...It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, ``in political arithmetic, two and two do not always make four .'' If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.
Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country. ...
The FairTax makes the consumption tax a direct tax nationally. I see that as superior to a direct income tax or any indirect (hidden) tax.
And as a side note, it looks like the Laffer curve should be renamed the Hamilton curve.: If duties are too high...the product to the treasury is not so great as when they are confined within proper and moderate bounds.
From Federalist 21 by Alexander Hamilton: ...It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, ``in political arithmetic, two and two do not always make four .'' If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them. Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country. .. . The FairTax makes the consumption tax a direct tax nationally. I see that as superior to a direct income tax or any indirect (hidden) tax.
KarlInOhio:
You forget to highlight an import part of Hamilton’s quote:
But, what is Hamilton talking about? How may the amounts to be contributed by the rich and poor to be determined by one’s own option? And, how is private oppression of taxes on articles of consumption to be avoided?
Surprise! The answer is to be found in that part of the quote which says, “by a judicious selection of objects proper for such impositions” which is not the kind of tax a NRST is which would oppress America’s businesses, industries and poor working people.
An across the board NRST, in addition to being oppressive upon America’s businesses, is a plan to tax the food a mother buys to feed her child, taxes the clothing she purchases to cloth that child, taxes the fuel used to heat that child’s room during winter, taxes the medicine a mother needs to care for a sickly child, and then taxes the coffin used to bury her child because she could not afford the taxes imposed upon the necessities of life!
The words of Hamilton obviously indicate certain articles of consumption ought to be excluded from the list of taxable items___ the necessities of life, tools of production and supplies necessary to conduct American businesses___ thereby removing the oppressive nature of taxation and making the tax a more voluntarily paid type of tax, which is exactly what our founding fathers practiced!
A consumption tax plan ought to be limited to articles of luxury, and each article must be individually selected by Congress, and then the appropriate amount of tax determined for each specific item chosen, just as was done in THE FIRST REVENUE RAISING ACT FOR OUR COUNTRY
NOTE: those interested may use the PREV IMAGE and NEXT IMAGE buttons at the above link to study the bill___it is refreshing to study statesmen creating a revenue raising bill beneficial for America’s businesses, industries and labor force, as opposed to politicians acting in their own self interest and on behalf of internationalists who have no allegiance to America or any nation [the NAFTA - CAFTA CROWD] !
Limiting the tax to articles of luxury, and requiring each article to be individually selected and having Congress place a specific amount of tax upon each article chosen, as our founding fathers intended, creates a self regulating check and balance upon Congress, just as Hamilton indicates!
If Congress does its job properly and the nation as a whole is productive and prosperous, the purchase of articles of luxury will undoubtedly increase, and with it, the flow of revenue into the common treasury. But, if the legislative policies of Congress are burdensome and its regulatory requirements upon business, industry and our nation’s labor force impede a flourishing economy, or any particular article is excessively taxed by Congress, the first sign would be is a decline in the flow of revenue into the national treasury and thereby defeat an extension of the revenue, just as Hamilton explains above!
For a recent example of how effective the founder's method of taxing consumption works to control the amount of tax on a specific article chosen by Congress see:Fed luxury tax 1990 in which Congress attempted to lay an outrageous 10 percent tax on boats. And then see: 1991 legislation to repeal the luxury excise tax on boats
Had the tax been one or two percent rather than the outrageous 10 percent, it probably would have been paid without much resistance and not adversely affect the industries involved which caused Congress to immediately repeal the tax because of its self regulating feature!
Bottom line, unlike the establishment proposed NRST, our founder's plan grants almost unlimited power to raise essential revenue, [imposts, duties and excise taxes in addition to a general apportioned tax among the states], but also provides various checks and balances to control the actions of Congress and makes Congress immediately accountable if it should resort to borrowing to meet its expenses which then requires a general across the board tax to be apportioned among the states to extinguish the deficit created by Congress___ a tax requiring each state’s Congressional Delegation to return to their own state with a bill for their state’s apportioned share to extinguish the deficit which leaves the various state Legislatures and Governors with the job of raising such revenue because of Congress’ failure to meet its own expenses. What a wonderful moment of accountability created by our Founder’s plan, which is dreaded by the friends of a big federal and socialist government. How dare someone would even think of such accountability!
How dare some people in America still desire that people of a particular socialist state such as N.Y. or New Jersey ought to contribute into the common treasury as our Constitution commands___ in proportion to their big mouths in Congress Assembled when voting to squander money from the federal treasury. How dare some people want New York’s and New Jersey’s Congressional Delegations to return to their state with a bill for their states’ apportioned share to extinguish an annual deficit created by their big spending mouths in Congress Assembled.
But heck, we all know America is infested with socialists and that H.R. 25 is socialist inspired in another way___ its family consumption allowance, a socialist gimmick which would create an entitlement making Hilary Health Care look like chicken feed, and create countless more federal political plum jobs in the process with high paying salaries to disburse money taxed away from the people. This socialist gimmick would also give Senator Ted Socialist Kennedy and his socialist gang on Capitol Hill a valuable gift . . . a new entitlement which they will promise to increase during election time to remain in power! The only thing the Kennedy type care about is getting the vote of the poor to keep themselves in power. If they cared about the poor working people they would have worked long ago to abolish the taxing of their wages.
“…..with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens—a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement and shall not take from the mouth of labor the bread it has earned.[ This is the sum of good government, and this is necessary to close the circle of our felicities“. Thomas Jefferson, First Inaugural Address
Unfortunately poor people are usually the least educated in our society and why the Kennedy socialists are able to con the poor and keep themselves in power. But, wouldn’t it be great to hear Neal Boortz say
“You know folks, I’ve been hoodwinked by a number of stealth socialists on this tax thing. I made a serious error in judgment but have learned to never trust anyone on Capitol Hill, especially those on K Street. I have an announcement. I have decided to take all the money made from the H.R. 25 tax book and use it to now promote real tax reform…a repeal of the 16th Amendment by the following words, and forbid Congress the ability to calculate a tax from income, which is the real TAX problem in American."
The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any” tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money.
Regards,
JWK