I have always believed consumption taxation is the optimal model of taxation and I am glad that it is getting press in the US. Federalist #21 is dead on re "signal advantage" quote.
my optimal model of taxation in a federation of states would go something like this. the federal government would be constitutionally prohibited from levying taxes of any sort (or levies, or tariffs, etc). the states of the federation would raise revenue any way they see fit (once again, through consumption taxation preferably, and it may be a good idea to put that in the constitution as well, that the states are only allowed to tax/levy/excise consumption). The federal government would lay down its budget each year in consultation with the states (would be quite difficult with 50 states, mind you) and the states would fund the federal govt on a strict per-capita basis (might want to make the per-capita basis a constitutional thing as well, otherwise you'll get the inevitable cribbing for exceptions from poorer states).
ok better sleep now. comments?
If you would take the time to REALLY study it you would find that the Fairtax does EXACTLY this without the excess baggage.
The federal government would lay down its budget each year in consultation with the states (would be quite difficult with 50 states, mind you) and the states would fund the federal govt on a strict per-capita basis (might want to make the per-capita basis a constitutional thing as well, otherwise you'll get the inevitable cribbing for exceptions from poorer states).
That was tried prior to the Constitution, under the original Articles of Confederation.
It failed miserably to provide even the minimal needs of the Continental Congress to provide for bare minimums of federal government of the times. That is one of the prime reasons why we have the current Constitution and the strong tax authority granted to Congress in regards laying and collecting taxes in Article 8:
Constitution for the United States of America:
- Article VI: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."
- 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;
but all duties, imposts and excises shall be uniform throughout the United States; "
- Article I Section 8: "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."
- The principle of regulating the contributions of the States to the common treasury by QUOTAS is another fundamental error in the Confederation. Its repugnancy to an adequate supply of the national exigencies has been already pointed out, and has sufficiently appeared from the trial which has been made of it. I speak of it now solely with a view to equality among the States. Those who have been accustomed to contemplate the circumstances which produce and constitute national wealth, must be satisfied that there is no common standard or barometer by which the degrees of it can be ascertained. Neither the value of lands, nor the numbers of the people, which have been successively proposed as the rule of State contributions, has any pretension to being a just representative.
- "The change relating to taxation may be regarded as the most important; and yet the present [Continental] sic Congress have as complete authority to REQUIRE of the States indefinite supplies of money for the common defense and general welfare, as the future [Constitutional] sic Congress will have to require them of individual citizens; and the latter will be no more bound than the States themselves have been, to pay the quotas respectively taxed on them. Had the States complied punctually with the articles of Confederation, or could their compliance have been enforced by as peaceable means as may be used with success towards single persons, our past experience is very far from countenancing an opinion, that the State governments would have lost their constitutional powers, and have gradually undergone an entire consolidation."
James Madison, Elliots Debates Vol 3 p128:
- Mr. Chairman, in considering this great subject, I trust we shall find that part which gives the general government the power of laying and collecting taxes indispensable, and essential to the existence of any efficient or well-organized system of government: if we consult reason, and be ruled by its dictates, we shall find its justification there: if we review the experience we hav had or contemplate the history of nations, here we find ample reasons to prove its expediency. There is little reason to depend for necessary supplies on a body which is fully possed of the power of witholding them. If a government depends on other governments for its revenues -- if it must depend on the voluntary contributions of its members -- its [*129] existence must be precarious. A government which relies on thirteen independent sovereignties for the means of its existence, is a solecism in theory and a mere nullity in practice.
*** snip ***
- If the general government is to depend on the voluntary contribution of the states for its support, dismemberment of the United States may be the consequence."
See also: James Madison, Elliots Debates Vol 3 p249: On Problem of Requistions and Direct taxation.
"my optimal model of taxation in a federation of states would go something like this. the federal government would be constitutionally prohibited from levying taxes of any sort..."
That's great!
A couple friends and I were writing a "dream constitution" a while ago and though one wanted to go with a strict confederacy and almost no central authority outside of defense, I suggested almost exactly the system you just laid out.
Good stuff!