Posted on 10/14/2004 11:11:20 AM PDT by Tolerance Sucks Rocks
By Claire Wolfe & Aaron Zelman
You do not examine legislation in the light of the benefits it will convey if properly administered, but in the light of the wrongs it would do and the harms it would cause if improperly administered. -- Lyndon Baines Johnson, U.S. President
“Abolish the IRS!”
So goes the cry. And who could disagree? The income tax is unAmerican in the most profound way, punishing people for being successful. The tax code is vast and incomprehensible. The agency that enforces it is universally loathed.
Yes, let's abolish the IRS. And the income tax.
Unfortunately, the statement that usually comes next begins, “And replace it with ...” And there a new round of troubles begin.
Over time, proposals have included replacing the graduated income tax with a flat tax, a VAT (value added tax), or some form of consumption tax. For several years now, the buzz has been growing for a national sales tax. While other “abolish the IRS” reforms have languished, the national sales tax has, as they say, developed legs.
The most durable proposal for a national sales tax – called the FairTax – is promoted by an organization called Americans for Fair Taxation (AFT) (http://www.fairtax.org). A bill to implement that tax (H.R. 25; Senate Bill 1943)(1) was introduced in Congress early in the 108th Congress. The so-called “Fair Tax Act” has 54 co-sponsors as of this writing, plus the outspoken support of both Speaker of the House Dennis Hastert and House Majority Leader Tom DeLay. President George W. Bush expressed cautious support for the act (http://www.georgewbush.com/News/Read.aspx?ID=3422) in response to a pre-screened questioner at one of his campaign events. In his acceptance speech at the 2004 Republican Party convention, Bush strongly advocated a total revamp of the U.S. tax system. Although he made no specific proposal, his language was similar to that of the FairTaxers. And at the moment, the FairTax is the only serious tax-revamp proposal on the Congressional table.
Finally, many, many ordinary freedom-loving people, weary of the present outrageous system, are cheering the FairTax as a great improvement.
But it's not.
The FairTax is not only not an improvement. We believe it's UnFair, dangerous, and a disaster in the making. You think nothing could be worse than the graduated income tax? We can virtually guarantee you that, after five years of the FairTax, you'd be looking back with nostalgia on the days when Americans had to put up only with the IRS and the income tax.
The misnamed FairTax is a national sales tax. Under the act promoted by AFT and now being considered by Congress, the federal government would impose a tax on all new goods and all services at the retail level. Proponents claim the tax would initially be 23 percent, but the federal government would actually add 30 percent to the cost of nearly everything you buy. (We'll explain the disparity below.)
The IRS would be abolished, effective three years after passage of national sales tax legislation. The sales tax would replace both the income tax and the FICA payroll tax. Gift and estate taxes would go, under the provisions of H.R. 25. That's the good part. (But don't count on it – as we'll also see below.)
The new tax would be levied on food, clothing, medicine, all services, newly constructed homes – everything except used items. Then every U.S. household would receive a check from the federal government each month, based on the number of Social Security card holders in each family. This check would supposedly compensate each of us for the tax we pay on necessities.
Under current projections, an individual (married or single) would get $178 per month or $2141 per year. For every child or dependent the household would get an additional $61 per month or $732 per year. Therefore a family of two adults and two children would receive payments from the federal government of $5,746 per year or $478.83 per month supposedly to compensate them for taxes payed on necessities.
Proponents point out that the sales tax is simple and highly visible, so Congress won't have such an easy time imposing hidden taxes. And they call it self-limiting: If taxes get too high, people simply stop buying. A tax increase might thus actually result in a revenue decrease for the federal government.
The following are some of the reasons we firmly believe the FairTax would be a disaster for our freedom and our economic well-being. Some of these “unintended consequences” of the national sales tax are verifiable facts or solid certainties based on historical experience. Others are our projections, based on our knowledge of history, the devious ways and means of government, and on technologies and trends that are now developing. These trends may, and probably will, intersect with the “FairTax” in ways that tax proponents would simply rather not consider.
Here is what we expect:
We're likely to end up with both a national sales tax and an income tax. Even if legislation required abolition of the income tax (as HR 25 does), a “national crisis” would soon cause the income tax to be “temporarily re-instated” and the Internal Revenue Service would remain in our lives on an “emergency basis” that never ended.
Likelihood: High probability.
When we posed this issue to Dr. Karen Walby, research director for AFT, she responded in part, “The income tax code would be abolished. Not in my wildest dreams can I see the members of Congress being able to agree on a new income tax code. The current Internal Revenue Code, regulations, and IRS rulings amount to 60,000 pages. Not one person in this country understands all of it.”
Unfortunately, Dr. Walby's statement contains two elements that are common to too many “FairTax” arguments: some verbal sleight-of-hand and a lot of naivete. Although she correctly notes that the income tax portions of the Internal Revenue code would be abolished by H.R. 25, she implies that the entire tax code is scheduled for abolition. That is untrue. H.R. 25 is loaded with amendments to the Internal Revenue Code (including new forms of punishment for tax evasion), but it abolishes only a portion of the enormous, incomprehensible tax code. Also, it would not be necessary for Congress to re-invent a new, complex, controversial income tax code. All they'd have to do is write a few lines reinstating the existing tax code and retaining the IRS.
Furthermore, even if the income tax does truly go away (an outcome devoutly to be wished) bureaucracies never simply disappear. It took nearly 30 years for Congress to have the courage to disband the ridiculous U.S. tea-tasting board. When Prohibition ended in the early 1930s, the federal government's booze-busting apparatus was almost immediately put to work creating and enforcing America's first war on drugs. That's history. And that's the reality of how Washington works. Those savage tax auditors and armed tax enforcers won't be put out in the streets to get honest jobs; they'll continue to be employed – most likely as sales tax enforcers.
The rate of a national sales tax would be colossal. Remember, even the proponents admit they'd need a 23 percent tax rate to fund the current size of the federal government. However, they are starting out their new “fair” tax system with highly deceptive language.
H.R. 25, Section 101(b)(1) states “FOR 2005- In the calendar year 2005, the rate of tax is 23 percent of the gross payments for the taxable property or service.” Note the phrase “of the gross payment.”
Here's how it works: You buy a candy bar for a total price, including tax, of $1.30. One dollar of that price pays for the candy bar, $.30 goes to the federal government.
