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May 17, 2007

More on the Fair Tax

by tarran

In a comment, Phillip Hinson brought up some very interesting points arguing in favor of the Fair Tax. I think he is on the wrong path, but they are quite respectable arguments, and I thought I would answer them.

He was writing in response to a post of mine where I argued:

To me the Fair tax is at best a waste of time or at worst a dangerous method of growing the size of government. I see few benefits to it; most people simply do not care how much they are paying in tax! It creates a new form of taxation to add to the income tax. I don’t think the income tax will ever go away. It may, at best be repealed for a decade or so, then will be brought back at the next fiscal crisis.
In the end, it is a frivolous exercise. The damage done by taxation is based on the amount taxed. How the tax is collected is far less important. Thus, while the Fair Tax does not prevent reducing spending at all, nor does it promote it. Thus every ounce of political capital and energy spent on adopting it is, in my mind, wasted.

Phillip responded,

We spend several hundered billion $$ per year in wasted compliance costs. Using a recent and conservative estimate of $265 billion/year, that is substantially more over a 10 year planning horizon than the last round of hotly contested Bush tax cuts. Are you saying that relieving that burden from American taxpayers is trivial?

I do not think compliance costs are trivial in and of themselves. I am starting my own business and compliance costs are my biggest single expense. However, in general the compliance costs are dwarfed by the actual cost of the taxes themselves. The compliance costs are a drain on the economy. As bad as they are, though, the amount taxed represents a far more destructive drain.

Phillip went on to say,

Also, we have a system which provides a competitive advantage in an increasingly global marketplace to foreign producers over and above our own domestic producers. Are you saying that you support, as a matter of public policy, the US providing an advantage to foreign producers?

I am also opposed to the US government giving any business an “advantage” over its competition. In this case, however, the solution to the problems caused by shooting ourselves in the foot are not to be fixed by shooting our neighbors in the foot too.

Phillip then stated,

Social Security and Medicare are headed for a financial disaster if we do not address the demographic dilemma which we are in. Of course, this problem never would have existed if those two programs had been set up on an actuarial sound basis to begin with. However, there is nothing that can be done about that now. The FairTax is the only proposal which I am aware of which addresses just this actuarial and demographic dilemma by replacing the revenue base of payroll taxes with a broader based tax on the entire economy.

This brings up an obvious question. If the programs are so screwed up, why bother saving them?

Social Security and Medicare are disasters precisely because they encourage waste, discourage production and as a result leave our society poorer in the aggregate. A program that is designed to help the government expand the resources it can commandeer to keep these disasters going isn’t a solution. It’ll just make the destruction wrought by those programs more extensive.

Phillip continued,

Furthermore, the current system facilitates and enables our legislators by allowing them to divide and conquer, passing out preferential tax treatment to friends while punishing enemies. By hiding much of the true cost from those bearing that cost, it reduces the public outrage which would otherwise occur.

This is one area where I strongly disagree with the Fair tax proponents about the immunity of their system to manipulation. The Fair Tax also treats different types of transactions differently; “new” goods for private consumption are taxed, everything else is not. I expect that politicians would get very creative about how they classify which transactions are taxable and which are not. Additionally, I would be very surprised if a uniform rate was kept in place. Just as food and clothing are taxed at different rates, or even sugar was taxed differently depending on whether it is imported dissolved in a solution or not, I think that within a few years a huge political movement would be put in place to tax “luxury” goods and “necessities” at different rates, despite the “prebate”.

Phillip then began to wrap up his argument with this,

We will never get to Constitutionally limited government under a continuation of the current system (which is probably why the Founders had the wisdom not to allow this type of system). We may not get there with the FairTax, but we certainly have a far better chance of it.

I agree with his first statement, and disagree with his second. Again, I think it is subject to the same forces of public choice gaming that any other form of taxation is prone to. People will not look at their receipts and scream “that’s outrageous”. They already see their tax-bill when they fill out their income tax forms. I think the vast majority of people simply do not care and that there is no way to get them to care. That, combined with the dangers that we will be saddled with a hybrid system combining both the income tax and the consumption tax makes the Fair Tax a very bad idea in my mind.

