Following yesterday’s entry, I received feedback from several readers. So, before diving into today’s discussion, I will address several of their concerns. By all means, the Fair Tax should NOT be implemented unless and until the 16th Amendment has been repealed. In addition, the IRS must be abolished. If the Fair Tax were to be utilized, then the respective states would be the “tax collectors” for the federal government. Currently 44 of our 50 states have a state sales tax which means that they are equipped for including the Fair Tax on the cash registers within their domains. One advantage of moving our tax system to a consumption basis rather than a labor/capital base as it is now is that the states will be collecting the tax and will have the means to enforce 10th Amendment/nullification issues by withholding the portion of federal taxes that are used for unconstitutional activities. It’s called the power of the purse.
As an ardent supporter of Constitutional principles, I fully understand that the federal leviathan was originally intended to rely on Fees, Duties, Imposts and Excise taxes to fund its operations. Clearly the size, reach and cost of the federal monstrosity have far exceeded its constitutional mandate. My personal view is that we could return to constitutional government and tax policy overnight. We would undoubtedly suffer some upheaval and dislocation, but freedom is a marvelous thing. Observe an animal that has been released from its cage or its tether. In the beginning the poor creature is tentative and fearful, but in most cases begins to explore the broader environment with gusto. Again, I believe that the cold turkey approach could be effective, but ……… it’s not politically feasible.
My reasons for preferring a modified version of the Fair Tax are rooted in political reality. To attempt to massively reduce government, radically alter the tax structure and diminish the power of politicians and bureaucrats would generate a flurry of opposition from those who govern us and from many of those who are governed. My primary purpose for choosing the Fair Tax as a transitional mechanism is that I believe that a “little taste of freedom” may trigger the urge for more of it. Secondly, the income tax and its progressive incarnation are absolutely evil. You own your body, your labor and your property. The taxation of labor is a form of piecemeal slavery, and it is compounded by the withholding of tax liabilities before the worker or citizen receives the fruits of labor (pay). The government gets its portion of your labor before your receive the remainder. That is wrong. God Almighty asked the Hebrews to give Him the first 10% of their earnings. Today, the government insists on the first dollar and more. Personally, I do not believe that the government has a greater interest in my labor than does God. This example is illustrative of the insistence by government to be the preeminent factor in every facet of our lives. We are much better served with government stays in the background while protecting our borders and guarding our God-given rights. When the state becomes the dominant principal in our lives, then our liberty has been dangerously usurped. Just as a toddler requires constant supervision and instruction, the ward of the Nanny State must have every aspect of life controlled.
My vision of a Fair Tax Amendment (following or concurrent with repeal of the 16th) would include a proviso that sets the upper limit for the tax at 23%, and would include strict unambiguous language that limits the tax to new products sold at retail (final consumer destination). Also, I would include two more elements, or place them in a separate accompanying amendment, that would require a balanced budget with no new tax avenues available, and constitutionally establish a drop down feature of the tax. For example the tax rate could be reduced one per cent (1%) every two years, thus resulting in an effective rate of 13% after 20 years. While this number may not force the federal government to live within constitutional parameters, it would demand very serious prioritizing. The 13% figure is not nearly as stringent as it may appear because the tax structure and the overall lower level of taxation will boost economic activity, and thus, generate significant revenues.
We’ll pick up the balance of this discussion tomorrow.
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