One dollar purchase + $.30 in tax sounds like 30 percent to you and me (and to every state that currently has a sales tax). But the “FairTaxers” don't calculate it that way. They say: $1.30 total price. $.30 = 23 percent of $1.30, therefore the tax is 23 percent.
Many critics have pointed out that this is a deceptive way to calculate a sales tax. AFT rebuts the critics by saying (we paraphrase for simplicity), “If you made $1.30 in income and paid $.30 of it in tax, you'd call it a 23 percent tax rate.” The 23 percent figure is what AFT refers to as the “tax inclusive” rate.
But a sales tax is not an income tax, and when we see national sales tax advocates and uncritical journalists promoting the 23 percent figure without giving the underlying explanation, we can only think that some very thick wool is being pulled over people's eyes.
It gets worse. A 1998 analysis by the William Gale of the Brookings Institute calculates that in reality (to pay all current government expenditures while also compensating for such factors as tax evasion), the national sales tax might have to run as high as 67 percent. AFT disputes that high figure. But they do not dispute that their initial “23 percent” tax rate would actually be achieved by adding 30 percent to the purchase price of goods.
Bruce Bartlett a senior fellow for the National Center for Policy Analysis, slams the 23 percent claim, also, saying it's too low even to cover current government spending. He writes in the National Review:
When Congress' s Joint Committee on Taxation scored the Linder proposal [The “Fair Tax Act”] four years ago it estimated that it would actually require a tax-inclusive rate of 36 percent, not 23 percent, to equal current federal revenues. Calculating the rate in a normal, tax-exclusive manner would mean a 57 percent rate.(2)
Once again, although the FairTaxers dispute most of Bartlett's claims on their website, they make no attempt to refute the basic fact: their “23 percent” is really 30 percent, under the rosiest possible scenario.
Likelihood of the tax actually being more than 23 percent: Certainty.
Inflation will kill you. For decades, the income tax gradually crept up as government-caused inflation pushed Americans into higher and higher tax brackets. This outrage caused horrific hardship before Congress was finally forced to index the income tax to the inflation rate (meaning that if your income goes up with the inflation rate, your tax rate doesn't). There is no indexing with the sales tax. As goods become more expensive, you have only two choices: pay more in taxes or do without the things you need.
Given the U.S. government's eternal spending spree, the mounting deficits, and a national debt whose true long-term obligations run into the tens of trillions, it's a virtual certainty that the federal government will inflate the currency in an attempt to keep Medicare and Social Security afloat and to keep its fiscal house of cards from collapsing. As your food, clothing, vehicles, and medical care get more and more expensive, you'll pay more and more and more sales tax.
Consider just one example. You've been saving to buy a new house. That house now costs $260,000 (which is already 10 times what your parents would have paid for an identical house in 1968). Your “FairTax” on that home will already be a whopping $78,000, for a total purchase price of $338,000. Then government printing presses go into high gear. While you're still saving up for your down-payment, double-digit inflation takes over and the price of your house zooms 20 percent in one year. The house now costs $312,000. Your “FairTax” on that house is now $93,600 for a total purchase price of $405,600. And you have to wait another year to buy it. And if inflation continues to go up, your hopes recede even further. (And all this is without mentioning the increased mortgage interest you'll have to pay over the decades to cover both the government-caused inflation and the government-benefiting tax.)
AFT never mentions the effects of inflation and always insists simply that prices of all American-made goods (presumably including house prices) will drop once the income tax ceases to be an underlying factor in the cost of goods.
Likelihood of inflation boosting the sales tax: Certainty
The FairTax is monumentally unfair to retiring Baby Boomers. People who have paid 1/4 or 1/3 of their income in taxes for 40 years will now have to pay an equally high tax on all the after tax income they've managed to put aside for their retirement. Every time Boomers buy anything with their lifelong savings, they'll be double taxed.
Likelihood: Certainty
Once again, we asked Dr. Walby about this double taxing. She wrote:
First, prices will decline once the 22 percent embedded [income] taxes are repealed. Second, they will get the rebate to pay the taxes up to the poverty level. If they have an IRA or 401k or pension plan in which they made deposits with pre-tax dollars, with the idea being that they would pay taxes on it when they drew it out, they will be better off. With the FairTax there will be no taxes to pay when they take their money out. So these income taxes saved have to be credited back against the taxes you said they paid under the income tax system.
The response about IRSs and 401ks is true as far as it goes. But this doesn't answer the question about savings in general. Your regular savings account, your CDs and other forms of savings which are not tax-deferred (as IRAs and 401ks are) will be double taxed.
In fact, we suspect that this (along with the ability to profit from inflation) is a prime motivation for the tax change, from Congress' perspective. Politicians know that retiring Boomers are soon to be paying less in taxes on their reduced incomes. They want their cut to continue!
The national sales tax is subject to manipulation in even more direct ways than the income tax has been. Let's say that Congress or some powerful regulatory agency decides that fatty foods or sugar or potato chips are bad for you – wham! Suddenly there might a 200 percent tax on those items.
Government won't have to ban firearms; they'll just place a 500 percent sales tax on them. Or a 1,000 percent sales tax on ammunition. Cigarettes? Imported clothing? “Gas-guzzling” SUVs? Given the wonders of the computer age, the eternal greed of government, and the unquenchable meddling of social engineers, we'll soon have custom tax levels for them all, constantly calculated and adjusted by computer.
FairTaxers talk about the tax being self-limiting; when it gets too high, people stop buying. While they praise the limiting effect that might have on government, they ignore the damage that a too-high tax might have on the unfortunate industries or individuals that get hit with it – a problem that's built into the tax even in its initial form, and which becomes Draconian once politicians realize they can use the sales tax as a club or a threat.
Likelihood: Probable.
The tax will be used to track your entire financial life. While H.R. 25 does not contain any requirement that every purchase be linked to an individual's ID, the trend toward tracking every purchase is growing. We expect that eventually, your “national ID cash card” will be required when you buy anything. Or giant databases will combine the records of your credit cards, store loyalty cards, radio-frequency ID tags on merchandise, government ID, etc. into one vast set of interlinked records, immediately accessible to – and subject to manipulation by – government agencies.