Again, I think the supporters of the Fair Tax are sincerely trying to make the United States a better place. I understand their arguments and respect them. I just think that they have misread the electorate and are underestimating the ability of politicians to exploit new ways of extorting the productive members of society.


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19 Comments

  1. tarran,

    I want to correct you on one point. The vast majority of people do not see their tax bill under today’s system because the complexity of the system is so bad that they have to hire a CPA to fill out the tax form. People definately notice if they get a refund or if they suddenly owe money, but not the total tax. Does that mean they would look at their tax bill on a receipt though? On that, I have to agree with you, but I do think it would be more transparent and allow for tax avoidance depending, as you mention, on what ultimately becomes “new” and what is allowed to be classified as “used.”

    Comment by trumpetbob15 — May 17, 2007 @ 4:18 pm
  2. The FairTax is not perfect. THere are no perfect ways to extort money from citizens. I support the FairTax because it is the strongest move in the right direction. It is gaining speed and it does stand a chance of passing. Ir is not a panacea but it will help a lot. It will make the changes that need to be made in areas like wealth envy and the political use of it. It would be political suicide to ask for an increase in the rate and the opposition will cry real loud if the FairTax is rewritten to gain favors.
    Let us not nit-pick but work toward ways to improve our lives. The FairTax is one of those ways

    Comment by Kenneth Howe — May 17, 2007 @ 10:23 pm
  3. I support the FairTax 100%. Anyone who cannot see the benefit of a sales tax rather than an income tax is just not doing the math. Look at the size of the consumption pool and the size of the income pool. Which is larger? We must change the system that punishes success if we are to continue to prosper. FairTax Now!

    Comment by Robert Kent RV — May 18, 2007 @ 7:02 am
  4. I don’t know which arguement against the FairTax is more frustrating…ones that distort and lie or those like this blog. It’s an argument akin to: “if confronted by a wolf, why put up a fight? You’ll be eaten anyway.” Your complaints here remind me of someone barefoot who has 3000 miles to travel. When offered a Jeep Cherokee, he refuses saying “You’ve got to be kidding!! Unless you give me a Rolls Royce I’ll keep walkinig!” Your goals are obviously way too far out of reach. The FairTax is obtainable. We are on the path to make the largest tax reform in our history. Though the media for the most part ignored 8500+ supporters at the Republican Presidential debate, the main topic of discussion at the Republican breakfast in Columbia SC was the FairTax and the amazing support from almost 9000 Americans. This grassroots effort is gaining steam and will force Congress to fix our broken tax system.

    Comment by Doug McCue — May 18, 2007 @ 7:18 am
  5. The Fair Tax has advantages over the present system.The Tax problem lies in the appetite of Congress to spend money. Less government is the answer. The present set-up will be almost impossible to change because of the Bankruptcy of this country in 1933 and the lien that the International Bankers have on the labor of the American Worker and this statement is a matter of record and history.

    Comment by Norman Earley — May 18, 2007 @ 8:33 am
  6. Most who disagree with the “FAIRTAX” lament about the power of the politicians to “do what they want to anyway”. The “FAIRTAX” takes away some of their power. One of our greatest problems is “roll over and play dead” like Gellhaus and Knapp suggest

    Comment by Billy Wilks — May 18, 2007 @ 8:35 am
  7. The key points of the FairTax in my mind are:
    1) The criminal class finally pays their taxes(!)
    2) The playing field vis-a-vis subsidized foreign
    industries is levelled.
    3) Investment is encouraged.

    Comment by David — May 18, 2007 @ 11:19 am
  8. Federal (over)spending is another issue entirely! The Fair Tax is not intended to address that. It deals with how the federal government COLLECTS revenue – not how they spend it. (That’s a battle on another front.)

