WOODALL INTRODUCES FAIRTAX BILL ON DAY ONE WITH RECORD NUMBER OF ORIGINAL CO-SPONSORS

All this great stuff on its way to languish and die in the Senate. :(:(:(

“I’m very pleased to see this “

Me too. Now all we need is a decent POTUS.

Let's see. Fed NRST 30% + California 8.5% sales tax existing plus another 5-7% to cover its lost state income tax. That makes for a nearly 50% total sales tax.

If you think for one minute that this country won't then incur all the inefficiencies of a barter economy and a black market, I've got news for you. All you have to do is to look at cigarettes, alcohol, and out-of-country pharmaceuticals to see what will happen. Oh and if you think the IRS is invasive, you haven't seen anything until the Feds are breathing down every single person's neck to make sure currently private gray market transactions are included. So, stick out your hand and take your chip because that is where this goes.

A "Fair Tax" is no panacea. Focus on cutting spending instead.

To 4 - Wrong. Thru myriad ways income can be hidden, not reported in its entirety, not reported at all. Everyone pays a consumption tax, unless of course they never buy anything.

No damn way!!!!

“Pass an amendment abolishing the income tax first. Then we can talk about Fair Tax.”

Bingo. The so-called Fair Tax is just another name for a national sales tax. If you don’t rip out the income tax by it’s roots, you’re likely to end up with both an income tax AND a national sales tax.

Awesome.

“Under the Fair Tax, the Ford would sell for $16,000 and at the time of sale the consumer would pay $4,000 in taxes”

I can’t see prices being lowered by business owners, at least initially. I think that once they don’t have the tax burden, they will look at it as bonus income. Maybe over time prices would be reduced due to competition, but I just can’t see them coming down that much that quickly.

Sad to see only one Indiana Rep signed on. At least he represents my district.

Where’s Mike Pence?

“Where’s Mike Pence?”

37) Jeff Duncan (SC)

38) Rob Bishop (UT)

39) Mike Pence (IN)

40) Sandy Adams (FL)

41) John Mica (FL)

Marlin Stutzman and Dan Burton are also on there. That makes three from Indiana. There are three other freshmen Republicans from Indiana that we are working on. We should get at least one of those by March 31.

The goal is to have 100 co-sponsors (in the house) by the end of the first quarter.

“The so-called Fair Tax is just another name for a national sales tax.”

Close. The “so-called FairTax” is the name of a SPECIFIC sales tax proposal which is laid out in bill language and is available for anyone to see on the internet. It is the most thoroughly researched tax reform proposal ever presented to congress and addresses the broad range of adverse economic trends that the current system exacerbates more comprehensively and effectively than any other alternative.

Compare that to “the so-called flat tax”, which is the preferred form of tax reform of the Republican establishment. If you ask 5 flat taxers what version of flat tax they support, you are quite likely to get 5 different answers, or some sort of evasive answer, such as “any”. None of those answers will correspond to HR 1040, which was the only flat tax bill in the house last session. In actuality, there is no such thing as “the flat tax” in the sense of a single proposal that enjoys the support of even a majority of those who call themselves flat taxers. A flat INCOME tax is a form of taxation, rather than a specific proposal, just as a sales tax, VAT, excise, etc. is.

For this reason, comparing the FairTax to “the flat tax” is a bit of an apples to oranges proposition. The various flat tax proposals (other than hr 1040) typically do not have enough support to have been drafted into bills* and I have never seen an economic study done on one. Hr 1040 isn’t even revenue neutral, which is a minimum requirement for a tax reform proposal to be taken seriously in congress. Many flat taxers don’t even know that it is a flat tax OPTION, meaning that it does not get rid of a single word of the current mess that no one understands.

Little wonder, then, that the Republican establishment keeps introducing “new and improved” versions of “the flat tax” every few months or so in an effort to find one that resonates with voters. I think that Laffer alone has touted two different flat tax versions within the past year. All of those misguided efforts to date have fallen flat (pardon the pun).

“The fight for fundamental tax reform is such a difficult uphill battle that requires so much energy and political capital, why would you go through all that and come up with the wrong answer?”
Dick Armey
Former House Majority Leader
Current Lobbyist

Indeed, FairTaxers agree with Mr. Armey’s statement - we just don’t agree with what constitutes “the wrong answer”. Why go through the effort to pass tax reform and not address the trade deficit and the ongoing erosion of our manufacturing sector, the crisis in SS & Medicare, etc, etc, etc?

* In addition to HR 1040, there were a couple of “flat tax” bills in the senate, none of which have more than a couple of co-sponsors and none of which have companion bills in the house where tax reform legislation is supposed to originate in our form of government.