Therefore, the national sales tax will eventually be used to track – and manipulate – what we purchase. Instead of merely being profiled by Wal-Mart or Safeway, your buying habits will be available in detail to the Department of Homeland Security, the Department of Health and Human Services, the FBI, the Bureau of Alcohol Tobacco Firearms and Explosives, university researchers – you name it.
The government will then decree that it has a vital interest in knowing exactly who is buying too much unhealthy food, the “wrong” kinds or amounts of medicine, ammunition, or unapproved reading matter. Your purchases could lead to criminal investigations (for buying unapproved books or contributing to the “wrong” charities), denial of insurance (for buying unhealthy foods, firearms, or cigarettes), suspension of your drivers license (for buying too much liquor), and other arbitrary bureaucratic punishments. Such investigations and prohibitions are already underway in America. The national sales tax can make them much easier by creating a federal database of all purchases in real time, linked to the identity of the purchaser.
Katherine Albrecht of the consumer-privacy group CASPIAN points out one way in which the social engineering and people-tracking aspects of the national sales tax might go together: As databases come to hold more information on each individual American, the tax could be manipulated to fit the person, rather than the item: “A welfare mother puts her RFID-enabled ID card under the scanner (or waves her RFID-chip implanted hand across the scanner) and the system says, 'Oh, you're a person who's taxed at the one percent rate.'” On the other hand, a person with a $100,000 salary flashes his card or waves his chipped hand and the system recognizes someone who's “rich” enough to be taxed at the 50 percent rate.
If Albrecht turns out to be right, that would also, of course, lead to the new “crime” in which low-taxed individuals purchased items for high-taxed individuals. Again, in fairness we must assure you that nothing in the current legislation calls for purchase tracking or custom taxing. (In fact, the FairTaxers appear to believe seriously that the tax will always remain absolutely flat and neutral.) We're just remembering our history, being realistic about the methods of government, and heeding Lyndon Johnson's words at the top of this article.
Likelihood: High probability (of tracking); possibility (of custom tax rates for individuals).
A national sales tax will create a huge black market. A punitive sales tax on everything you buy will lead to enormous black markets. You'll soon see gang violence and vast new prisons being built to house the millions of people illegally trading DVDs, cigarettes, canned foods, TV sets, and clothing. This will be true even if the underlying prices of goods drop – as the FairTaxers assure us will happen. If people can evade a 30+ percent tax – they will. Even if the price of items is 20 or 25 percent lower than today (a claim we'll examine in a moment) people will still want – and go after – their 30 percent black-market discount.
Although the tax is initially only to apply to services and new items, here's another projection: Swap meets, farmers' markets, gun shows, and garage sales will automatically come to be considered prime places for black market activity. Either the tax will eventually be extended to used items, or all such free markets will eventually be heavily regulated and patrolled – or banned outright as havens for the new anti-sales tax criminals and resisters.
Likelihood: Certainty (of black markets); high probability (of regulating used and private sales)
AFT persistently denies any possibility of black markets developing. When we raised the issue Dr. Walby responded:
First of all, the FairTax, since it is a tax on consumption, will make the underground economy, which is not paying any income tax, subject to taxation. When those who earn income from these illegal activities (sales of illegal drugs, for example) spend their unreported earnings they will have to pay the FairTax on their purchases just like anyone else. The same holds true for illegal aliens working in this country.
Again, that's true as far as it goes. But merely because one form of tax “avoision” goes away doesn't automatically mean no tax avoision is possible. People who are motivated to keep their own money will always invent thousands of clever ways to do so; we're astonished at the FairTaxers' naivete in assuming there will be no black marketeering.
And remember – to whatever extent some people manage to keep more of their own money through black-market purchases, those who buy on the legal (taxed) market will end up paying higher taxes to feed the insatiable federal government.
The national sales tax will give government another reason to make cash purchases illegal. Because buying with cash will make it easier to evade the sales tax, taxing authorities will quickly conclude that buying with cash is a sure indicator of criminal activity. The federal government has already classed all large cash transactions (in some cases, that means amounts as low as $750) as “suspicious.” Expect cash purchases of all sorts eventually to become criminal under the sales tax regime. After all, as government and the media will soon tell us, “It used to be that big drug dealers and crooked businessmen evaded taxes on large purchases. But now millions of Americans are cheating their countrymen every day by evading tax on billions of small, but cumulatively huge, purchases of milk, coffee, CDs, and tee-shirts!”
Cash purchases, of course, will also make it more difficult for government social engineers and corporate marketers to make sure your buying habits meet their standards. Cash purchases make it harder to tell whether you're guilty of eating too much butter, consuming too much beer, or owning too many guns. That will be yet another reason to make all purchases trackable. But the excuse given will be to prevent the terrible crime of sales tax evasion.
Likelihood: High probability.
This tax is designed to put every single American household on welfare. The FairTax is regressive – that is, the poorer you are, the more you pay, proportional to your income. Sponsors of the new tax have come up with the worst possible solution for making it more “fair.” They want to put every single American household on the dole.
Instead of simply not taxing staple items like food, health care, transportation, or clothing, they want the federal government to send each of us a check every single month. Think of the dependence this would create. It's very hard to imagine a “limited government” -- which many of the FairTaxers say they want – buying the loyalty of every American household with a monthly government payment of $478.83 – or any other substantial amount.
Likelihood: Fact; it's built into H.R. 25.
If everything else about the FairTax proposal were simply wonderful, we would oppose it because it creates universal dependence on a government check (or direct bank deposit) each and every month. Yet once again, AFT doesn't even want to look at the effects of such dependency. When we raised the question, Dr. Walby responded only:
The purpose of the rebate is to make essential consumption (as measured by spending up to the poverty level) exempt from the tax. We do not want to tax the poor. This is similar to the earned income credit (in the income tax) that doesn't tax income below a certain level. Only the poor will not have to pay a tax preparer to fill out a complicated form in order to qualify for it. many have paid $200 to file that return.
But the “rebate” isn't similar to the earned income tax credit because it's intended to go, month after month, to every American household. If the intent was really to avoid taxing essential spending to place less burden on the poor, one could simply not levy the sales tax on stable items like food, medicine, school supplies, or clothing.
Some religious people will be penalized. The monthly rebate check is to be paid by the Social Security Administration, based on the number of SSN holders in a household. Tens of thousands of Americans (for instance, the Amish, or those who believe the SSN is the biblical Mark of the Beast) do not have social security numbers. Therefore, they would have to pay the heavy national sales tax without being compensated in any way. When we asked AFT how their proposal addressed this inequity, their reply was one sentence long: “There is no requirement that any individual apply for the rebate.”
