Posted on 04/21/2002 5:42:46 PM PDT by Starmaker
Income Tax time has come upon us and people have grown to accept the fact that paying taxes is a way of life. Very little thought is given to the fact that the money we pay in taxes is our hard earned income and that it is essentially forcibly being taken away from us before we even get our hands on it. By withholding a portion of one's income the government essentially confiscates wage earnings before they are ever received.
It hasn´t always been this way but only the older people of our generation can actually remember that. The Federal Government has achieved the position of saying that these funds belong to them and it is the tax payers who are the criminal if they attempt to retain what they have earned. They own these funds and then gleefully pit one element of society against the other over the balance that they leave in the hands of the public. You are a bad person for making too much money and must therefore pay a disproportionate amount to the government, who becomes more and more to look like the Mafia. Honest citizens are made to feel like they may be liable for severe penalties should they not make the correct arbitrary decision relating to income and deductions.
A case in point is Nina Doherty who received stock options from an Internet company she worked for and subsequently exercised them in 2000. At that time the market value of the stock made her holdings worth $400,000 if she were to have sold them. It is a fact that the realized value of anything is only what revenue is received for it at the time it is sold. However, the income tax code defies this reality and although her stock is now worthless Nina is stuck with a tax of over $100,000 based on revenue that she never realized. Doesn´t that sound like an irrational and unfair tax code provision.?
Numerous similar onerous provisions exist in a tax code that has grown like a cancer over many decades. In fact, one could say that the very passage of the constitutional amendment creating the income tax in 1913 was similar to a carcinogen that created a cancer as Congress enacted laws that enabled and expanded its tentacles. Members of the federal government fed the cancer by inserting provisions in this law that conceded tax revenue to some at the expense of others. Over the decades they have used changes in the tax code for purposes of social engineering and to provide benefits to special interests and constituencies of respective legislative members. In return, of course, benefits accrued to those providers in a quid-pro-quo manner that bordered on bribery. In addition, this tax system seemingly contradicts the provisions of our Constitution in two ways.
1. The IRS process considers a tax payer guilty until proven innocent 2. It violates provisions of the 5th Amendment that protects against providing evidence against yourself. Information on a tax return has been used against a filer. There are incidents of filers submitting their return unsigned stating a signature would be applied only if there was a guarantee that its contents would not be used against them in the future.
It should be apparent to anyone having the ability to see the obvious, the ridiculousness of the present tax code. It is amazing that supposedly intelligent well meaning legislators are still attempting to solve all the economic needs of our country by tinkering with an antiquated, special interest oriented, unproductive and corrupt taxation system. It doesn't take a Nobel prize winner in economics to come to the conclusion that any taxation laws that rely on the arbitrary selection of tax credits, alternative minimum tax for selected types of income, loop holes, concessions to lobbyists and provisions that cater to political factions has little chance of providing anything resembling the proper economic ends that prompted the initiative in the first place.
The only reason taxes are imposed is to collect revenue to support government operations. It is entirely irreconcilable for taxes to be imposed for any other purpose. We should ask ourselves, what the derived revenue when applied in government spending is supposed to accomplish in fact? If we clearly think this question through I believe we must come to the simple conclusion that it is to provide our citizens, in the best manner possible, with the conditions that allow each individual citizen to live a reasonably free, safe and economically productive life. To provide this does not require manipulation of the manner in which the tax revenue is derived. In fact, it does require that the imposition of taxes does not infringe on freedom, safety or the ability for individual citizens to pursue their respective economic pursuits In essence it only requires the revenue.
There are elements in society that keep harping on the fact that the tax code should be fair. The definition of fairness in taxation can be quite broad. Contrasting the tax the rich in progressively higher proportion than others syndrome that surrounds us, I propose the following questions.
Is it fair to have your neighbor pay a higher portion of his income in taxes because he may have exercised his abilities and assets in a way that provided him with a higher income?
Is it fair to expect a person to still want to produce more when a disproportionate amount of his income is taken away by the Government in taxes?
Is it fair to tax an older person, who has just been able to reach the income necessary to contribute to his children's college education, at the same rate as a younger person who not having this responsibility but earning the same income, will probably have accumulated a greater degree of wealth at the same age?
Is it fair to tax a person on a capital gain he has made in an investment paid for by after tax dollars and also where the increase in appreciation caused by inflation is included in the gain?
Then the most important -
Is it fair to take away the creation of jobs for those who are in the lower income area by over-taxing those with high incomes who would invest their money directly or indirectly creating those job? Money that is taken away through taxes does not go into the savings and investment pool which creates jobs by providing the funds for companies to start up or grow.