    These objections aren’t on the MERITS of the Fair Tax proposal, i.e., what is set forth in the Fair Tax Act itsself, but instead, on what Congress and others MIGHT do in the future. (Do you have a crystal ball or something?) The Fair Tax isn’t perfect, but there’s just something about the federal government FINALLY getting a cut of the currently UNtaxed income of drug dealers, prostitutes, gamblers, undocumented aliens, et al., when they BUY stuff . . . and stuff they WILL buy.

    Comment by tea2dump — May 18, 2007 @ 11:37 am
  9. I am an active FairTax supporter and have introduced thousands of citizens over the past two years to this proposal. I have not found that the “vast majority of people simply do not care” about taxes, in fact I would say quite the opposite. Supporters like myself are in direct contact with the American people and if we have “misread the electorate” I would like to know by what means has the author gauged their feelings about this issue.

    Comment by Jackie Fowler — May 18, 2007 @ 1:06 pm
  10. Just looking over your arguments I noticed several errors almost immediately. It is nothing that can’t be addressed. You are simply mis-informed on some aspects of the Fair Tax. No problem! Here let me help.
    You said:It creates a new form of taxation to add to the income tax. I don’t think the income tax will ever go away. It may, at best be repealed for a decade or so, then will be brought back at the next fiscal crisis.
    Wrong sir. The Fair Tax is not added to the income tax. It REPLACES the income tax. And the next fiscal crisis you ask? Why enact an income tax when simpley raising the Fair Tax a percent or two will cover the cost? What would be easier for the politicians? “We need to add an income tax to you people” or ” We need to raise taxes by 1/2 percent to cover X” Half of a percent doesn’t sound like much. Far easier than bringing back an unpopular tax system such as the income tax.
    Think that bit over for a while. This movement may take years or decades, but it’s moving. People hate the IRS. I do agree with you that far too many Americans are just too damn lazy or uneducated to care.

    Comment by steven lee — May 18, 2007 @ 3:50 pm
  11. From what you have written we can all see that you are opposed to the FairTax. Fine. What is your opinion for something better?

    You and your ilk make a living by the negative commentary without ever proposing something better.

    To me it’s time for you to put up or shut up.

    Comment by Duane Neighbors — May 18, 2007 @ 7:56 pm
  12. Frankly, I’m so sick of the IRS, of Congress, and of the ill-informed irrationalizers who nay-say the FairTax, that I am willing to go to jail as a rabid member of a Tax Revolution that REFUSES to pay ANY taxes at all. I can assure you, you will have several years or more of non-payment before the IRS will want to talk sternly with you, considering their complete ineptitude. But that’s what it will untimately take, an ANGRY Revolution. Did our forefathers sip their tea to make their point clear? Do illegal immigrants have siestas talking about their woes to make their point clear? It may have been how they started, but what ultimately got the job done? What’s the saying about the squeaky wheel getting the grease? Just imagine, a quarter-million decent, previous taxpaying citizens marching on Washington, surrounding the Capitol, burning Tax Forms on April 15th! Ah, what a GREAT vision. At least then I could spend my birthday doing something constructive! Viva La FairTax!!! It is the RIGHT thing for America.

    Comment by Hadley Lamar — May 18, 2007 @ 11:12 pm
  13. Sorry if this comment is late, I haven’t been keeping up with every post this week.

    Billy, you say that Knapp and I want to “roll over and play dead”. That is a total misreading of what we are saying about the Income Tax versus the Fair Tax. It implies we don’t want to make any change at all to the Income Tax, when that is definitely NOT the case.

    One of the, if not the MAIN, objections to the Fair Tax is that it is revenue neutral.
    (This seems to be one reason why the Mises Instutite and Congressman Ron Paul are not enthusiastic supporters of it)

    The reason people hate the income tax is that it is so excessive and funds SO MANY unnecessary bureaucratic agencies. I really doubt that a national sales tax, gathering the SAME amount of money, and administered from a federal agency – yes there would have to be some IRS-equivalent agency – would gain support from the average person once they understood what LITTLE real difference it would make.

    Our objection to both forms of taxation is simple – it is theft, no matter how you try to phrase it.
    If I have a business, selling goods that people desire to buy, each customer enters into a willing transaction with ME (rather than a competitor, assuming my goods seem more valuable). The government steps in, uninvited, and takes money from one of us. By force, if necessary. That is your so-called Fair Tax.