In other words, tough luck.
A working-class religious family of four, forced to absorb $478.83 more than its neighbors for basic expenses each month simply to remain true to its faith, would have considerable incentive to make its purchases on the black market or otherwise go underground to survive.
The economy would very likely collapse. Just before the FairTax went into effect, the economy would boom as Americans raced out to buy cars, electronic gear, or even to stock up on food. They would not believe that prices on everything would drop the very next day, or the very next week, after the sales tax was imposed. Their spending would reflect their quite rational fear that prices would simply jump 30 percent.
The day the tax went into effect, the American economy would collapse. Eventually, the economy would restabilize, and some prices would drop, as AFT claim. But some industries producing high-ticket items, like the automobile industry, furniture manufacture, or construction, might never recover – even if removal of the income tax did allow prices to drop and Americans to keep more of their paychecks.
Likelihood: Probable.
You'll pay a higher sum for your new home. If the tax passes as written, new homes would suddenly become 30 percent more expensive than existing ones (because all new construction, but not existing homes, would be subject to the tax). Two homes could sit side-by-side – each with four bedrooms, two baths, and comparable features – and one would cost $50,000 or $100,000 more than the other, simply because it was being marketed by its builder, rather than a resident.
No one would want new homes. Construction would dry up. The lack of new homes and the price differential between new and existing ones would in turn create demand for existing homes and push their prices up. Eventually, Congress might feel compelled to save the construction and building materials industries by imposing the sales tax on “used” homes, as well. Or the upward thrust of “used” home prices might, by comparison, make new homes desirable again. Housing markets would eventually stabilize, but only after traumatic disruption.
Oh, and that tax applies to your remodeling supplies, too.
This process of constantly adjusting the tax in vain attempts to undo such unintended consequences will take place all across the economy – and go on for decades.
Likelihood: Probable (disruption of the housing market); high probability (tinkering with the tax in panicky attempts to fix unintended consequences)(3).
Countering the “FairTaxers” claims
AFT makes dozens of claims that are backed by only the most sketchy evidence. We don't have space to refute them all. But here are four examples of dubious claims and the realities behind them.
Claim #1: Goods would be cheaper. Proponents of the new tax say that their claimed 23+ percent tax rate wouldn't be so painful because goods would be cheaper. Without an income tax, businesses could charge less for the items they manufacture.
Maybe. And in a truly free market, even likely. But in our real world and our managed economy, this is far from assured. First of all, even if the income tax were repealed, the price of imported goods would have no reason to drop – and think about the huge percentage of our vehicles, electronics, clothing, and other goods that are now manufactured overseas (again, more on that in a moment).
Second, there is simply no guarantee that manufacturers would lower prices – or that the government would resist the temptation to continue placing various punitive taxes on makers of goods – which would force up their underlying cost. The income tax is hardly the only tax the government uses to make our goods more expensive.
And what about products and services whose prices are already set (or “supported”) by the government? Americans already pay three times the typical world rate for sugar, for instance, solely because of government price supports. Neither the income tax nor free markets have anything to do with it. Would powerful industries with high-paid lobbyists urge the federal government or state governments to set their prices considerably lower? Not likely.
Prices of domestic goods and services may certainly fall a bit. Some may fall substantially. But overall, we predict that the after-national-sales-tax price of goods (including the tax) will be higher than the after-income-tax price of goods. And once again we need to consider the worst case: what happens if we end up with both the national sales tax and the income tax?
Likelihood of goods remaining more expensive than the FairTaxers claim: High probability.
Claim #2: A national sales tax would create jobs and support American manufacturing. At first, this seems counterintuitive. A tax that boosts the price of all consumer goods by 30 percent (or more) would help manufacturers? Well, yes, after the U.S. economy recovered from the probable post-tax crash, in the long run the national sales tax actually might boost certain American industries.
What the FairTaxers don't tell you is that it would do so by making one enormous class of goods cost 30 percent more than competing goods. Here's the plan: imported products, which would not benefit by the planned repeal of the income tax, would suddenly be that much more expensive than their domestic counterparts.
That would be the big advantage gained by U.S. manufacturing – and no doubt many people reading this article are all for that. “Buy American!” they cry. “Quit sending our jobs overseas!”
Yet placing a 30 percent or higher penalty on foreign goods essentially forces us to carry U.S. companies on our backs – even when they're less efficient, less innovative, or produce poorer goods. Competition from overseas has often forced American manufacturers to improve their products (as Japanese autos did in the 1970s). Without competition, companies become complacent and sloppy – and their customers are the ones who ultimately suffer.
And again ... what happens if the price of American goods don't drop? Or if we still end up with the income tax on top of the sales tax?
Likelihood: Probable.
Claim #3: Ordinary Americans would be freed from record-keeping and tax filing. Initially – if indeed Congress were to abolish the income tax – this might be true. But not in the long run! Again, look at what the actual legislation says.
From HR 25 Section 101(d):
(1)The person using or consuming taxable property or services in the United States is liable for the tax imposed by this section, except as provided in paragraph (2) of this subsection.(2) EXCEPTION WHERE TAX PAID TO SELLER- A person using or consuming a taxable property or service in the United States is not liable for the tax imposed by this section if the person pays the tax to a person selling the taxable property or service and receives from such person a purchaser's receipt within the meaning of section 510.
In other words, you, not the seller, are liable for the sales tax. Dr. Walby maintains that once you've received your receipt from a business, you're off the hook. According to her, the businesses will (not may, but will) be audited periodically to make sure they're charging and paying the tax. If they are, fine. If they're not, it's the business, not you, that will be in trouble.
We believe her when she explains that this is how the law is intended to work. We simply don't believe this is the way the law will work in the long run. No, when a business is caught not charging sales tax, eventually the federal government will seek to make criminals out of business customers – who are, after all, “conspirators” in tax evasion, black marketeering, and racketeering.
You'll have to have a receipt to prove you bought that can of beans, that computer, or that car “legally.” Lose your receipt and you could be required to pay that 30+ percent tax all over again – plus penalties and interest.
