By 1910, state after state was approving the 16th Amendment, which provided for a graduated income tax, John D. read the handwriting on the Congressional wall and, using his "deeply conspiratorial nature," began making plans to avoid the consequences of the tax by hiding his wealth in the Rockefeller Foundation.
One quite naturally assumes that the graduated income tax, the second plank of the Communist Manifesto, would be opposed by the wealthy. The fact is that many of the wealthiest Americans supported it. At first the taxes were to be very small, and some of the superrich may have promoted them out of altruism. But others backed the scheme because they already had a plan for permanently avoiding both the income-tax and the subsequent inheritance tax. John D. had figured out how to turn the lemon of the graduated income tax into lemonade for the House of Rockefeller. It is the most classic case of what accountants call "pretax planning" on record.
Chapter XVI, Part II of a two-volume set.
The best way for the Rockefeller-Morgan Insiders to eliminate growing competition was to impose a progressive income tax on their competitors while making sure the law contained built-in escape hatches for themselves. Actually, very few of the proponents of the graduated income tax realized they were playing into the hands of those they were seeking to control. As Ferdinand Lundberg notes in The Rich And The Super Rich:
"What it [the income tax] became, finally, was a siphon gradually inserted into the pocketbooks of the general public. Imposed to popular huzzahs as a class tax, the income tax was gradually turned into a mass tax in a jujitsu turnaround .... "
The Insiders' principal mouthpiece in the Senate during this period was Nelson Aldrich of Rhode Island, the maternal grandfather of Nelson Aldrich Rockefeller. Lundberg says that
"when Aldrich spoke, newsmen understood that although the words were his, the dramatic line was surely approved by 'Big John' [D. Rockefeller] . . . .-
In earlier years Aldrich had denounced the income tax as -communist and socialistic,- but in 1909 he pulled a dramatic and stunning reversal. The American Biographical- Dictionary comments:
"just when the opposition had become formidable he (Aldrich) took the wind out of its sails by bringing forward, with the support of the President (Taft) a proposed amendment to the Constitution empowering Congress to lay income taxes. "
The escape hatch was ready. By the time the Amendment had been approved by the states, the Rockefeller Foundation was in full operation. The careful orchestration of both parts of the campaign represents one of the most successful financial coups in history. The money the Rockefellers have made by it is incalculable.
By exempting themselves from the burden they forced on their competitors, the Rockefellers were able to operate in a world of near laissez-faire capitalism while foisting the weight of more and more socialism on their competitors. It is the equivalent of a sprinter forcing every other runner in a race to carry a sixteen-pound shot.