    To answer the question of how the government would get its money if there is no taxation at all, I guess I would say…THATS NOT MY PROBLEM TO SOLVE.

    Comment by Tom Gellhaus — May 19, 2007 @ 7:44 am
  14. “To me the Fair tax …creates a new form of taxation to add to the income tax.”

    This is precisely NOT what the FairTax would do. Part and parcel with the FairTax is the repeal of the Sixteenth Amendment, so no, it would not be in addition to the current income tax.

    Ultimately, NO tax is easily borne, as one with no rights to your money steps in and demands a portion of yours, like a schoolyard bully. The FairTax is simply the most transparent and least onerous of the choices. It has my support.

    Comment by The Aardvark — May 19, 2007 @ 9:45 am
  15. Again – repeal the Sixteenth Amendment FIRST, then I might consider supporting your Fair Tax. I don’t trust the politicians, either in the states or in Congress, to repeal it afterwards. And you shouldn’t either.

    The Aardvark, you are basically saying that a schoolyard bully DOES have your support. You just think he will be LESS bullying than the other guy.

    Comment by Tom Gellhaus — May 19, 2007 @ 10:14 am
  16. “Again- repeal the Sixteenth Amendment FIRST, then I would consider supporting your Fair Tax.”

    It seems that your biggest objection is with the political class rather than the Fair Tax.
    I agree that the politicians as a rule are not trustworhty, but there are a few of them that know why they are in Washington and who it was that sent them. John Linder is one of them. As the author of the Fair Tax Bill(HR25) he made sure that the language of the bill requires the repeal of the Sixteenth Amendment before anything else can go forward. I guarantee that he will not let that provision be changed.
    The Fair Tax is the best proposal out there to not only give transparency of the process, but to give a huge boost to the economic strength of this country. By relieving the corporate community of the onerous burden of the current tax code, you free them up to do what they do best- drive the economy. What better way to keep the ecomony strong than to create an influx of businesses previously going to our overseas competition because of our tax structure. One prime example of which was Diamler-Chrysler. We lost their corporate headquarters because of the unfair tax burden that all U.S. companies bear.
    Small businesses also have to deal with these same taxes. You said that you wanted to start a company,but you didn’t like having an uninvited party coming in and taking part of your transaction at the point of a gun. Well you will be doing that anyway because part of your cost of doing business is figuring in the tax liability of you and your employees in your overhead and therefore in your prices. YOU’RE ALREADY PAYING THEM, it’s just hidden from your and your customer’s view. That’s why they call them embedded.
    It’s going to take a grassroots effort like this one to make any changes in D.C. Quit bitching about everyone elses proposals and do something.

    Comment by Don Knighten — May 19, 2007 @ 12:23 pm
  17. The alleged fair tax is un-constitutional on its face. It proposes to violate the very reason for which Art. 1, Sec. 2, Cl. 3 was agreed to by our founding fathers.

    The framers of our Constitution intended to allow Congress to raise its necessary revenue from imposts and duties [taxes at our water‘s edge], and miscellaneous excise taxes [internal taxes]. And if imposts, duties and miscellaneous internal excise taxes were found insufficient to meet Congress’s expenditures, and a general tax among the states were found necessary to meet Congress’s expenditures, the following formula would be observed:

    State`s population

    ——————————X SUM TO BE RAISED = STATE`S SHARE

    Total U.S. Population

    After determining the total sum needed, and each state’s share was calculated, each state’s Congressional Delegation was to then return to their own state with a bill to extinguish their state’s share of the tax. and the various state legislatures and Governors were then to retain the responsibility of having to meet that financial responsibility in their own chosen way, which would prevent Congress from entering the states and taxing the people as Congress may think proper, and manipulating who shall pay the federal burden.