Worse, using the precedent of the drug war and the income tax, we'd be presumed guilty until we proved ourselves innocent. Or, under the legal fiction now used to perpetrate civil forfeiture, our property would be considered guilty if we had no receipts for it. Without due process, it could be confiscated.
Since current paper receipts are easy to forge, an ever-escalating federal program would have to be dedicated to designing – and eternally re-designing forge-resistant store receipts, which private businesses would be forced to adopt under penalty of law. New federal crimes would be created for receipt forgers or possession of forged receipts. Being found in possession of an item originally purchased by a relative or acquaintance could conceivably become a crime, if the tax is extended to used goods.
Yes, these are projections and they sound draconian. Nothing in the above several paragraphs is written into the current bill. But remember Lyndon Johnson's warning. And remember the way government works.
Likelihood: Certainty in the long run (of paperwork for citizens); High probability (of Draconian punishments and controls for failure to keep receipts and other records
Claim #4: A national sales tax is simpler than the income tax.
David Gross (6), an alert critic of both the present and proposed tax system writes:
National sales tax promoters promise that the tax will be a simple one, but I think they're using wishful thinking when they say things like: Exemptions are the work of special interests and their Gucci-shod lobbyists. The FairTax has no exemptions. Sure it doesn't have any exemptions – now -- when it's just an unamended bill on some congressman's desk. But if it gets closer to being law, you can bet that it will get more and more complicated.What do you mean the tax is the same for bibles as it is for pornography? Are you saying that someone buying good, wholesome Iowa corn has to pay the same tax as someone who buys French wine? A poor family pays the same sales tax on baby food that a rich bachelor spends on his sports car? and before you can say Gucci-shod lobbyists, there are a thousand pages of regulations describing which sales tax rates apply to which items.
As we've noted above, the possibilities for using a national sales tax as a social engineering tool or as a carrot/stick for corporations are plentiful. To hungry politicians those temptations will prove irresistible. No matter how a “pure” a national sales tax is initially, it will soon become as complex, punitive, and manipulative as any other mega-billion dollar cash cow.
Anyone who believes a national sales tax would never be used for social engineering, or that it would never be used to favor one industry over another, or that it would never be jacked up even more sky-high that it's already proposed to be, or that it would never be used to persecute ordinary Americans, or that it would never lead to black markets, is simply naive about the ways of government and ignorant of history.
Read the “Fair Tax Act” for yourself. You'll discover there's absolutely nothing simple about the legislation. Already – before the inevitable decades of amending and tinkering – H.R. 25 is an enormously complex proposal that contains gems like these:
SEC. 602. (a) IN GENERAL- The sales tax administering authority may levy and seize property, garnish wages or salary and file liens to collect amounts due under this subtitle, pursuant to enforcement ...SEC. 103. (f) BARTER TRANSACTIONS- If gross payment for taxable property or services is made in other than money, then the person responsible for collecting and remitting the tax shall remit the tax to the sales tax administering authority in money as if gross payment had been made in money at the tax inclusive fair market value of the taxable property or services purchased.
SEC. 905. (a) IN GENERAL- All persons, in whatever capacity acting (including lessees or mortgagors or real or personal property, fiduciaries, employers, and all officers and employees of the United States) having control, receipt, custody, disposal, or payment of any income to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.
Yes, that's right. That last provision is for an income tax and it's included in legislation that claims to “abolish the income tax.” And those are only a sample of the pitfalls and landmines you'll find within this terrible legislation. Read it. Then re-think whatever favorable attitudes you may have had toward it. (4)
Likelihood: Dead solid certainty (of complexity and punishments)
Advocates of the national sales tax are naive – or believe that we are.
Virtually all of the assumptions promoted by AFT are based on the rosiest possible projections. That there will be zero tax evasion. That all new goods and services will always be taxed equally, without social engineering or other political manipulation. That the base price of new goods will drop 22 percent across the board in the first year (and the price of all services will drop by 25 percent in the same period). That “compliance costs” under the new tax bureaucracy will be lower than those under the existing tax system.
They totally ignore, or breezily dismiss, the jolting disruptions to the economy that imposition of their plan will cause. They pretend there will be no black markets. Despite the clear statement of tax liability in the proposed law, they claim Americans will be forever free of paperwork. They simply don't deal at all with all the obvious implications for citizen tracking inherent in a national sales tax.
They assume that the IRS and a raft of long-time taxes will simply go away, despite every clue that history and the nature of bureaucracy has to offer.
They rightly call all income taxes a “tool of tyranny.” The FairTax, they say, “dramatically changes the basis for taxation by eliminating the root of the problem: Taxing income.” But taxing income isn't the root of the problem – although indeed the income tax is a horrible Marxist system. The root of the problem is a government unchecked, a government that believes it has an inherent right to some government-defined percentage of our property, our time, our very lives. These starry-eyed tax advocated fail to see – or hope we fail to see – that other forms of taxation can easily fill that same role.
Above all, they make the stupidest possible assumption – or they ask us to. They assume that the federal government will not grow, that it will not get more greedy, that it will not consume an ever larger share of everything Americans produce.
Why is this article coming from a gun-rights group?
Jews for the Preservation of Firearms Ownership (of which one of the co-authors is executive director) is a Second Amendment educational foundation, not an economic think tank. So why is this article coming from us?
Two reasons. One: The tax will be used to attack and limit gun ownership; two, it's bad for freedom, and what's bad for freedom is bad for all gun owners.
It is painfully obvious to anyone who observes the tactics of the federal government (and the lobbying groups that buzz around it like flies) that a national sales tax will be used to attack gun ownership. Already, under the planned tax, anyone who wants to buy an imported firearm like a Glock or a SIG Sauer may have to pay 30 percent more than any American equivalent. But the ardent, and persistent gun prohibitionists in Congress – people like Hillary Clinton, Charles Schumer, Dianne Feinstein, Caroline McCarthy, and John Kerry – will never be content with that.
Do you want to see a 500 percent tax on firearms? A 1,000 percent tax on ammunition? A 200 percent tax on targets, smokeless powder, camouflage clothing, and knives? Then tell your Congressperson you want a national sales tax.
Our second reason is that, as horrible as the IRS and the income tax are, the FairTax proposal is even worse for freedom.
