Well... yes and no. That's what I was trying to get at with the founders. It is totally dangerous to liberty (though most of ours is already gone) to say or enact tax policy in order to "prevent substitution bias."
Tax policy should be about collecting the minimun necessary revenue to run Government. We must abandon the failing system of instituting taxes to mold public behavior.
If people start bartering or "trading services" then that just means the tax is too high and it is time for the government to roll it back a bit or find new sources.
I'm not meaning to jump all over your ideas, you are right about the main point. The consumption based taxes are far better than anything we currently have.
I just get really worked up when people or politicians propose the idea that my labor is whithin their jurisdiction. Your labor or even mental abilities are the only thing you truly own and even that has been rested from you. If you don't give an unkown, undeserving third party, a cut of your labor via the nanny-state... get ready to lose all you posession and then your liberty.
It is simply criminal to tax the sweat of a man or woman, in my view. That is why I terribly dislike the current system.
. It is totally dangerous to liberty (though most of ours is already gone) to say or enact tax policy in order to "prevent substitution bias."
Why would you want a tax system with "substitution bias". That is what we have now in the income tax system, where one kind of income is taxed another note, where specialize deductions and rule create favored niches in the economy and encourge the citizen to always be looking out for that loophole to hide thier income under that is specifically created by Congress to modify social and economic behaviour.
Tax policy should be about collecting the minimun necessary revenue to run Government. We must abandon the failing system of instituting taxes to mold public behavior.
That is why you want a broad tax base, with as few exceptions as possible in it. That way there is no favorites to be rewarded or olitical opponent to be punished in the the tax law. There should be no biases in the tax system and certainly the entire tax system should be open and in front of the direct perceptions of the electorate.
If people start bartering or "trading services" then that just means the tax is too high and it is time for the government to roll it back a bit
Definitely government should be considering rolling back services as well as rates in such a case. A fully visible tax, such as a retail sales tax acts in just the right manner to assure the voter starts pounding on the Congress Critter's door for less government an lower taxes.
or find new sources.
New sources? That sounds alot like hiding taxes from view to me, say as corporate tax in the background where it is unnoticed? Like VATs, GST's,corporate income taxes, business transfer taxes, .... Perfect way for government to start picking and choosing winners and loosers again.
I just get really worked up when people or politicians propose the idea that my labor is whithin their jurisdiction.
It is simply criminal to tax the sweat of a man or woman, in my view.
Only problem with that position is that every consumption commodity is a product of the labor of the citizens. The factor that distinguishes a consumption tax is that it is paid by the laborer out of wages when they purchase goods or servicds, rather than collected on the basis of taxed income which paid by the laborer when they earn their wage.
Any way you can view taxes, the individual citizen pays the tax, passed through in prices and lower wages when a tax is levied on businesses, as an income tax collected on the bases of earnings from the earner, or as a consumption tax when collected on the basis of one's purchases out of what they have learned.
The bottomline as regards liberty, is how much is government involved in reaching into our family privacy and lives to collect that tax what ever its form, and how visible is the tax to assure the electorate can perform that function with which we are all charged in representive republics, to excercise the "eternal vigilance" that is necessary to maintanance of our liberties and holding government to account for its excesses.
The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt."
-John Philpot Curran: Speech upon the Right of Election, 1790.
That is why consumption taxes in general were view to be superior to other forms of taxation by the founders of this government under the Constititution. The tax is visible and perceived by the citizen who is responsible for the payment of it and becomes a focus of the citizens's attention as regards their perceptions of government.
James Madison, Federalist #39:
- "The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"
Anti-Federalist Papers #3 NEW CONSTITUTION CREATES A NATIONAL GOVERNMENT;
- There are but two modes by which men are connected in society, the one which operates on individuals, this always has been, and ought still to be called, national government; the other which binds States and governments together (not corporations, for there is no considerable nation on earth, despotic, monarchical, or republican, that does not contain many subordinate corporations with various constitutions) this last has heretofore been denominated a league or confederacy. The term federalists is therefore improperly applied to themselves, by the friends and supporters of the proposed constitution.
- "A nation cannot long exist without revenues. Destitute of this essential support, it must resign its independence, and sink into the degraded condition of a province. This is an extremity to which no government will of choice accede. Revenue, therefore, must be had at all events. In this country, if the principal part be not drawn from commerce, it must fall with oppressive weight upon land."
- "The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
- ``A CONCURRENT JURISDICTION in the article of taxation was the only admissible substitute for an entire subordination, in respect to this branch of power, of State authority to that of the Union.'' Any separation of the objects of revenue that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the Union to the POWER of the individual States. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident that it has at least the merit of reconciling an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities.
Under consumption taxes the revenue stream to government is more in the control of the citizen than when it is visible and open and can be reacted to in a naturally limiting manner.
- 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. ... 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.
I hope someone listens to you on this fundamental and extremely important point. They never listen to me. These types of fundamental comments usually get me the cold shoulder since questions that emanate from there are usually ones that folks can't answer.