On November 28, 1980, L. Ron Hubbard wrote the following letter to President-Elect Ronald Reagan with ideas about how to boost the economy and national prosperity by abolishing income tax and Social Security. In this video, Jeff Wasel, John P. Capitalist and I go over this letter line by line and analyze just how wrong Hubbard gets it, how woefully inadequate his economic ideas are and why if this advice had been followed, America would have wound up in the toilet.
Here is John P Capitalist’s blog post on this same subject: http://johnpcapitalist.com/2018/03/hubbard-letter-to-reagan/
Here is the letter:
Ron Hubbard
PO Box 24152
Tampa, FL 33623
28 November 1980
Mr. Ronald Reagan
President-Elect of the United States
1669 San Onofre Drive
Pacific Palisades, CA 90272
Dear Sir,
I am writing you because I very much want to see you make it. Inflation was apparently the key issue which swept you in.
There IS a way to handle it and [unreadable].
When I studied economics at Princeton decades ago, they still knew basic economics. But the economic scene has been muddied by two foreign importations: Lord Keynes and Karl Marx. You can trace the economic tragedy of today to them. Their think was dedicated to plausible destruction.
If you were to forthrightly abolish income tax and substitute for it a ten percent Federal sales tax, percentage adjustable for commodities like stocks and bonds which have repeated sales, the Federal Government would have MORE money than it has now. The “rich” who buy things would bear a lot of the tax and this could be used as an argument for the plan. The XVI Amendment does not require Congress to tax incomes, it only authorizes it to do so, and can cancel its own laws. It could also make it attractive to states to abolish theirs.
Income tax removes the money from the society in the wrong place — before it is spent. Substituting a sales tax for it would put the money out into the marketplace.
The banks would not like it at first glance as it would become possible for companies and individuals to work hard to make money, save it up and use it, bypassing loans. But banks cannot prosper at double-digit inflation and their survival would depend upon such a change. It would remove some of their excess paper from the market.
The socialist inheritance taxes often punish firms who have to find the money for estates. They can wreck a lot of people and do. The have-not vengeance against the successful should be abolished.
Social Security is really a farce. FDR put it in because he needed money right then which he would not have to repay until much later. The big insurance companies would be utterly delighted to have it phased over to them and off the government’s back.
Production has to be raised to absorb excess paper. The fast way to do it is simply abolish income tax, shifting the buying power over to the marketplace; abolish inheritance and withholding taxes and get the money into people’s pockets to be spent.
I realize that with your floods of mail, this letter will probably never reach your eyes. But I would feel bad, knowing what would bail you out, if I did not send it in your direction.
I am an old fan of yours. We were high up in Hollywood at the same time. I really quite desperately want you to succeed. I want to see you break the presidential tradition and leave office far more popular than you went in.
Well, there. I have sent your way. It’s good, straight economics. The move is bold but you will have to be bold to handle the awful mess Marx and Keynes got us in.
Respectfully,
RON HUBBARD
LRH:ldv