Particularly worrying is the plan to put every single American household on federal welfare. Many households will become desperately dependent on government payments to help them survive the higher price of food, clothing, transportation, health care, and shelter. Wealthier people will simply see their monthly handout as an entitlement, a bonus – fun money to help fund their spending sprees.
Either way, a direct payment from the federal government each month will make people less inclined to protest injustice, less inclined to make waves, even when waves are seriously needed. Because people won't want to risk losing their monthly “freebie,” they'll be less inclined to look critically upon the government – and more inclined to oppose anybody who threatens to cut off their monthly handout.
It's all a matter of perception; in all too many cases, people are going to view their $500 freebies as being more important than the even higher – but incrementally smaller – amounts they pay out in sales taxes day by day. They'll say (as so many do with government handouts now), “I'm entitled. After all, I'm only getting my own money back.”
And besides, millions of households will be happily gaming the system – collecting their monthly handouts while buying tax-free goods on the black market. Big government will have achieved its ultimate dream: Citizens will like higher taxes.
In the end, as tyranny tightens its iron grip, Americans will be less inclined to bite the fist that they believe feeds them – even if they're actually paying more in taxes than they do now. All they'll see is that freedom might threaten their government payment. And since fewer will be able to buy guns, even those who want to fight a future tyrant will have a harder time doing so.
Some time ago, we wrote an article claiming that gun-rights and Social Security couldn't co-exist in the long run (http://www.jpfo.org/ssandguns.htm). We'll go further now and add that gun-rights and a national sales tax cannot and will not co-exist in the long run.
We sincerely hope we're wrong. But from where we stand, the conclusion seems inescapable: Imposition of a national sales tax will inflict the same kind of long-term damage to American society that was earlier inflicted by imposition of the income tax, the adoption of fiat currency, and life-consuming programs like the New Deal and the Great Society. And it will be coming at a time when America's fiscal health is already too shaky to absorb one more such blow.
What type of tax do we propose instead?
Now comes the moment where we're supposed to propose our alternative. “Be constructive,” someone will demand. “If you don't like their proposal, what have you got to offer that's better?”
Here's our alternative: Nothing.
Ban the income tax, definitely. Banish it. Disband the Internal Revenue Service and auction their buildings to the highest bidder. Let all the IRS auditors, clerks, and armed enforcers get honest jobs.
But don't replace the income tax with any tax, of any variety.
The United States survived until 1913 without an income tax. It survived until World War II without wage withholding (a federal trick “for the duration of the war” that increased tax collections enormously).
The income tax has enabled and encouraged wild governmental spending sprees. And irony of ironies, the federal government has now gotten so drunk on reckless spending and its attendant debt that (5) an amount equivalent to all the income taxes collected west of the Mississippi River accomplishes nothing but helping pay the interest on that debt! You pay and pay and you're not even getting government services for your money. Just paying off debt that should never have been incurred – and probably wouldn't have been incurred if Americans hadn't been forced to hand over so much money to government.
If you want smaller government, then don't spend your time thinking of “better” ways to feed big government. If you want freedom, don't fall for ploys that simply enable to government to find new routes into your pocket and your life.
If you want to tame the beast of tyranny – starve it into submission. Ban the income tax. Trash the unFairTax. And put the government back on a leash.
(1)The “Fair Tax Act” will almost certainly not pass during the 108th Congress, which ends this year. However, it's gaining support and will surely be re-introduced in the 109th Congress. At that point, the bill numbers will change. We refer to H.R. 25 in this article because that's the bill that's now under consideration. You'll be able to find the text of both the current bill and any new versions of it by doing a keyword search at Congress' Thomas web site: http://thomas.loc.gov.
(2)Bartlett, Bruce. “A National Sales Tax No Vote.” National Review Online. August 9, 2004. http://www.nationalreview.com/nrof_bartlett/bartlett200408090847.asp
(3)It's also worth noting that if the income tax is indeed abolished, the homeowner's interest deduction goes with it. That automatically eliminates part of the incentive for buying houses, rather than renting. It also means that, with no deduction, home buyers effectively pay a larger percentage of their own money for their houses. We don't believe that any tax should ever have been used for a social engineering purpose (e.g. artificially encouraging home ownership). We merely note that this would be one of many disruptive factors Americans would have to cope with.
(4) Use this link and input H.R. 25 into the search box: http://thomas.loc.gov/. If you are reading this article after 2004, then go to the bills of the 108th Congress and search for H.R. 25. Or use keywords to search for any version of the FairTax bill introduced in your current Congressional session.
(5)This is according to a statement by Rep. Christopher Cox made to the House Judiciary Committee on February 3, 1997. http://www.house.gov/judiciary/187.htm. Cox estimated that in that year, $340 billion -- roughly half the federal income taxes collected in the United States – would go to pay interest on the national debt. The actual interest payment in 1997 was $355.8 billion. Interest expenses have gone down slightly since then. However, income tax receipts have also gone down. In 2003, for example, actual receipts from individual federal income taxes were $793.3 billion, and interest on the national debt was $318.2 billion. You can see historic and current national debt interest figures here: http://www.publicdebt.treas.gov/opd/opdint.htm.
(6) Gross, David. The Picket Line. August 29, 2004. http://www.sniggle.net/Experiment/index.php?entry=29Aug04&showyear=2004
Copyright © Aaron Zelman 2004. Permission is granted to distribute this article in its entirety, so long as full copyright information and full contact information is given for JPFO.
Published by:
Jews For The Preservation of Firearms Ownership, Inc.
P.O. Box 270143
Hartford, WI 53027
Phone (262) 673-9745
Fax: (262) 673-9746 http://www.jpfo.org
I personally think you are because you always WANT a ""NEW ""US tax not supported by The US CONSTITUTION.
Your FR post for years have been nothing short of TREASON against my family members at Valley Forge under Oath.
Your FR post for years have been nothing short of TREASON against my family members at Valley Forge under Oath.
Correct. With an amendment that clearly sets out that the federal government can never impose both a tax on income and a tax on sales, the FAIR tax could work.
Yes, there are a lot of details that need to be worked out. But the disadvantages to individuals because of an income tax begs that a better system be implemented. The advantages of a sales/consumption tax is that, if you don't have enough money, you don't buy as much but you get your full income. You can put yourself on a spending diet until you have enough to get what you really want or need. You'll be able to buy a house sooner and faster. If you have a lot of extra money, you can go out and blow it.