    In addition, Art. 1, Sec. 2, Cl. 3 was also a compromise the insure that those states paying the lion’s share of the federal tax burden in a general tax among the states, would be compensated by a vote in Congresses equal to the financial contribution ___ a vote to be exercised when Congress determines how to spend their money! And this is another aspect of our founding father’s plan, representation with proportional obligation which socialists and the friends of our Washington Establishments political plum job empire hate with a passion, and H.R. 25 is designed to subjugate.

    Keep in mind there is a vast difference in laying miscellaneous excise taxes on specifically chosen articles of consumption from a general tax among the states which is specifically intended to be Congress’s primary source to fill the national treasury___ the latter type of tax being the very type of tax for which the rule of apportionment was adopted ___ a general type of tax among the states as a primary means to fill the national treasury which would make the most productive states in the union carry the largest share of the federal tax burden! And so, a compromise was reach tying such a tax and representation by the same standard…each state‘s population‘s size

    Of course this has already been established by the SCOTUS in POLLOCK V. FARMERS’ LOAN & TRUST CO., 157 U.S. 429; (1895) which struck down a tax because it would have subjugated the intentions for which the rule of apportionment was adopted! The Court carefully documents the intentions for which the rule of apportionment was adopted___ two illuminating references being:
    Mr. George Nicholas said: “the proportion of taxes is fixed by the number of inhabitants, and not regulated by the extent of territory, or fertility of soil. . . . Each State [*568] will know, from its population, its proportion of any general tax. As it was justly observed by the gentleman over the way, (Mr. Randolph), they cannot possibly exceed that proportion; they are limited and restrained expressly to it. The state legislatures have no check of this kind. Their power is uncontrolled.” 3 Elliot, 243, 244.

    Mr. Madison remarked that “they will be limited to fix the proportion of each State, and they must raise it in the most convenient and satisfactory manner to the public.” 3 Elliot, 255

    CLICK HERE FOR An Act to lay and collect a direct tax within the united states1st direct tax July 14, 1789 for $2 million and each state’s share of the $2million being raised.

    CLICK HERE FOR Section 7 of the direct tax of 1813allowing states to pay their respective quotas and be entitled to certain deductions.

    H.R. 25 proposes to subjugate the intentions for which the rule of apportionment was adopted. PERIOD

    Supporters of H.R. 25, the alleged fair tax, and the socialists who worked very hard to adopt the 16th Amendment, both have something very much in common ___ the subjugation of the rule of apportionment by which the people of the various states agreed they would contribute into the common treasury if imposts, duties [external taxes] and miscellaneous excise taxes [inland taxes on consumption] were found insufficient to meet Congress’s expenditures.

    But the difference between the socialists who promoted the 16th Amendment and those who now promote the alleged fair tax is this.

    The socialists who promoted the 16th Amendment were up front and promoted exactly what they wanted:

    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

    But the weasels behind H.R. 25, who are obviously the friends of big government, are not being up front in saying exactly what they want, which is:

    The Congress shall have power to lay and collect taxes within the various states on the sale of property, real and personal, without apportionment among the several states, and without regard to any census or enumeration.

    Instead of saying exactly what they want, direct access to the people’s property, real and personal, they hide their evil by calling it the “fairtax“! But when all is said and done, H.R. 25 is the same socialists type taxing pig we now have but in a different dress!

    The only tax reform freedom loving people need is to have the following words added to their Constitution, bringing us back to ourFOUNDING FATHER‘S ORIGINAL TAX PLANwhich was created by tax rebels and designed to control the actions of Congress, rather than having Congress control the people:

    The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money

    Regards,

    JWK

    Comment by johnwk — May 19, 2007 @ 9:40 pm
  18. The alleged fair tax is un-constitutional on its face. It proposes to violate the very reason for which Art. 1, Sec. 2, Cl. 3 was agreed to by our founding fathers.

