatever tax revenue the government collects is also ultimately generated from land.

    A tax on land, then, is direct tax. Anything else that is taxed, is indirect. The revenue still comes from land, in the final analysis, but you are directly getting the money from sale of foreign goods, purchases of liquor, whatever. The money is indirectly coming from the land.

    The Physiocrats generally supported free markets, but it wasn’t long after the founding of the U.S. that “classical” economics, following Smith became dominant. On the whole, classical economists supported the free market too. “Classical economists” didn’t really think much about the total revenue of society, or its source. Smith, of course, insisted that labor was the source of value.

    The distinction between direct and indirect taxes became very hazy because of this change.

    When the Supreme Court declared a specific income tax bill unconstitutional, they argued that everyone knows that taxing land is a direct tax. They said that taxing income from land is the same as taxing the land. Then they said taxing income from “capital” is also a direct tax.

    They specificially said that taxing income from labor is an indirect tax.

    So, a labor income tax must be uniform across all states. While a tax on income from land or capital must have a different rate in each state so that the revenue generated from each state is in proportion to the population of that state.

    The particular income tax bill was fine for labor income (the rates on wage income was the same regardless of the state where you lived or worked) but, the tax levied on rental income, profits, dividends, capital gains, and so on, was unconstituional because the rates didnt’ vary to raise revenue from each state in proportion to population.

    The Supreme Court said that because Congress intended to tax income from all sources, and not just wages, it would throw out the whole thing.

    The 16th amendement was specifically directed to reversing this decision. That is the reason why it says, income from any source. It was reversing the Supreme Court notion that a tax on rents, interests or profits was direct because its source was land or capital.

    If the 16th amendment was repealed, and the old Supreme Court decision isn’t reversed, then the current income tax on wage income could be maintained. But tax on profits, divididends, rents, royalties, capital gains, would have to change. Different rates in different states.

  24. Russo’s analysis of the Federal Reserve is very much wrong. The story he tells is of a secret plot by big bankers to profit from the issue of currency. Russo assets figures that suggest that a large fraction of the current Federal budget is funds going to the private owners of the Federal Reserve.

    He would have been more or less correct if he had been writing about the Bank of the United States, which was set up by the Washington administration. That was a private bank (though 20% owned by the federal government) which held a good bit of the Revolutionary war debt and so earned much of its income from interest on that debt. And, in the early years of the Republic, paying interest on the Revolutoinary war debt was an important part of the budget.

    The Federal Reserve, on the other hand, makes money for the U.S. government. It holds a significant fraction of the national debt (but nothing like most of it,) and while it collects interest on that debt, it transfers nearly all of it back to the U.S. Treasury.

    The “private owners” of the Federal Reserve are making less than $1 billion per year in dividends. With a $3 trillion dollar federal budget, this is pretty small.

    The “private owners” are the “member banks” of the Federal Reserve system. All national banks must be member banks. State chartered banks can join if they want.

    Member banks must purchase stock in the Federal Reserve banks. This stock always has a price of $100 per share. Each member bank must hold stock equal to 3% of its net worth. Becaue of capital requirements (of 10% of assets) that amounts to .3% of assets. So, stock ownership is roughly proportional to the size of the member bank. If a bank grows (or shrinks) it must purchase (or cash in) shares of stock at the Fed. The Fed issues or withdraws shares as needed. The dividends on the stock is fixed by law at 6%. So that is $6 per $100 share per year. The total payment is less than $1 billion.

    The member banks vote for 6 of 9 members of the board of directors of their Federal Reserve bank. (There are 12 Federal Reserve banks.) However, they don’t vote their shares. Each bank gets one vote regardless of share ownership. The banks are divided into three groups. The large banks select two directors, the medium banks 2 directors, and the small banks two directors. The other 3 directors are appointed by the Board of Governors.

    The Boards of Directors of each federal reserve bank set the interest rate they charge banks for loans, however, this must be approved by the Board of Governors.

    The Boards of Directors of each federal reserve bank select the President of that Federal Reserve bank, again, subject to Board of Governors approval.

    Monetary Policy at the Fed comes from the FOMC. 5 Federal Reserve bank presidents vote on this committee at any time. The 7 members of the Board of Governors make up the rest of the committee, and so, form the majority.

    In my view, the “private” aspects of the Federal Reserve banks are a sham. I think that when the Federal Reserve was set up, this private window dressing was created so that banks would join the system. While some bankers were promoting the Fed, they felt they needed to convince the tens of thousand of banks in teh U.S. to join up. While the national banks (about 1/3 of them at the time) had to join, there was nothing stopping a national bank from giving up its national charter and becoming a state chartered bank. So, this was a live issue.

    While the major banks may have felt confident in their ability to manipulate Congress and the President and so protect themselves that way, the tens of thousands of smaller banks accross the country had to be convinced to add this further scheme of potentially harmful regulation. And so, this rube goldberg system we have today. (Most banks didn’t join the Fed)

    Anyway, the board of governors, who are appointed by the U.S. President and approved by the Senate, have the dominant influence in the system. They most certainly do create money out of thin air. This certainly does make money for the federal government. The fact that we have persistent increases in prices is certainly their fault. And at the very least, a good bit of other sorts of economic disruption (like recessions) can be laid at their door.

    Because members of the Board of Governors serve for 14 years, they are relatively “independent,” along the lines of federal judges.

    But, the Fed is _not_ funnelling large amounts of Federal money into the pockets of the “owners” of the Federal Reserve.

    Russo’s primary criticism of the Fed is wrong.

  25. Note to GE, the Trevor Lyman group Break the Matrix would probably love to fund your film “Give me Liberty or Give me Debt” which sounds like it would be awesome. And you can obviously interview Bill Woolsey on the details.

  26. Bill Woolsey – I asserted these facts in a Ron Paul forum and was called a “shill” for the Fed!

    However, it is important to note that the Fed has total control over its own budget and only returns excess profits to the Treasury. In other words, they can spend almost as much as they want on salaries and other expenses to reduce the amount they want to return to the Treasury. I think their budget was around $2 billion last year. That’s a drop in the bucket, really, though.

  27. I am a law student, and in my classes we have been discussing this movie. I would be more than happy to provide people with Supreme Court decisions, Title 26 references, and Revenue Rulings, that clearly refute the arguments presented in Russo’s film regarding the illegality of income tax. As a side note, Sherry Peel Jackson, a former IRS agent featured in the film who claimed not to pay taxes for four years, was found guilty of tax evasion in 2007. Joseph Banister, another featured former IRS agent, wasn’t found not guilty of tax evasion as the movie would lead you to believe, but was actually found not guilty of conspiracy to commit tax fraud. A client of Banister’s, who Banister instructed not to pay taxes, was found guilty of tax evasion and sentenced to 6 years in prison. You can see most of my citations and sources at:

    This is another blog that I commented on, of course the blogger responded by telling me that I was an uneducated idiot; refer back to the top for my educational credentials.

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