A sales/consumption tax also forces the government to be more fiscally sane as their spending allowance will be directly apportioned by what has been sold. If they get out of hand with spending, people can stop buying and starve them out.
Like it'll ever happen, though.
If you are part of the US Government,we will charge you with FRAUD on behalf of the PEOPLES lawsuit.
Too bad your if misses target as well as your charges, LOL.
TP'r : One who's tax evasion sales pitch and legal argument has the substance of used toilette paper.
I personally think you are because you always WANT a ""NEW ""US tax not supported by The US CONSTITUTION.
Constitution for the United States of America:
- Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
to pay the debts and provide for the common defense and general welfare of the United States;
A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
DUTIES. In its most enlarged sense, this word is nearly equivalent to taxes, embracing all impositions or charges levied on persons or things;A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856 edition:
EXCISES. This word is used to signify an inland imposition, paid sometimes upon the consumption of the commodity, and frequently upon the retail sale.
"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "
"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. . Those of the direct kind, which principally relate to land and buildings, may admit of a rule of apportionment." (Emphasis added).
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer for additional information: http://www.fairtax.org & http://www.salestax.org
Your FR post for years have been nothing short of TREASON against my family members at Valley Forge under Oath.
Your FR post for years have been nothing short of TREASON against my family members at Valley Forge under Oath.
Got hiccups?
You were on the Brit side of the river I take it then, as mine were serving under Gen George Washington.
Sorry,
My x5 Great Grandfather served with George Washington at Valley Forge as he was one of the officers who took the oath at the Valley.We bear the same name today.
I could buy into that scheme.
My x5 Great Grandfather,
Good for your 5x Great Grandfather.
Glad to know he served with mine, a Captain of the PA militia, and his 3 brothers, and their father a Virginian and one of Washington's Generals.
We bear the same name today.
As does my family.
Unfortuately, one's ancestory is no palative for one's capacity for delusional positions, nor a recommendation of the right or wrongness of the causes that one may become aligned with.
"Facts are stubborn things; and whatever may be our wishes, our inclination, or the dictates of our passions, they cannot alter the state of facts and evidence."
--John Adams
Doesn't Russia get by with a flat tax of 13%???
I could buy into that scheme
No, but there are those that would lead one believe so.
|
RUSSIA: PART TWO OF THE RUSSIAN FEDERATION TAX CODE August 10, 2000
Alexander Chmelev and Evgeny Astakhov Baker & McKenzie, Moscow Office
Sent by BISNIS, U.S. Department of Commerce, http://www.bisnis.doc.gov Judith_Robinson@ita.doc.gov, Tel: 202-482-2293. BISNIS sends this report as a courtesy to the U.S. business community. This is not to be construed as endorsement or sponsorship of any information or group. On August 5, 2000, Russian Federation President Vladimir Putin signed into law four chapters of Part Two of the Russian Federation Tax Code and Federal Law No. 118-FZ ôOn the Implementation of Part Two of the Russian Federation Tax Code and Amendments to Certain Federal Laws on Taxationö (the "Implementation Law"). The chapters of the Tax Code signed into law by the President are Chapter 21 - VAT, Chapter 22 - Excise Taxes, Chapter 23 - Personal Income Tax, and Chapter 24 - Unified Social Tax. These four Chapters and the Implementation Law were officially published in Rossijskaya Gazeta on August 10, 2000, and, with few exceptions, will become effective on January 1, 2001. The most sweeping changes introduced into the Russian tax system by this new legislation are as follows: 1. VAT (Chapter 21 of the Tax Code) Although Chapter 21 of the Tax Code does not change VAT rates or the general VAT structure, it contains numerous provisions, which will significantly affect most businesses in Russia. Most notably, Chapter 21 substantially modifies the "place of service" rules, which generally determine whether for VAT purposes a particular transaction has occurred in Russia and is, therefore, subject to Russian VAT. Effective from July 1, 2001, Chapter 21 also will treat export sales to CIS countries in the same way as sales to all other foreign countries, and will exempt them from VAT. On the downside, Chapter 21 will repeal a number of long-standing and important VAT exemptions, including an exemption for license fees for the use of intellectual property (such as, patents, copyrights, and trademarks), and will significantly narrow the VAT exemption for pharmaceuticals. 2. Personal Income Tax (Chapter 23 of the Tax Code)
Chapter 23 of the Tax Code will replace the current progressive tax rates ranging from 12% to 30% with a flat tax rate of 13%. This 13% rate will apply to almost all categories of income earned by individuals who are Russian tax resident. A 30% rate will apply to dividends, and to any Russian source income received by individuals who are not Russian tax resident. A 35% rate will apply to income from gambling, lottery prizes, deemed income from low-interest or interest-free loans, certain insurance payments, and excessive bank interest. 3. Unified Social Tax (Chapter 24 of the Tax Code) Chapter 24 of the Tax Code will replace the existing employersÆ contributions to four separate social benefit funds (which currently are imposed at an over-all rate of 38.5%) with one unified social tax. This unified social tax will have a regressive tax scale from 35.6% to 2% of an employee's salary with the lowest rate applicable to the portion of an employeeÆs annual salary in excess of 600,000 Rubles (approximately US$22,000 at the current exchange rate). It should be noted that under the Implementation Law, as a transition rule, the lower rate of this tax will be 5% rather than 2% during 2001. 4. Excise Taxes (Chapter 22 of the Tax Code) As a countermeasure to reducing rates of other federal taxes, Chapter 22 of the Tax Code provides for an increase in excise tax rates for gasoline and other oil products by almost 300%. It also provides for a less dramatic increase of excise tax rates for tobacco products and certain passenger cars. 5. The Implementation Law a. Turnover Taxes Effective from January 1, 2001, the Implementation Law repeals the Housing Fund Tax of 1.5% and reduces the Road Users Tax from 2.5% down to 1% and completely repeals the Road Users Tax effective January 1, 2003. These taxes are imposed on gross sales and have been among the most onerous taxes on business in Russia. b. Regional Tax Concessions The Implementation Law reconfirms the right of regional authorities to provide tax exemptions for the regional portion of federal taxes retroactive to April 1, 1999. This reconfirmation resolves an issue that arose in 1999 as to whether the regional portion of profits taxes could be reduced pursuant to regional incentive laws. c. Profits Tax Rate Apparently in compensation to local budgets for the cancellation of turnover taxes, the Implementation Law authorizes municipal governments to introduce an additional "municipal" profits tax of up to 5% of a taxpayer's taxable profits. Thus the maximum overall profits tax rate may be increased from 30% to 35%. This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS) |
Russia's tax system, as you have posted it, should be duplicated here.