If I’m not mistaken, a tax on consumption would pass Constitutional muster, whereas a tax on “income” does not.

Is this correct?

> rate of 23 cents per dollar

Am I reading this right?

A 23% sales tax?

Who in the world would want to buy ANYthing at that rate, and how in the world is that supposed to stimulate the economy?

It might stimulate savings, I’ll venture.

“If I’m not mistaken, a tax on consumption would pass Constitutional muster, whereas a tax on ‘income’ does not.”

The founders rejected the notion of an income tax, which is why the 16th amendment had to be ratified. An income tax had been tried a couple of times in the 19th century (most notably to help finance the Civil War), but the Supreme Court struck down an income tax sometime after that. The 16th amendment was ratified in 1913, I think.

We believe that the founders got it right and the legislatures (both state and federal) of the early 20th century were wrong. I won’t even get into the controversy over whether the 16th was duly ratified or not.

Of course you said this realizing that the current tax system orginally started out as a Flat Tax, right?

**income tax had been tried a couple of times in the 19th century (most notably to help finance the Civil War), but the Supreme Court struck down an income tax sometime after that. The 16th amendment was ratified in 1913, I think**

From Wikipedia:
Income taxes pre-Pollock
To raise revenue to fund the Civil War, Congress introduced the income tax through the Revenue Act of 1861.[7] It levied a flat tax of 3% on annual income above $800, which was equivalent to $19,490 in today’s money.[8] This act was replaced the following year with the Revenue Act of 1862, which levied a graduated tax of 3–5% on income above $600 (worth $13,156 today[8]) and specified a termination of income taxation in 1866.

The Socialist Labor Party advocated a graduated income tax in 1887.[9] The Populist Party “demand[ed] a graduated income tax” in its 1892 platform.[10] The Democratic Party, led by William Jennings Bryan, advocated the income tax law passed in 1894,[11] and proposed an income tax in its 1908 platform.[12]

Prior to the Supreme Court’s decision in Pollock v. Farmers’ Loan & Trust Co., all income taxes had been considered to be indirect taxes and so were required to be imposed with geographical uniformity; as opposed to being direct taxes, which are required to be apportioned among the states according to population.[13][14]

The Wilson–Gorman Tariff Act of 1894 attempted to impose a federal tax of 2% on incomes over $4,000 (worth $101,200 today[8]). Derided as “un-Democratic, inquisitorial, and wrong in principle,”[15] it was challenged in federal court.

The Pollock case
In Pollock v. Farmers’ Loan & Trust Co. the Supreme Court declared certain taxes on incomes — such as those from property under the 1894 Act — to be unconstitutionally unapportioned direct taxes. The Court reasoned that a tax on income from property should be treated as a tax on “property by reason of its ownership” and so should be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so forth burdened the property generating the income in the same way that a tax on “property by reason of its ownership” burdened that property.

After Pollock, while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends and rent income were required to be apportioned by population. The Pollock ruling made the source of the income (e.g., property versus labor, etc.) relevant in determining whether the tax imposed on that income was deemed to be “direct” (and thus required to be apportioned among the states according to population) or, alternatively, “indirect” (and thus required only to be imposed with geographical uniformity).[16]

In his dissent to the Pollock decision, Justice John Marshall Harlan stated:

When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property, or upon income arising either from rents of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds, except by apportioning the sum to be so raised among the States according to population, it practically decides that, without an amendment of the Constitution — two-thirds of both Houses of Congress and three-fourths of the States concurring — such property and incomes can never be made to contribute to the support of the national government.[17]
The Congress reflected the concern of many elements of society that the wealthiest Americans had consolidated too much economic power.[18]

Adoption
On June 16, 1909, President William Howard Taft, in an address to Congress, proposed a 2% federal income tax on corporations by way of an excise tax and a constitutional amendment to allow the previously enacted income tax.

Upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock.[19][20]
The text of an amendment to the Constitution was first proposed by Senator Norris Brown of Nebraska. He submitted two attempts, Senate Resolutions Nos. 25 and 39. The amendment proposal finally accepted was Senate Joint Resolution No. 40, introduced by Senator Nelson Aldrich of Rhode Island, the Senate majority leader and Finance Committee Chairman.[21]

On July 12, 1909, the resolution proposing the Sixteenth Amendment was passed by the Sixty-first Congress and submitted to the state legislatures. Support for the income tax was strongest in the western states and opposition was strongest in the northeastern states.[22] New York Governor Charles Evans Hughes, who a few years later became a Supreme Court justice, opposed the income tax amendment. He believed “from whatever source derived” implied that the federal government would then have the power to tax state and municipal bonds, thus excessively centralize government power, and “would make it impossible for the state to keep any property”.[23]

The presidential election of 1912 was contested between three advocates of an income tax.[24] On February 25, 1913, Secretary of State Philander Knox proclaimed that the amendment had been ratified by the necessary three-fourths of the states, and thus had become part of the Constitution.[25] Shortly thereafter, the Revenue Act of 1913 was enacted.

