On September 18, 1928, at the peak of the ‘Roaring 20s’, an American investor by the name of Evelyn Gregory was sitting on a fat capital gain totaling over $133,000– worth more than $12 million in today’s money.
The top federal tax rate back then was 25%… but Evelyn wasn’t inclined to fork over such a vast sum to Uncle Sam.
So, she and her advisors engaged in a series of complex transactions designed to dramatically reduce her tax bill. In fact, her tax return that year reported a gain of just $76,007.88, instead of the full $133k.
What Evelyn did was legal… but extremely aggressive. And she ended up in a legal dispute with the IRS.
At a certain point the case ended up in US Court of Appeals for the Second Circuit, where legendary federal judge Billings ‘Learned’ Hand famously wrote:
“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”
(Hand went on to reiterate this view in subsequent rulings, writing later, for example, that “nobody owes any public duty to pay more than the law demands.”)
What’s really interesting about Judge Hand’s opinion is that it completely contradicted his personal beliefs.
Hand was a hard-core progressive. He believed that the government should spend big on social programs, and that it should all be paid for in higher taxes.
Frankly his political views would probably be closely aligned to Elizabeth Warren’s today.
Yet, even though he privately wished to live in a high-tax society, Judge Hand knew his primary duty was to the law– which was very clear on the matter of taxation: no one had a duty to pay any more than the law required. And taking legal steps to avoid taxes was perfectly fine.
But this was a different era in America. Judges like Learned Hand had the integrity to separate their personal beliefs from their public duty to interpret the law without passion or prejudice.
This is part of what’s known as the ‘Rule of Law’, the concept that laws in a civilized society are objective, fair, uniform, and evenly applied. And this has been a hallmark of advanced civilizations for thousands of years, going back to the Romans, Greeks, and even ancient Babylon.
History shows that societies start to break down when their rule of law becomes weaker– like when the ruling class isn’t subject to the same laws as everyone else, or when judges and kings begin making up ridiculous interpretations of the legal code.
This has been sadly happening for quite some time in the United States, and we’ve seen a number of recent instances.
In 2020, for example, three federal judges based in Illinois created a new policy which gives female and minority attorneys extra time to make their arguments in front of the court.
Someone’s life could be hanging in the balance of a court decision… yet these judges are more concerned about social justice than actual justice.
More recently, Judge Janet Protasiewicz ran for (and won) the Wisconsin Supreme Court last year, campaigning on an ultra-progressive political platform.
Rather than commit to upholding the law and objectively interpret the state’s Constitution, she essentially promised to completely ignore the law and instead rule in favor of her personal, woke ideology.
Unsurprisingly, billionaire activists like George Soros and J.B. Pritzker funneled tons of money into Protasiewicz’s campaign; she outspent her nearest opponent by 5-1 in what became the most expensive judicial race in American history.
We’ve seen similar behavior from several Attorneys General and District Attorneys– elected officials whose entire campaigns were based on a promise to prosecute a certain former President.
These are all despicable violations of their most solemn obligation to the Rule of Law– to apply the law fairly and interpret it objectively without injecting their personal beliefs.
The latest example came last week from the Hawaii Supreme Court.
It’s worth pointing out that even high school civics students know that the US Constitution is the supreme law of the land. Full stop.
But according to the esteemed justices of Hawaii’s Supreme Court, there is now a higher authority: the spirit of Aloha.
Yes I’m serious.
In a recent gun rights case, a man asserted his right to carry a firearm in public for self-defense.
But as the Hawaii Supreme Court ruled, “The spirit of Aloha clashes with a federally-mandated lifestyle that lets citizens walk around with deadly weapons during day-to-day activities.”
The Justices then claimed that, when interpreting laws, they may “contemplate and reside with the life force and give consideration to the ‘Aloha Spirit.’”
Come again? Was this a legal ruling or the opening remarks of a yoga retreat?
After some research, my team and I found an obscure section of the Hawaiian state statutes which actually defines with the “Aloha Spirit”:
“’Aloha Spirit’ is the coordination of mind and heart within each person. It brings each person to the self. Each person must think and emote good feelings to others.”
Unbelievable. You can practically smell the pot wafting from the halls of justice.
Honestly it sounds like Adam Neumann’s absurd mission statement for WeWork from a few years ago. But it’s hardly a foundation for a strong Rule of Law.
Pretending that the ‘Spirit of Aloha’ is a real legal framework ultimately gives justices the latitude to rule however they want, regardless of the actual law, based solely on their personal feelings.
Hey fellow justices! Should we thoroughly research case law and objectively interpret the Constitution? No, let’s emote good feelings and use the life force. Case closed.
Again, this isn’t some random judge making a rogue ruling— this is the highest court in the state of Hawaii. The justices don’t like people carrying around guns in public, so they made up an argument to ban it.
The concept of a separate, independent judiciary branch charged with objectively interpreting the law is one of the better ideas of modern society. It’s supposed to serve as a vital check and balance against government overreach and to protect individual freedom.
Yet America is quickly losing its responsible guardians of liberty. Before taking office, judges swear to set aside their personal beliefs and uphold the Constitution of the United States.
More and more of them now appear to be robe-wearing activists who lie through their teeth when taking the oath of office.
They think they’re doing good work. They think the ends justify the means. But all they’re doing is further eroding trust and confidence in the system.
We write a lot about the massive challenges facing the United States and the West in general.
The US government itself estimates, rather optimistically, that the national debt will increase by at least $20 trillion over the next ten years.
We’ve explained how this trend will likely result in major inflation and destroy the US dollar’s credibility as the global reserve currency.
On top of those serious economic and fiscal catastrophes, the US also faces myriad social problems, from the border and rising crime, to extreme disunity and polarization.
These trends from the justice system only make the problem worse; it’s hard to move forward and have a civilized society when people just make up whatever rules they want.
I’ve written before that America still has a narrow window of opportunity to turn things around. And that’s true.
But with these sorts of Inspired Idiots in charge, we shouldn’t hold our breath.
And that’s the entire reason to have a Plan B: even though the Inspired Idiots probably won’t fix anything, you can still take plenty of sensible, rational steps to ensure you’re in a position of strength regardless of what happens (or doesn’t happen) next.
This is a lot better idea than betting your entire future on the ‘life force’.
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