-By Warner Todd Huston
In theory, I like the Fair Tax idea. I have to say, I find it completely illogical that many people today who earn up to $50,000 a year, end up paying no Federal taxes at all. Why, exactly, should they get away with paying nothing? It simply makes no sense that those in the highest tax brackets pay nearly all the taxes, and everyone else gets off free of charge. We all use the same government, after all. Why should it be free to so many?
But wait, you say, they aregetting thousands a year withheld and sent to Washington, right? Aren’t they paying taxes, then? Well, certainly the lower middle classes are being deprived of a part of their income for most of the year as true and criminal as that is. But, in the end, they are not paying Federal taxes because most of them get nearly all of it back at the end of the year. Washington just had the luxury to have had the use of it (and the interest it might have generated) throughout the year, right up until they send it all back. But it is, indeed, all sent back for many who could afford to pay something.
You don’t have to take my word. Any tax preparer will confirm this fact.
In any case, the Fair Tax idea sounds quite a bit more equitable. Everyone pays something. Further, they can control, to some extent, what they do pay by not consuming when they don’t have to.
Recently, to explain the idea, Fair Tax proponent Doug Patton, puts it this way:
The Fair Tax would replace all federal income taxes. No more federal withholding. No more Social Security withholding. No more Medicare withholding. No more stealing from the paychecks of American workers before they even see it and then pretending to give them a refund, without interest, at the end of the year. No more saving receipts for tax deductions. No more IRS audits. No more April 15th.
Sounds great, right? If this were the method of taxation, I’d go for it.
Unfortunately, we have one little thing that dooms the fairness and the equitable nature of the Fair Tax plan.
It’s a little, tiny thing called the 16th Amendment to the Constitution of the United States. And it states:
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.
This Amendment kills the fairness of the Fair Tax. Unless the Fair Taxers can get this Amendment eliminated before they get their plan passed, we WILL end up with both a national sales tax and an income tax. Mark my words.
Why do I say that?
Well, it plainly says it right there for everyone to see: “Congress shall have power to lay and collect taxes on incomes.” What could be clearer?
Now, it might be true that, once passed, the Congress will repeal all their IRS laws and requirements. It is quite possible that a Fair Tax fever will sweep our old tax structure right out of existence. But, a tax laid aside is not a tax dead and a law ignored is not a law repealed.
Even if we were lucky enough to have a Congress exuberant enough for the Fair Tax plan to sweep away all our old taxes, with the 16th Amendment still lurking there in the Constitution, we would have but to wait for a time when a different Congress would begin the efforts to tax income all over again. And they would do it quite despite what any previous Congress said. After all, it says we can tax income right in the Constitution! It would be a temptation that no Congress could long resist.
Of course, this Fair Tax panacea would also not necessarily be put in place by the individual states and need not be. As Federalist 33 clearly says, the individual states have their own completely Constitutional powers to tax and they are powers separate from the Federal government. As Alexander Hamilton wrote: “The inference from the whole is, that the individual States would, under the proposed Constitution, retain an independent and uncontrollable authority to raise revenue to any extent of which they may stand in need, by every kind of taxation, except duties on imports and exports.”
So, a Federal adoption of the Fair Tax plan would not assure that the states would follow suit. In fact, many states would raise their taxes even higher since the Federal government would to some extent be dropping theirs.
But that is a minor quibble compared to the fact that without eliminating the 16th Amendment, we’d eventually — and sooner rather than later if I know the greed of government — have both a national consumption tax via the Fair Tax plan AND a Federal income tax piled neatly right on top.
Heck, Congress doesn’t even need a Constitutional Amendment to breach the Constitution. The Constitution has already been breached. As Article 1., Section 8a, says, “all duties, imposts, and excises shall be uniform throughout the United States.” A graduated tax is hardly “uniform” because it hits some people differently than it does others. Who could imagine that the Founders thought that people of middle income would often pay no tax while the upper reaches of the income bracket would pay nearly all of it?
