Posted on 04/22/2003 10:40:02 AM PDT by sheltonmac
There is an important distinction to be made concerning a "national sales tax" as proposed to replace current taxation, and the method of taxing consumption as intended by the Founding Fathers. A national sales tax would give Congress an across the board percentage of our economy by laying an internal tax, whether such revenue is needed or not. The Founder's method of taxing consumption began with an external tax on imports at our water's edge, and was extended to reach internal consumption only if external taxation were found insufficient.
It is important to study our nation's first revenue raising Act to understand the wisdom of the Framers. The Act was "... in a certain sense a second Declaration of independence; and by a coincidence which could not have been more striking or significant, it was approved by President Washington on the fourth day of July, 1789." [See, Twenty Years of Congress, James G. Blaine, 1884, Vol. 1, page 185]
Madison, in discussing this Act before Congress, clearly pointed out a very important principal of American's original tax reform package:
"...a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue it shall not be oppressive to our constituents."
The Act imposed taxes, not on American constituents, but on "goods wares and merchandise" imported into our Country by foreign nations, and not one dime was raised under the Act by any internal taxes. Internal taxes were frowned upon by the Founder's especially when a national revenue could be had by requiring foreign nations to pay for the privilege of doing business on American's soil!
Jefferson, in his Second Annual Message (December 15, 1802) states:
"In the department of finance it is with pleasure I inform you that the receipts of external duties for the last twelve months have exceeded those of any former year, and that the ratio of increase has been also greater than usual. This has enabled us to answer all the regular exigencies of government, to pay from the treasury in one year upward of eight millions of dollars, principal and interest, of the public debt, exclusive of upward of one million paid by the sale of bank stock, and making in the whole a reduction of nearly five millions and a half of principal; and to have now in the treasury four millions and a half of dollars, which are in a course of application to a further discharge of debt and current demands."
Imagine...all this in consequence of "external duties!"
In Jefferson's Second Inaugural Address (March 4, 1805), he points out:
"At home, fellow citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary vexation which, once entered, is scarcely to be restrained from reaching successively every article of produce and property. If among these taxes some minor ones fell which had not been inconvenient, it was because their amount would not have paid the officers who collected them, and because, if they had any merit, the state authorities might adopt them, instead of others less approved."
"The remaining revenue on the consumption of foreign articles, is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, "what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States?"
The national sales tax idea would do ill to our nation as it is an internal system of taxation which ultimately increases the cost of goods manufactured on American soil; burdens the American Citizen in its collection; and, is to be paid BY the farmer, mechanic, laborer, etc. who will continue to see the intrusion of the "tax gatherer of the United States" if such a system is adopted!
It is also important to note how imposts and duties (external taxation) were successfully used to encourage domestic manufacturing and assist in building a strong industrial base. The first revenue raising Act imposed an across-the-board tax on imports which was higher for imports shipped in foreign owned foreign built vessels, and discounted the tax for imports arriving in American owned American built ships:
"a discount of ten percent on all duties imposed by this Act shall be allowed on such goods, wares, and merchandise as shall be imported in vessels built in the United States, and wholly the property of a citizen or citizens thereof."
This skillful use of external taxation gave American ship builders a hometown advantage and predictably resulted in America's merchant marine becoming the most powerful on the face of the planet. In addition, our national treasury was filled by foreigners paying for the privilege of doing business on American soil.
But this was when members of Congress, and those running for Office, put American interests first and would have considered NAFTA, GATT and the WTO as acts of sedition, and would have tarred and feathered those promoting such surrender of America's sovereignty.
A national sales tax plan which omits external taxation as a principal source to fill our national treasury, is in fact a surrender of national sovereignty to the advantage of foreign interests!
It is quite obvious the American People are fed up with the manner in which Congress now raises its revenue, and the system will be changed...one way or another. But if income taxation is abandoned and the Founders original tax plan is returned to, including the use of impost and duties at our water's edge as a principal means to fill our national treasury, a powerful group of international financiers and investors will have their gravy train cut off. Perhaps that is why a flat tax along with a national sales tax has been offered as "tax reform" by the establishment ... each proposal cleverly perpetuates a burdensome system of internal taxation as the principal means to raise revenue, and leaves the international gravy train in tact by not resorting to external taxation to meet the expenses of Congress as was intended by the Founders!
In closing, many of the same people who promoted the NAFTA, GATT and the WTO (the free trade crowd) are now promoting various forms of tax reform ... each proposal cleverly maintaining internal taxation as a principal means to raise a national revenue. Let us continually keep in mind the important distinction between internal and external taxation while working toward the elimination of income taxation and strive to return to the Founding Father's original tax reform package which provided the means allowing America to become the economic envy of the world.
One of the questions I have labored over concerning a national sales tax is this: if it is constitutional, and if Congress already has the power to tax anything it wants, why isn't there a national sales tax on everything already? I think the author's point, that our focus should be on external taxation, deserves some serious examination.
A national RETAIL sales tax is not what is described in the first paragraphs above. The word RETAIL changes everything.
One thing that is often ignore by its proponents is the NRST imposes a tax on goods AND services. This means millions of people who are self-employed will have to charge a 30% tax on top of their services.
GREAT POST!!!
Myopic FReepers would still rather report their income to the Feds via a "flat" tax.
The flat tax will again become the monstrous daddy that it is now if it's ever passed after the vulture lobbyists circle overhead and pick out their deductions for the special-interests groups.
Current unconstitional income tax is also a VAT - the prices for goods and services are adjusted to pay the hidden taxes paid to make the product.
The NRST would also tax the underground economy - drug dealers have to buy ziploc bags, homeless bums have to buy clothes from somewhere (unless if they buy it from a rummage sale, then it's not taxed again because it's already taxed)
For all intents and purposes there already is a national sales tax on everything you buy, although it isn't presented as such. Income and excise taxes on every level of domestic production and distribution make everything you buy cost 50-150% more than it would otherwise.
Because it's rather obvious, unlike (for example) a VAT, or income tax withholding.
You would actually see how much the government is costing you, every single day, day in, day out, on every sales receipt and that would lead to the question: "Am I paying too much money to Uncle?"
The politicians don't want to take the chance.
Raising the sales tax a mere 0.25% in California takes a lot of effort. This is a good thing.
The current gov't will NEVER return back to it's constitutional limits. Unfortunately, there will be unconstitutional federal depts and orgs hanging around.
Power is the mark. But suggest a step deeper. The legislators are financed by lobbyists and lobbyists are financed by those who provide the funds and these are the ones do not want to lose that power.
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