    The framers of our Constitution intended to allow Congress to raise its necessary revenue from imposts and duties [taxes at our water‘s edge], and miscellaneous excise taxes [internal taxes]. And if imposts, duties and miscellaneous internal excise taxes were found insufficient to meet Congress’s expenditures, and a general tax among the states were found necessary to meet Congress’s expenditures, the following formula would be observed:

    State`s population

    ——————————X SUM TO BE RAISED = STATE`S SHARE

    Total U.S. Population

    After determining the total sum needed, and each state’s share was calculated, each state’s Congressional Delegation was to then return to their own state with a bill to extinguish their state’s share of the tax. and the various state legislatures and Governors were then to retain the responsibility of having to meet that financial responsibility in their own chosen way, which would prevent Congress from entering the states and taxing the people as Congress may think proper, and manipulating who shall pay the federal burden.

    In addition, Art. 1, Sec. 2, Cl. 3 was also a compromise the insure that those states paying the lion’s share of the federal tax burden in a general tax among the states, would be compensated by a vote in Congresses equal to the financial contribution ___ a vote to be exercised when Congress determines how to spend their money! And this is another aspect of our founding father’s plan, representation with proportional obligation which socialists and the friends of our Washington Establishments political plum job empire hate with a passion, and H.R. 25 is designed to subjugate.

    Keep in mind there is a vast difference in laying miscellaneous excise taxes on specifically chosen articles of consumption from a general tax among the states which is specifically intended to be Congress’s primary source to fill the national treasury___ the latter type of tax being the very type of tax for which the rule of apportionment was adopted ___ a general type of tax among the states as a primary means to fill the national treasury which would make the most productive states in the union carry the largest share of the federal tax burden! And so, a compromise was reach tying such a tax and representation by the same standard…each state‘s population‘s size

    Of course this has already been established by the SCOTUS in POLLOCK V. FARMERS’ LOAN & TRUST CO., 157 U.S. 429; (1895) which struck down a tax because it would have subjugated the intentions for which the rule of apportionment was adopted! The Court carefully documents the intentions for which the rule of apportionment was adopted___ two illuminating references being:

    Mr. George Nicholas said: “the proportion of taxes is fixed by the number of inhabitants, and not regulated by the extent of territory, or fertility of soil. . . . Each State [*568] will know, from its population, its proportion of any general tax. As it was justly observed by the gentleman over the way, (Mr. Randolph), they cannot possibly exceed that proportion; they are limited and restrained expressly to it. The state legislatures have no check of this kind. Their power is uncontrolled.” 3 Elliot, 243, 244.

    Mr. Madison remarked that “they will be limited to fix the proportion of each State, and they must raise it in the most convenient and satisfactory manner to the public.” 3 Elliot, 255

    CLICK HERE FOR An Act to lay and collect a direct tax within the united states1st direct tax July 14, 1789 for $2 million and each state’s share of the $2million being raised.

    CLICK HERE FOR Section 7 of the direct tax of 1813allowing states to pay their respective quotas and be entitled to certain deductions.

    H.R. 25 proposes to subjugate the intentions for which the rule of apportionment was adopted. PERIOD

    Supporters of H.R. 25, the alleged fair tax, and the socialists who worked very hard to adopt the 16th Amendment, both have something very much in common ___ the subjugation of the rule of apportionment by which the people of the various states agreed they would contribute into the common treasury if imposts, duties [external taxes] and miscellaneous excise taxes [inland taxes on consumption] were found insufficient to meet Congress’s expenditures.

    But the difference between the socialists who promoted the 16th Amendment and those who now promote the alleged fair tax is this.

    The socialists who promoted the 16th Amendment were up front and promoted exactly what they wanted:

    The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

    But the weasels behind H.R. 25, who are obviously the friends of big government, are not being up front in saying exactly what they want, which is:

    The Congress shall have power to lay and collect taxes within the various states on the sale of property, real and personal, without apportionment among the several states, and without regard to any census or enumeration.

    Instead of saying exactly what they want, direct access to the people’s property, real and personal, they hide their evil by calling it the “fairtax“! But when all is said and done, H.R. 25 is the same socialists type taxing pig we now have but in a different dress!