A fair person should answer in the negative to all of these questions. True fairness requires completely abolishing the present tax code, thus eliminating its arbitrary elements and developing a new one that relies on simplicity, fairness and economic soundness. A sensible new way to provide the government with income would be one where every American would become a voluntary taxpayer, choose how much they wish to spend in taxes, and know that everyone is paying the same amount on purchases. One that provides for no taxation of low-income individuals and eliminates the taxes that seniors pay on Social Security benefits, pension benefits, investment income and the like.
Such a plan has been developed by the Fairtax organization. The FairTax would repeal all income taxes – individual and corporate – as well as payroll, self-employment, estate and gift taxes and abolish the I.R.S. In its place, the FairTax would levy a flat sales tax on the final sale of new goods and services with no exemptions and no exceptions. Further, the FairTax is revenue neutral so that the government will continue to take in the same amount of money it receives currently and thus will not be forced to cut government services. The removal of payroll taxes along with income tax will offset the sales tax. In order to ensure that low-income individuals are not unduly burdened under the FairTax, the FairTax simply "untaxes" these workers. Every household is to receive a monthly rebate equal to the tax on spending up to the federal poverty level. Should you wish to learn more you are referred to their website .
It is unlikely that tax reform will be addressed by our government as long as it is preoccupied with the threats to our country that presently exist. However, it is in such times when necessary reforms are put to one side that it is necessary for concerned citizens to express to the degree possible the continuing need for government to address violations of the basic tenets of our Constitution. There should be no doubt that the application of the 16th Amendment to the Constitution should be considered such a violation.
To comment on this article or express your opinion directly to the author, you are invited to e-mail Ben at ratadv@pacbell.net .
"... legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children,...But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state."
-- Thomas Jefferson to James Madison, Oct. 28, 1785 -- PROPERTY AND NATURAL RIGHT
And it's so depressing to hear all my relatives and friends that have a litter of kids how much of a refund they're getting back. I tell them it's nice of the govt. to give you your money back to you. Idiot's!
A tax on all sales is simply not Constitutional. The Federalist Papers show that.
Strange, I can't seem to find that either in the Constitution, or in the Federalist Papers.
Could you provide us with a reference, and quotation of such?
Then we will have the worst of both world, an income tax AND a sales tax!!
Actually there is something worse, an individual income tax of whatever variety and a "hidden sales tax".
With that combination it is possible for politicians to create the appearence of a tax exempt class of the electorate in combination with a heavily taxed minority, while hiding a substantive portion of the tax burden behind a screen of inflation using business and the rich as whipping boys.
http://www.house.gov/ways_means/fullcomm/105cong/4-15-97/4-15hubb.htm
"Under a subtraction-method value-added tax (VAT), each business has a tax base equal to the difference between receipts from sales of goods and services and purchases of good and services from other businesses. [Receipts - Costs = Income] This measure of value added is then taxed at a fixed tax rate. Because the aggregate business tax base equals aggregate sales by businesses to non-businesses, the tax base is equivalent to aggregate consumption. As long as the tax rates are the same, such a tax is equivalent to a European-style credit-invoice value-added tax."
http://www.taxfoundation.org/foundationmessage03-00.html
" Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law.
As Glenn Hubbard of Columbia University and others have argued elsewhere, the signal difference between expensing and economic depreciation is the time value of money, estimated in percentage terms at roughly 3 percent of the value of the principal annually. This means that for a relatively small amount of tax revenue, the U.S. could make its corporate income tax a WTO-sanctioned indirect tax. "
Definition [ http://www.encyclopedia.com/articles/13330.html ]:
value-added tax
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.
The current corporate income/payroll tax structure now in place is a subtraction method VAT, a levy imposed on businesses at all levels of production, passed on to the consumer hidden in the price of goods and services.
Walter Williams, World Net Daily, 10-25-2000
According to the most recent U.S. Treasury Department figures, ... the top 50 percent ($36,000 and over) paid 96 percent of income taxes. Guess what the bottom 50 percent of income earners paid?
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
Think about it, which shell did they hide the pea under.
In politics perception is everything:
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
70% of the public clamors for more from government, believing someone else foots the bill.
Every man woman and child in the nation, pays federal taxes through that VAT.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
Why? Because all wages and the taxes on them are paid for out of sales receipts to business,(i.e. consumption expenditure).
Federal tax revenues collected as % of current family expenditure = fed/(1-state-fed-savings) =
23.5/(1-.235-0.102-0.012) = 36.09%
If we add in the cost of federal tax compliance, planning, litigation & enforcement, the percentage that truely represents the burden on the family due to the Federal income/payroll tax system, product prices are increased by more than 55% over taxfree prices.
Where Have All the Dollars Gone?
How the government robs Peter to pay him back.
