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The most important book you'll read all year


David Cay Johnston's "Perfectly Legal"


by Ken Mondschein




Perfectly Legal
by David Cay Johnston
Portfolio / 2003 / $25.95

The most important book to be published in the last several years is not on sex, drugs, or rock 'n' roll, but on taxes.

That's right: taxes.

David Cay Johnston knows taxes: He's won one Pulitzer, and been nominated for several more, for writing about them for the New York Times. We all know, instinctively, that the system is screwing us, but Johnston tells us how exactly we're being screwed in clear, comprehensible, everyday language that anyone can understand.

Taxes, when you think about it, are inevitable—as explained by Oliver Wendell Holmes, they are the price we pay to live in a civilized society. This is a risky proposition to state in an Internet publication: The latest result of the American penchant for small government and don't-tread-on-me-ism is a breed of online libertarian who believes that the world will be perfect if the government would just go away and leave him alone.

Yet, the Internet itself could not have come about if not for government grants; it came out of ARPAnet, a product of the Cold War-era desire for a decentralized communication system. Modern people are no more capable of living independently of one another than my finger could if I sliced it off my hand. American individualism aside, we are no longer Kit Carsons, living on the edge of the wilderness, wearing the skins of the animals we shoot for food. No individual or corporation can afford to, or should be trusted with, the maintaince of roads, law enforcement, and other such necessary institutions. Like it or not, from Mesopotamian kings directing the storing of grain against famine years to our modern Social Security system, all human civilization is to some degree socialist—and so, taxes are a necessary evil.

More importantly, in Johnston's view, they are a way to examine our entire economy. Perfectly Legal makes it clear that our supposedly meritocratic, equal system is nothing of the sort. To read Johnston's book is to be outraged. It is immediately apparent that there are two castes in our country: Those of us who labor for wages, and those well-off individuals who live off a pool of assets. Moreover, from trust funds to offshore banks, corporations and the superrich have ways of hiding their income that are not open to us. Nor are they satisfied with what they have: The pressure to artificially inflate stock prices by doing more with less is what is driving the Wal-Martization of our economy. (It has also resulted in my being laid off two Christmases in a row.) The losers are employees, small stockholders, and taxpayers who are unwittingly bankrolling the personal use of company jets.

The Bush administration has compounded all this by granting its corporate allies policy advisor status. The supposed promises of "tax relief" and $300 checks are lies and propaganda of the rankest sort. Literally billions of dollars of tax breaks are given to the wealthy and the corporations. Thus, our mounting budget deficit and the burden of taxes being shifted onto the middle- and lower-class. Johnston's anger at this fact is palpable and, after reading this book, yours will be, too.

Interestingly, Johnston does not blame the faceless government bureaucracy for the mess, as most of us would be wont to do. Soviet Russia had a most clear and fair system of laws; it was the administration that was corrupt. The American bureaucracy, for all of our complaints of the IRS, is, for the most part, fairly administered (though incidents where laws are not equally applied to the rich and powerful do not escape Johnston's examination). It is our tax code, passed by our elected representatives, that is Byzantine. Reform must begin with the tax code, and continue until all Americans (and corporations doing business in America) are paying their fair share of the burden. With the billions that have escaped the system, we could easily afford the social benefits that other countries take for granted -- health care, a decent education, and retirement benefits.

Lest anyone forget, 2004 is an election year. I, for one, would like to see candidates asked some of the questions that David Cay Johnston raises in Perfectly Legal.



E-mailing won't help you with your taxes, but you can click here to order Perfectly Legal off


Posted December 28, 2003 5:05 PM




Great article. A sure way to get the rich to pay taxes is to eliminate the payroll tax upper contribution limit. Make everyone pay the 12.4% Social Security tax (6.2% by employer and 6.2% by employee, or 12.4% for self-employed), not just the middle and lower classes earning under $87,000 annually. Bill Gates and other moguls may not pay any income tax, but it sure would be nice to see the "filthy rich" paying 12.4% of all their earned income into Social Security. It'll never happen since the lawmakers themselves are wealthy. We can still dream.

Posted by: Bob Sireno at October 4, 2008 6:22 AM

The phrase "death and taxes" is proof enough that assuming rather than thinking is what leads one to the conclusion that taxes are inevitable. A tidbit of financial history: Income taxes were introduced as a measure to pay for a debt-based money system, the result of allowing international bankers to control government finance and the printing of money. Think about it. No central bank, no bonds. No bonds, no debt. No debt, no taxes. Governments have had enormous success printing their own money, based on the guarantee of monarchs or treasuries. The book sounds like a good read, but the real scam of the super-rich is to make our mostly unknowing politicians dependant on them to finance their wars. While the system in America and Europe continues to depend on bonds, the rich will encourage fear and conflict to deepen our debt and increase justification for taxes on laborers. My opinion is that property, sales and excise tariffs are necessary to pay for normal government services and that for any big spending project the people should be capable of backing up their own money, without simultaneously promising to pay interest on it. Sorry to sound preachy, but if one is going to put effort into fighting a massive system for the good of mankind, then I don't think the tax mechanism is the place to start. That said, people do appreciate your efforts,

Posted by: Daniel Boardman at October 4, 2008 6:23 AM



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