From LibertyForest:
I have noticed that promoters of the “FairTax” (FT), are infiltrating tea parties across the nation to advance their cause. Sadly, the FT, as documented by its legislative text (H.R.25), would not only enlarge the iron fist of our federal government’s taxing powers if adopted, it would also subjugate the thoughtful checks and balances of our Constitution’s original tax plan, just as current federal taxation now does!
Nowhere in the text of H.R.25 is language to remove Congress’s authority to lay and collect “excise taxes” calculated from profits and gains. For those not aware, an excise tax may be laid upon a “privilege” or a specific occupation and the amount of tax to be paid may be “calculated” from profits and gains realized under the privilege or occupation which the excise tax has been laid upon. Why is this important for tea party participants to fully understand? Repealing “income taxes” and the 16th Amendment, which is the sales pitch made by ringleaders of the FT, does not propose to end “excise taxes” which may be “calculated” from profits and gains. This is a clever loophole contained in the language of the FT and would keep alive the very kind of tax freedom loving Americans now complain of, while an across the board 23 percent tax upon the sale of consumer items and services rendered would be established if the FT is adopted.
Note that the SCOTUS, before the 16th Amendment was adopted upheld the Corporate Excise Tax Act of 1909 which was an excise tax laid upon the “privilege” of being a corporation, and the amount of tax to be paid under it was calculated from profits and gains realized under corporate charters ( See Flint vs. Stone Tracy). So, while corporate “income taxes” are proposed to be repealed under the FT, the power to lay a Corporate “excise tax” as was done in 1909 is not intended to repealed under the FT, and would allow Congress, in spite of the FT, to lay an “excise tax” on small businesses across the nation and calculate the amount of tax to be paid from profits and gains realized by these businesses. This in effect keeps alive the very kind of tax which unsuspecting fair tax supporters think would end under the FT.
It is interesting to note that H.R. 25 would actually create an Excise Tax Bureau- … to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco and Firearms! And, this “Excise Tax Bureau” would be in addition to the a Sales Tax Bureau- - - which is another federal taxing agency proposed to be created under the alleged FT!
So, how would the FT affect America’s Mary and Joe Sixpack, our every day folks? Well, Mary and Joe have two children and find it necessary to earn extra money to pay their bills. Mary baby sits for neighbors in the community and cleans homes on week ends to raise extra money while Joe, who works for a pluming company as a full-time job, also provides the same plumbing service on his own time to people living in his community. Surprise! Under the FT which promises to end the misery of income taxation, Mary and Joe would continue to experience the same burdens they now suffer under “income taxation”— record keeping, audits, and filing sales tax returns under the penalty of perjury!
The startling truth is, those who sell a taxable service or property under the FT, such as Mary and Joe mentioned above, will have to collect and send sales tax receipts to the federal government and keep any records Congress may decide are needed, and this would be in addition to Mary and Joe having to register with government as a “seller” of a taxable property or service in order to sell the property they have in their labor, which is what is really being taxed under the alleged FT.
Although the so called income tax may be repealed under the FT and the IRS closed down, its employees would merely be moved to other federal agencies and the same miseries of income taxation would still be experienced by small business owners, our nation’s large corporations, and even felt by Mary and Joe Sixpack who seem to have fallen for the feel good rhetoric dished out by the ringleaders of the alleged FT.
And so, the question remains, what is it that America’s freedom loving people ought to be promoting at every tea party? I would say a return to our nation’s first principles, and that would include a return to our Constitution’s original tax plan which can be accomplished by adding the following words to our federal Constitution:
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
In effect, our founding fathers intended, as a first method to raise a federal revenue, was to have Congress lay imposts and duties at our water’s edge, which included taxing specifically selected articles of consumption, preferable those considered to be luxury. The logic and fairness of these taxes on consumption is explained by Hamilton in Federalist No. 21:
The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. If inequalities should arise in some States from duties on particular objects, these will, in all probability, be counterbalanced by proportional inequalities in other States, from the duties on other objects. In the course of time and things, an equilibrium, as far as it is attainable in so complicated a subject, will be established everywhere. Or, if inequalities should still exist, they would neither be so great in their degree, so uniform in their operation, nor so odious in their appearance, as those which would necessarily spring from quotas, upon any scale that can possibly be devised.
Under our founding father’s method of taxing consumption (see our nation’s first revenue Act) note that each article is judiciously selected and then evaluated for the appropriate amount of tax.
In addition to the above mentioned tax on specifically chosen articles of consumption, an across the board tonnage tax on imports was also laid by our founding fathers as a way to help raise a national revenue from foreign business owners wishing to sell their products on American soil — sort of like an entry ticket into a flea market.
Moving on with our Constitution’s original tax plan, if insufficient revenue was raised from the above mentioned “external taxes” then internal taxes on articles of consumption were intended to be imposed to raise additional revenue. But once again, each article was to be carefully selected and judged for the appropriate amount of tax. It seems to be self evident that articles necessary to conduct business and expand our nation’s domestic industrial base ought to be excluded from the list of taxables to encourage a healthy and vibrant manufacturing capability on American soil, and was thought essential to the survival of America’s independence by our founding fathers, and also would provide needed employment!
Our founders also believed that articles of necessity, such as food, clothing, shelter etc., ought not be taxed to avoid an oppressive burden upon the poor and working classes which is also pointed out in Federalist No. 21.
But there is still another reason for selecting each specific article to be taxed and judging the amount of tax to be laid___ and that reason is to allow the market place to determine the limit of taxes on articles of consumption. As Hamilton states in very clear language:
It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit, which can not be exceeded without defeating the end proposed, that is, an extension of the revenue
The beauty of limiting Congress’ power to taxing specifically chosen articles of luxury is this. If Congress performs its constitutional functions properly and the nation as a whole is productive and prosperous, the purchase of articles of luxury will undoubtedly increase, and with it, the flow of revenue into the federal treasury. But, if the legislative policies of Congress are oppressive and its regulatory impositions upon business and industry impede a flourishing economy, which unquestionably is now the case, or any particular article of consumption is excessively taxed by Congress because of Congress’s greed, the first sign would be is a decline in the flow of revenue into the national treasury, and this would be a poetic and self inflicting punishment upon Congress!
The bottom line is, those who participate in tea parties around the nation need to familiarize themselves with our Constitution’s original tax plan, and what is really being promoted under the guise of an alleged FT, and can be discovered by carefully studying the actual text of H.R. 25 which is 135 pages of legal mumbo jumbo and is far different than its fairy tale version put into book form and panhandled by its ring leaders.
For those who have done their homework and will attend tea parties, real tax reform does not need 135 pages of legal nonsense to extricate our nation from the misery of income taxation, it only takes the following 32 words to be added to our Constitution:
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
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This post was written by Michael Maresco on April 6, 2009
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