By economist James L. Payne, Reason Magazine February '94When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue.
Current total Federal tax revenues are about $1900billion, more than $1,000 billion additional dollars are added on onto consumption prices due to the business costs of complying with the federal income/payroll tax laws.
The percent total current federal burden (taxes + compliance costs) of consumption dollars = 36*(1900+1000)/1900 = 54.95% economic burden added on to base retail(i.e. taxfree) prices.
Too bad that citizens don't get a receipt detailing those "hidden sales taxes" buried in their consumption purchases. If they ever did, some of those 70% of the public clamoring for more from government, thinking someone else foots the bill, might be tempted to change their mind.
Unfortunately, a) the income tax has been added to the Constitution through the amendment process (never mind that there are some that this was done illegally: It's there), immediately making it Constitutional; b) As Walter Williams has said, Government has the power to kill you if you don't pay taxes...
I believe that a retail sales tax (rather than a VAT) would be the best choice... You make your choices as to how much tax you pay by how much you buy. For the fans of "progressive" (i.e. socialist) taxes, certain required purchases could be exempt, like food in grocery stores and clothing below a certain cost, and housing.
Something that opponents of the current tax code should lobby for is to repeal the requirement of automatic withholding of federal taxes. Make everyone write a quarterly check to the IRS. In less than a year, there would be a massive tax overhaul!
Mark
Oops... Sorry, a clarification here. If the current income tax were to be abolished, and replaced with a sales tax, it would require an amendment to the Constitution, making it Constitutional.
Sorry about that... It's been a very long day.
Mark
This was the thinking vis-a-vis all excises as well as duties. A tax on whiskey - a single item, is one thing. It is self regulating. A tax on everything is something else. A tax on a single commodity can be avoided, a uniform tax on everything (like an NRST) cannot be avoided and therefore provides no negative feedback loop - a concept the founders understood.
I have nothing further to say on the subject so feel free to break out your Taxprotester's Hall of Fame sheet now. I won't be back. Bye.
Could you provide us with a reference, and quotation of such?
Try this one:
from HR2525:
Then this from:Wisconson Dept. of Revenue:
Sales of goods and services to the federal government or to any of its incorporated or unincorporated agencies or instrumentalities are exempt from the sales tax. Taxing purchases by the federal government would violate the U.S. Constitution, so the fiscal effect of this exemption has not been estimated.
He also said (on another subject) this:
Do we allow the federal government to determine the scope of its own powers? Should we accept whatever Congress, the White House and the courts say is constitutional? .......no one has a moral obligation to obey unconstitutional laws. That's not to say there isn't a compelling case for obedience to unconstitutional laws: the brutal force of the federal government to coerce obedience.
That does not however prevent the federal government from taxing its own entities.
This is a Federal tax, taxing consumption of its own Federal agencies. There is no violation of State autonomy by the Federal authority, nor Federal autonomy by a state authority.
a uniform tax on everything (like an NRST) cannot be avoided
First: The NRST of HR2525 does not tax "everything". Business purchases are not taxed, used goods are not taxed, a person's own produce for his own use is not taxed. A person's labor for himself is not taxed. Therein are plenty of opportunities to avoid both the collection and remittence of the tax as a business, as well as payment of the tax by the consumer.
Secondly, the concept of not being able to tax beyond a certain level, is mentioned as a virtue of consumption taxes in general because it decrease sales of that which is being taxed, it is not a prohibition in the Constitution for laying a tax on all items.
Note: Hamilton's tax on whiskey, taxed all whiskey. If one wished to purchase that commodity they paid the tax and when the "duties are too high they lessen the consumption--the collection is eluded;" That is not to say they had an legal alternative source of that commodity. Merely that people buy less of that which is taxed.
In the case of a general the NRST something not puchased results in savings & investment that reduces prices through increases of productivity and pressure on competitive pricing causing a fall in overall tax + product price cost. The tax is avoided, and the economy as a whole benefits the consumer both in the amount of tax collected from him, as well as the downward pressure of pricing, which is just the opposite of the current tendancy in the economy to inflate.
As usual, wrong again. There are no exemptions...remember?
`(a) GOVERNMENT ENTERPRISES TO COLLECT AND REMIT TAXES ON SALES- Nothing in this subtitle shall be construed to exempt any Federal, State, or local governmental unit or political subdivision (whether or not the State is an administering State) operating a government enterprise from collecting and remitting tax imposed by this subtitle on any sale of taxable property or services. ....
BTW, where does the federal government get the money to pay itself taxes?... That, and the sales(?) tax on "any government" wages sure shoots a hole in the "You make your choices as to how much tax you pay by how much you buy", theory doesn't it?
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