Sure the Fair Tax is a great idea in theory. But, I have to stand against it until we change the Constitution with a Constitutional Convention. And, unfortunately, that is a rare thing nearly impossible to arrange. Worse, we would have to expect politicians that derive power from the tax code to be the ones to call it to order. And that is probably the biggest fantasy of them all.
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Warner Todd Huston’s thoughtful commentary, sometimes irreverent often historically based, is featured on many websites such as newsbusters.org, townhall.com, men’snewsdaily.com and americandaily.com among many, many others. Additionally, he has been a guest on several radio programs to discuss his opinion editorials and current events. He has also written for several history magazines and appears in the new book “Americans on Politics, Policy and Pop Culture” which can be purchased on amazon.com. He is also the owner and operator of publiusforum.com. Feel free to contact him with any comments or questions : EMAIL Warner Todd Huston
So your objection to the FairTax is that the 16th Amendment needs to be repealed. FairTax.org agrees. See items 38, 42, and 50 in the FairTax FAQ:
http://www.fairtax.org/site/PageServer?pagename=about_faq
38. Could we end up with both the FairTax and an income tax?
42. What about the 16th Amendment?
50. Is there any provision in the FairTax bill to prevent both an income tax and a sales tax?
FAQ 50 points out that we have a de-facto sales tax on domestic production plus a personal income tax today. So your fears are already realized and we don’t even have the FairTax yet.
Perhaps you would rather keep the Income Tax system, which you claim is unfair and unconstitutional, to avoid the inconvenience of passing an Amendment to the Constitution. I think it’s time to unleash our economy from the bridle of the Income Tax.
FairTax.org has the answer.
Ed,
You said,
“Perhaps you would rather keep the Income Tax system, which you claim is unfair and unconstitutional, to avoid the inconvenience of passing an Amendment to the Constitution.”
You, sir, are not really reading what is written.
I never said ANY such thing NOR could an honest or INTELLIGENT reading of my piece lead to such a stupid conclusion as yours.
Get back to me if you want to stop with the petulance and actually debate the issue.
There are several inaccuracies in this report. I’ll deal with them in turn. But before I do, I’d like to suggest that you take an hour or two and actually READ the bill, HR 25, at Thomas.loc.gov.
1. “Now, it might be true that, once [the Fair Tax is ]passed, the Congress will repeal all their IRS laws and requirements. It is quite possible that a Fair Tax fever will sweep our old tax structure right out of existence. But, a tax laid aside is not a tax dead and a law ignored is not a law repealed.”
The Internal Revenue Code is not simply ignored. The Fair Tax bill repeals the vast majority of Title 26, The Internal Revenue Code, before it imposes a sales tax. See Title 1 of the Bill. Moreover, the Bill provides only three years for the IRS to conclude audits and collections. At the end of three years, the Fair Tax Bill defunds the IRS and requires the destruction of the records. See Title III, Section 301.
2. “Even if we were lucky enough to have a Congress exuberant enough for the Fair Tax plan to sweep away all our old taxes, with the 16th Amendment still lurking there in the Constitution, we would have but to wait for a time when a different Congress would begin the efforts to tax income all over again. And they would do it quite despite what any previous Congress said. After all, it says we can tax income right in the Constitution! It would be a temptation that no Congress could long resist.”
This oft repeated criticism is a red-herring. The fact is the Fair Tax repeals the vast majority of the Internal Revenue code. The Internal Revenue Code is the body of statutory law which actually imposes the tax. The 16th Amendment IMPOSES NO TAX.
The 16th Amendment is analogous to a license to drive a car. Without a car (The Internal Revenue Code), a license to drive the car (The 16th Amendment) is worthless.
After the Fair Tax passes and Title 26 is gutted, we will turn our attention to the repeal of the 16th Amendment. Once the American people have tasted the freedom of the Fair Tax, any politician who even whispers an intent to re-institute an income tax will be tarred and feathered.
