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.
Pray tell what 'must' happen?
You're wrong. I have seen more and more supporters of fundamental tax reform elected every election cycle. We're getting there--slowly to be sure--but getting there nonetheless.
Me and those like me are hardly the ones staking the future of our children on wishful thinking. We are working sacrificially down in the political trenches to bring about real change.
It is those who hate the current monstrosity, but have no solution of their own, that are doing that. Respectfully, there are plenty of those on this thread.
Criticism does not equal a plan to fix the problems.
So, you are saying that all the tax now paid by corporations will be shifted onto the backs of citizens?
Why can you not see that that is exactly where the burden is now, only hidden?
If the government isn't tracking income, how would it know where all of your money is coming from?
Why should the government need to track income? Under a retail sales tax, government doesn't care and doesn't need to know where all your money is coming from. The only interest is how much much is received by those selling retail goods or services. Business-business sales, and payroll is not taxed, only purchases are taxed at point of retail sale of new goods, and of services.
Under the NRST, government only needs to worry about total retail receipts reported by businesses. Government can focus on ferreting out that much smaller group involved in retail sales as compared to the large number of citizens receiving income from all sources now.
There is a substantial gain in enforcement and investigative efficiency when resource can be concentrated with regard to a small group as opposed to the whole citizenry.
Note that I do believe these enforcement problems can be solved. I simply don't think that solving them will be easy or automatic. Talk to your state's taxation department about enforcement problems with their existing sales tax. Those problems will only get worse if the tax rate tops 20%, as they have with motor fuels and cigarettes.
How can that be? The marginal tax rates of the current system now exceed more than 30% with an additional 20% tax overhead costs. That creates a 15% non-compliance in the current system where the enforcement effort is overwhelmed by shear numbers of tax reporters and income earners.
How can a lowering of a tax imposed burden exceeding marginal rates of more than 50% to 20-23% of a revenue neutral NRST induce greater non-compliance? Especially considering that enforcement efforts can be focus on a much smaller number of tax collection points than the current income/payroll tax system has.
You are welcome to your opinion but, I see enforcement and compliance problems improving by going to the NRST, not getting worse.
Really, how many generations do you believe the political parasites can stall off any meaningfull change?
Criticism does not equal a plan to fix the problems.
My only criticism is of your non-plan.
Only if the consumer agrees to pay them. Otherwise, businesses do not survive.
'Non-plan'???
The NRST is one of the most well-thought-out plans in history. It is detailed, comprehensive, and complete.
It has been carried forward by thousands of patriots who have spent the last decade educating the electorate, and who continue to do so--fighting the good fight over the long haul in the real world of politics.
If this is a non-plan, then nothing would qualify as a plan.
You just don't know what you are talking about.
Are you saying that the continuation of American business is predicated on the continuation of the current system? I wish I had a nickel for every business that has foundered on the shoals of taxation and compliance difficulties under the current system. I could retire today.
You must really like the status quo.
In the final analysis all costs, all taxes are passed onto the customer. Taxes are remitted out of sales revenues there is nowhere else they can come from. All taxes get passed down to the individual citizen one way or another.
So, you are saying that all the tax now paid by corporations will be shifted onto the backs of citizens?
Of course. The individual citizen, a human being, is the only entity having the capacity to pay anything. Organizations are merely a pass through mechanism for taxes to government from a taxation viewpoint.
What happens to a business that has no sales revenue? Guaranteed it doesn't remit taxes or pay wages or capital returns to individuals from which taxes can be extracted for very long.
In the end it is the individual, purchasing goods, receiving wages, dividends, interest etc. that pays the burden one way or another.
Maybe a few with so many well-meaning conservatives who refuse to look at all of this closely and with an honest eye; and who because of that become de facto defenders of the status quo.
I've already tried that; havn't you.
Businesses ultimately don't pay taxes. They simply pass along costs to the consumer.
Only if the consumer agrees to pay them. Otherwise, businesses do not survive.
DUHHHH! Businesses that do not survive can not pay anything.
OK. But what if the feds decided they weren't getting enough revenue from this kind of tax and wanted to tax it at different levels? What if they decided that instead of say a 10% tax, they would increase it to 25%, 30%? What that be such a good idea? I'm not enthralled with this idea.
DUHHH! If you get your way none will pay.
That's a very important point --- the Chinese workers can accept very little in wages because they don't have to turn around and pay Social Security and income tax plus all the property tax and state and local taxes. In order for Americans to be able to compete with third world labor, their labor should be taxed at the same rate as ours ---a national sales tax instead of income tax would go a long way to making things equal. As it is now, those who choose to buy American made products are severely punished because much of the price ends up in the government's hands.
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