    The only tax reform freedom loving people need is to have the following words added to their Constitution, bringing us back to ourFOUNDING FATHER‘S ORIGINAL TAX PLANwhich was created by tax rebels and designed to control the actions of Congress, rather than having Congress control the people:

    The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money

    Regards,

    JWK

    Rescued from the Spam Filter–Kevin

    Comment by johnwk — May 19, 2007 @ 9:48 pm
  19. It has been asserted above that the author of H.R.25, Rep. John Linder, has “made sure that the language of the bill requires the repeal of the Sixteenth Amendment before anything else can go forward. I guarantee that he will not let that provision be changed.

    Truth is, the text of H.R. 25 merely proposes the 16th Amendment “should be” repealed. In addition, neither does H.R. 25 propose to get rid of taxes calculated from profits, gains, salaries and other “incomes”. And, none of the co-sponsors of H.R. 25 propose to get rid of taxes calculated from profits, gains salaries and other “incomes”.

    The architects of H.R. 25 have left a very clever loophole in the language of H.R. 25 allowing Congress to continue calculating taxes from profits and gains and other “incomes“. This of course would also allow a continuance of the existing misery of record keeping under taxes laid upon “incomes“.

    H.R.25 stipulates the following:

    SEC. 101. INCOME TAXES REPEALED.
    SEC. 102. PAYROLL TAXES REPEALED.
    SEC. 103. ESTATE AND GIFT TAXES REPEALED.

    Well, isn’t that peachy? But, there is no language in H.R. 25 suggesting to repeal all taxes which may be calculated from profits, gains, salaries and other “incomes”! Why is this pertinent and ought to cause alarm? To understand this one must study FLINT v. STONE TRACY CO., 220 U.S. 107 (1911), a case decided prior to the adoption of the 16th Amendment. The Court upheld an excise tax, ‘the corporation tax’ law of 1909, which was laid upon the privilege of being a Corporation and the amount of tax to be paid was calculated from profits and gains realized under the corporate charter granted by government. Although such a tax looks like and quacks like an “income tax”, it is not a generic “income tax” and is not even suggested to be repealed by the language of H.R. 25!

    If H.R. 25 were adopted, our socialist Congress would have no difficulty gaining popular support to use its “excise” taxing power to enact a small excise tax on the “windfall profits” of those evil corporations and then calculate the amount of tax to be paid from their profits, or, how about also laying a windfall profits tax on those evil and wealthy scoundrels in America who make millions of dollars a year in profits by bleeding the poor working people, such as was alleged about Leona Helmsley who they sent to jail for an alleged tax fraud, but who actually contributed more in federal taxes than any twenty average working people in New York.

    If the architects of H.R. 25 are really sincere and determined about ending taxes calculated from income, then they would have said so in crystal clear language such as:

    “The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money”

    But as it turns out, not one of the co-sponsors of H.R.25 have proposed a companion bill to H.R. 25 with specific language proposing a constitutional amendment to forbid Congress from calculating any tax or burden from “profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money”, and would be necessary to end the misery which now occurs under “income taxation”. What has been proposed is the following clever and empty language:


    109th CONGRESS
    1st Session
    H. J. RES. 16

    Proposing an amendment to the Constitution of the United States to repeal the sixteenth article of amendment.

    Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two-thirds of each House concurring therein), That the following article is proposed as an amendment to the Constitution of the United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States within seven years after the date of its submission for ratification:

    `Article —
    `The sixteenth article of amendment to the Constitution of the United States is hereby repealed.’.

    And what do the architects of H.R. 25 propose within the language of H.R. 25? The language of H.R. 25 merely says that the 16th Amendment “should be repealed”. But if H.R. 25 were adopted, and 10 or 15 years down the road the 16th Amendment by some remote chance is finally repealed by the above proposed language in H. J. RES. 16, Congress still maintains the power to calculate taxes from profits, gains, salaries and other “incomes” under its excise taxing powers, and, the SCOTUS has already upheld such a tax in the FLINT CASE mentioned above!

    H.R. 25 is nothing more than another way to divide the people and distract them from real tax reform such as:

    “The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay “any“ tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money”

    Regards,

    JWK

    Comment by johnwk — May 19, 2007 @ 11:38 pm

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