3. “Of course, this Fair Tax panacea would also not necessarily be put in place by the individual states and need not be. As Federalist 33 clearly says, the individual states have their own completely Constitutional powers to tax and they are powers separate from the Federal government. As Alexander Hamilton wrote: “The inference from the whole is, that the individual States would, under the proposed Constitution, retain an independent and uncontrollable authority to raise revenue to any extent of which they may stand in need, by every kind of taxation, except duties on imports and exports.”
So, a Federal adoption of the Fair Tax plan would not assure that the states would follow suit. In fact, many states would raise their taxes even higher since the Federal government would to some extent be dropping theirs.”
This argument is nonsensical and based on conjecture. Of course the states have the current power to tax to provide for their own needs. The Fair Tax is a plan to replace THE FEDERAL INCOME TAX with a FEDERAL SALES TAX. It is calculated to be REVENUE NEUTRAL, which means it will take no more OR LESS from the economy that the current monstrosity. This Bill does not cut taxes, it merely changes the method of collection.
With respect to Federal Sales Tax collections, administrative provisions are found in Title II, Chapter 4 of the bill. Under the Fair Tax, the States are compensated for collecting and administering the Fair Tax at a rate of .25% of collections. See Section 401(d)(2).
4. “Sure the Fair Tax is a great idea in theory. But, I have to stand against it until we change the Constitution with a Constitutional Convention.”
You can’t be serious. You really believe we need to convene a Constitutional Convention to AMEND the Constitution?
Please read Article V of the Constitution. It begins: “The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, OR, on the Application of the Legislatures of two thirds of the several States, shall call a Convention…”
Moreover, Section 2 of the Fair Tax Bill includes the following finding of Congress:
“(f) Findings Relating to Repeal of Present Federal Tax System- Congress further finds that the 16th amendment to the United States Constitution should be repealed.”
Your arguments against the Fair Tax are specious. Please read the bill. It is supported by MILLIONS of dollars in research, and is in complete harmony with the vision of the Founding Fathers. From Federalist No. 21, written by Alexander Hamilton:
“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 cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, “in political arithmetic, two and two do not always make four.” If duties [taxes on articles of consumption] are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.
Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country.”
Betty,
Your assumptions that a mere bill can change the Constitution is an outright falsity.
Until the 16th Amendment is repealed, talking about the Fair Tax bill is useless. Those millions you say have been spent to create this Fair Tax plan have been spent in vain and should have been spent to create a Constitutional convention to repeal the 16th.
I am NOT willing to even entertain this Fair Tax idea until that Amendment is history. Your argument that the Amendment will be addressed “as soon as the people see the freedom of the Fair Tax” is more specious than ANYTHING you claim I have written. Because the PEOPLE won’t have any say in the matter. CONGRESS does. Once a Congress passes the Fair Tax AND later heaps on a new income tax, no matter how many Congressmen lose their jobs afterwards it is STILL a passed and singed, sealed and delivered deal.
Focus on getting rid of the 16th Amendment first, otherwise we will have an even worse situation than we now do. And we will have you Fair Taxers to thank for making matters worse.
Without that Amendment gone, you will be setting us up for tax disaster and the greatest tax hike in history.
I never said that a statute can amend the Constitution, rather, I quoted from Article V of the Constitution:
“The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution…”
We do not need a to convene a Constitutional Convention.
Moreover, WITHOUT A STATUTE that imposes an income tax……the 16th Amendment is a worthless vestige. NOTE WELL: The 16th Amendment does not impose the tax, it merely authorizes it.
Betty,
You wrote: “the 16th Amendment is a worthless vestige. NOTE WELL: The 16th Amendment does not impose the tax, it merely authorizes it.”
You should also note well that your bill may eliminate the IRS and the income tax laws NOW, but without eliminating the Amendment you have NOT eliminated an income tax permanently. The groundwork for making a NEW income tax in the future is right there in the Constitution. You are dreaming the dream of a zealot to ignore it and this is the main reason the Fair Tax is a chimera and dangerous.