But then that would mean we'd be able to dump all the lawyers and CPA's that have made our tax laws incomprehensible to the reasonable man.
Can't happen. Wouldn't be prudent.
This is why whatever comes out of Congress will remain about as voluminous as the current tax 'code'. A status quo system will also assure IRS personnel employed to enforce the Federal Reserve's control over our tax system continued employment.
We will, thanks to a Congress full of lawyers, continue to get screwed front, back, and sideways. Business as usual. Fairtax, flattax, foolstax. The title may change, but rape by any other name is still rape.
Best solution? Scrap the current system of taxes and entitlements. Impose a negative income tax, ala Milton Friedman, to replace the assorted Medicaid, welfare, food stamps, public housing etc. crap. Impose an income tax with few or no deductions.
I have no problem with reasonable progressivity -- and the beauty of a flat tax isn't its flatness, it's the removal of deductions. So have four tax levels or so -- nothing under $35000, 10% between 35000 and 50000, 15% between 50000 and 200000, 25% above 200000. Plenty of revenue, low marginal rates, nothing wasted in compliance, pro-growth.
The Historian for the The Attorney Generals office of the state of Florida has just announced the US income tax to be totally UNCONSTITUTIONAL based on all of his research.
Of the "State of Florida" you say, guess that brings the Florida contingent in Congress right up in line with:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer for additional information: http://www.fairtax.org & http://www.salestax.org
Got hiccups, TT?
I have no problem with reasonable progressivity -- and the beauty of a flat tax isn't its flatness, it's the removal of deductions. So have four tax levels or so -- nothing under $35000, 10% between 35000 and 50000, 15% between 50000 and 200000, 25% above 200000. Plenty of revenue, low marginal rates, nothing wasted in compliance, pro-growth.
I however have a problem with reporting my family finances to the government and that being used as a club over my head by the IRS, not to mention the other negative of the income tax system:
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
The Historian for the The Attorney Generals office of the state of Florida has just announced the US income tax to be totally UNCONSTITUTIONAL based on all of his research.
Ohhhh, you mean this guy.
Noted Tax Historian´s Book Declares U.S. Income Tax as Direct Tax is in Violation of Long-established U.S. Supreme Court Mandates "'The New Income Tax Scandal' is about the corruption that lies at the heart of the tax system," said Garrison. "As a result of my legal case against the IRS in 2000, the IRS now privately concedes that, in 1915, after the ratification of the Sixteenth Amendment, the U.S. Supreme Court ruled in the case of Brushaber v. Union Pacific that an income tax is an excise tax, and that it is to be enforced as such. An excise is not a direct tax on property, but an indirect tax.
Looks like he overlooked something in his researches. The taxes on income found to be unconstitutionally laid for being a direct tax are those associated with rent from real property and dividends and interest from equity and financial instruments per Pollock:
POLLOCK v. FARMERS' LOAN & TRUST CO., 158 U.S. 601 (1895):
- "We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such."
- "If that[rents from land] be stricken out, and also the income from all invested personal property, bonds, stocks, investments of all kinds, it is obvious that by far the largest part of the anticipated revenue would be eliminated, and this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way what was intended as a tax on capital would remain, in substance, a tax on occupations and labor. We cannot believe that such was the intention of congress."
- "We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. "
- Our conclusions may therefore be summed up as follows:
First. We adhere to the opinion already announced,-that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.
Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.
Third. The tax imposed by sections 27 to 37, inclusive, of the act of 1894, so far as it falls on the income of real estate, and of personal property, being a direct tax, within the meaning of the constitution, and therefore unconstitutional and void, because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.
- Mr. Justice WHITE, dissenting.
16. The injustice of the conclusion points to the error of adopting it. It takes invested wealth, and reads it into the constitution as a favored and protected class of property, which cannot be taxed without apportionment, while it leaves the occupation of the minister, the doctor, the professor, the lawyer, the inventor, the author, the merchant, the mechanic, and all other forms of industry upon which the prosperity of a people must depend, subject to taxation without that condition.
Too bad, I thought you had something there for a moment.
That is why Brushaber held:
BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)
- "the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class [240 U.S. 1, 17] of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such"
And Stanton stated:
Stanton v. Baltic Mining Co.(1916), 240 U.S. 103:
- "the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment"
Unfortunately that leaves us all liable to taxes on wages and such with no relief in sight
BROMLEY v. MCCAUGHN, 280 U.S. 124,136 (1929)
- "Whatever may be the precise line which sets off direct taxes from others, we need not now determine. While taxes levied upon or collected from persons because of their general ownership of property may be taken as direct, this Court has consistently held, almost from the foundation of our government, that a tax imposed upon a particular use of property or the exercise of a single power over property incidental to ownership, is an excise which need not be apportioned, and it is enough for present purposes that this tax is of the latter class.
It is a tax laid only upon the exercise of a single one of those powers incident to ownership, the power to give the property owned to another. . . . The persistence of this distinction and the justification for it rest upon the historic fact that taxes of this type were not understood to be direct taxes when the Constitution was adopted and, as well, upon the reluctance of this Court to enlarge by construction, limitations upon the sovereign power of taxation by Article 1, sec. 8, so vital to the maintenance of the National Government.
280 U.S. at 136; see The Federalist No. 12 (Hamilton) (distinguishing between "direct taxes" and "taxes on consumption")."
Charles C. Stewart Machine Co. v. Davis (1937), 301 U.S. 548:
- "[N]atural rights, so called, are as much subject to taxation as rights of lesser importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right."
- Employment is a business relation, if not itself a business. It is a relation without which business could seldom be carried on effectively. The power to tax the activities and relations that constitute a calling considered as a unit is the power to tax any of them. The whole includes the parts. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 267 , 268 S., 53 S.Ct. 345, 349, 350, 87 A.L.R. 1191
TP'r : One who's tax evasion sales pitch and argument has the substance of used toilette paper.
Better hang your hat somewhere else TT, something that can actually do the job.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information: http://www.fairtax.org & http://www.salestax.org
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