According to the United States Government Printing Office, the following states ratified the amendment:[26]

Alabama (August 10, 1909)
Kentucky (February 8, 1910)
South Carolina (February 19, 1910)
Illinois (March 1, 1910)
Mississippi (March 7, 1910)
Oklahoma (March 10, 1910)
Maryland (April 8, 1910)
Georgia (August 3, 1910)
Texas (August 16, 1910)
Ohio (January 19, 1911)
Idaho (January 20, 1911)
Oregon (January 23, 1911)
Washington (January 26, 1911)
Montana (January 27, 1911)
Indiana (January 30, 1911)
California (January 31, 1911)
Nevada (January 31, 1911)
South Dakota (February 1, 1911)
Nebraska (February 9, 1911)
North Carolina (February 11, 1911)
Colorado (February 15, 1911)
North Dakota (February 17, 1911)
Michigan (February 23, 1911)
Iowa (February 24, 1911)
Kansas (March 2, 1911)
Missouri (March 16, 1911)
Maine (March 31, 1911)
Tennessee (April 7, 1911)
Arkansas (April 22, 1911), after having previously rejected the amendment
Wisconsin (May 16, 1911)
New York (July 12, 1911)
Arizona (April 3, 1912)
Minnesota (June 11, 1912)
Louisiana (June 28, 1912)
West Virginia (January 31, 1913)
Delaware (February 3, 1913)
Ratification (by the requisite 36 states) was completed on February 3, 1913 with the ratification by Delaware. The amendment was subsequently ratified by the following states, bringing the total number of ratifying states to forty-two of the forty-eight then existing:

37. New Mexico (February 3, 1913)
38. Wyoming (February 3, 1913)
39. New Jersey (February 4, 1913)
40. Vermont (February 19, 1913)
41. Massachusetts (March 4, 1913)
42. New Hampshire (March 7, 1913), after rejecting the amendment on March 2, 1911
The legislatures of the following states rejected the amendment without ever subsequently ratifying it:

Connecticut
Rhode Island
Utah
The legislatures of the following states never considered the proposed amendment:

Florida
Pennsylvania
Virginia
[edit] Pollock nullifiedThe Sixteenth Amendment nullified the effect of Pollock.[27][28] That means the Congress may impose taxes on income from any source without having to apportion the total dollar amount of tax collected from each state according to each state’s population in relation to the total national population.[29] In Abrams v. Commissioner, the United States Tax Court stated:

Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived.[30]

“Who in the world would want to buy ANYthing at that rate, and how in the world is that supposed to stimulate the economy?

It might stimulate savings, I’ll venture.”

There would some shifting toward savings and away from consumption, which is one of the economic benefits. Every serious economist I have heard speak on the subject has said that our savings rate is too low and is going to cause long term problems if not addressed. We cannot remain dependent on foreign sources of capital indefinitely.

There are, however, three primary reasons that the FairTax would stimulate the economy:
1. It would facilitate the repatriation of much of the app. $13 trillion (and growing) that is stranded offshore by the current tax system. This is capital that could be used to fuel our economy, rather than foreign economies.
2. Because it is “border adjustable”, it would create pricing shifts that would improve the competitive position of US producers (primarily mfg & ag) in foreign markets, as well as our own marketplace. The US is the only one of 30 OECD nations without a border adjustment element in its tax system.
3. It would eliminate several hundred billion $$ in wasted compliance costs. This is capital which could be much more effectively employed in our economy.

Every economic study that I am aware of has forecast a more rapidly growing economy under the FairTax than under a continuation of the current system, with GDP growth of typically 10 to 14 % higher in the initial years immediately after implementation. That is HUGE. None of us have ever lived through a year in which GDP grew by 10+%. That is Chinese growth rates in an economy three times China’s size. Obviously, those growth rates aren’t permanent, but by the time they leveled off, the US economy would be 1/4 to 1/3 bigger than it would have been under a continuation of the current system and THAT difference would be permanent.

Boooo

Fair tax is not good.

FLAT TAX is equitable.

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The income tax was originally a “flat tax” and it’s pretty “flat” now with only 3 rates ... How’s that working for you? Continuing the Income tax is a losing bet ...

The “Fair Tax” is equitable and cannot be gamed easily by the Pols.