Although the federal income tax system was designed and intended to make up for revenue losses due to tariff reform, it quickly became a primary means to fund the programs of our bloated federal government. The Constitution provides that Congress is authorized to tax and spend for its constitutional purposes, but the reverse is also true... it is NOT empowered to tax and spend for unconstitutional objects. As we all know, the "General Welfare" clause, as well as the "Necessary and Proper" Clause, are not separate grants of power.
The income tax, as used by our government, has become an arbitrary tool to plunder the property, income, assets, savings, gifts, etc of American citizens, burdening their very freedom and chilling their Pursuit of Happiness. Thomas Jefferson wrote: "To take from one, because it is thought his own industry and that of his father's has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it." Furthermore, the federal government is engaged in so many unconstitutional objects that it is currently using taxation to force Americans to support programs, speech, religion, ideology, and social views that many find offensive. Again, Jefferson wrote on the subject: "To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical."
We need to return to a taxation system similar to the one established by our Founding Fathers. They did not penalize productivity through taxes the way we do today. They had no Internal Revenue Service. They believed in minimal taxation. They didn't believe in income taxes, which were prohibited by the Constitution ("unless in proportion to the census or enumeration before directed to be taken") - that is, unless such taxation was uniform and equally applied. They would have been horrified at the enormity of tax schemes crafted to plunder Americans' income and property in order to fund a bloated government - income taxes, employment taxes, capital gains taxes, estate taxes, corporate taxes, property taxes, Social Security taxes, gas taxes, etc. It was excessive taxation like this that drove our founding patriots and Founding Fathers to rebel against Great Britain in the first place. They did not believe in paying export taxes, which also were prohibited by the Constitution. But they did believe revenue to fund the responsibilities of the federal government should be raised by taxing imports. The Founders believed in free trade within our own borders and a system of tariffs on imported goods.
That's a system that makes sense. It is a system designed to preserve individual liberty and encourage productivity (through no income taxes and no discouragement of domestic production through export taxes) while choosing to keep taxes as painless as possible (through taxes on foreign imports). And it doesn't require an IRS to run it.
All of the Founders were opposed to domestic taxes. They regarded high taxes and aggressive tax collectors as tyrannical and always to be guarded against. Patrick Henry warned: "Excisemen may come in multitudes, for the limitation of their numbers no man knows. They may, unless the general government be restrained by a bill of rights or some similar restriction, go into your cellars and rooms and search, ransack and measure everything you eat, drink and wear." (A prophetic statement?)
The Internal Revenue Service was started in 1862 - nearly 100 years after the Revolutionary War - as the Bureau of Internal Revenue. It was created to collect the income tax that President Lincoln and Congress imposed on the states and territories of the Union to pay for the costs of the Civil War. The Revenue Act of 1862 was allowed to expired 10 years later, but was revived in 1894, although temporarily. It was struck down by the Supreme Court as unconstitutional in 1895. In 1913, Congress was able to devise a scheme ("Soaking the Rich") to get around the "uniformity" requirements of the US Constitution with an income tax and that scheme became the Sixteenth Amendment. "Soaking the Rich" was an easy concept to sell to the states at the time. It soon became clear to anyone with substantial knowledge of the tax code that obtaining tax breaks for the wealthy would be a lucrative business. The tax lobbyists in Washington DC were born.
There were times in our history when the government taxed income at the highest brackets at almost 100%. Complete confiscation. For example, at its highest taxation level (94%; 1944-45), FDR explained: "Taxes shall be levied according to ability to pay. That's our American principle." That was also the time FDR was singing the praises of "Uncle Joe" (Joseph Stalin). FDR's "American principle" was really a Marxist principle - from Karl Marx' Communist Manifesto: "From each according to his abilities, to each according to his needs."
Ever since the passage of the Sixteenth Amendment and the direct ability the federal government had to take whatever it needed from the income of its citizens and the value of their assets and property, the income tax has deprived families of their rightful earnings, restricted our liberties, and deprived our economy of money that could have been invested in productive enterprises. It has been a "dull journey" to this point in history - the 21st century - where it seems many things are free except us.
Today the tax code is a complex, convoluted monstrosity of rules and exemptions. It is modified an average of three times daily when Congress is in session. It was modified a total of 579 times alone in 2010.
Today the IRS is the No. 1 enemy of your pocketbook. Who doesn't fear an IRS audit? It's the only federal agency that considers you guilty until proven innocent. It can't be overhauled or even reformed (Congress' attempts have failed), and the power to audit is a powerful tool tyrants in government can use to silence, intimidate, and harass political opponents and enemies.
In 1994, three Houston businessmen met for lunch - Jack Trotter, Bob McNair, and Leo Linbeck, Jr. As was common at their luncheons, they began to complain about the federal income tax system. But at this particular lunch, they decided to do more than just talk. They decided to try to do something about it. Each of them pledged $1.5 million as seed money to hire the best tax experts in America to identify the faults with the current federal tax system, to determine what American citizens would like to see in tax reform, and then to design the best system of taxation. With their initial investment of $4.5 million, Trotter, McNair, and Linbeck went on to raise an additional $17 million to fund focus groups and finance/fiscal studies, and additional research. The research was extensive and distinguished the Fair Tax from every other tax reform proposal ever put forward.
The tax policy experts hired to research and develop the Fair Tax include:
Professors David Burton and Dan Mastromarco, University of Maryland and The Argus Group
Professor Larry Kotlikoff, Boston University
Stephen Moore, The Cato Institute
Professor Dale Jorgenson, Harvard University
Bill Beach, The Heritage Foundation
Jim Poterba, The National Bureau of Economic Research
Professor George Zodrow, Rice University and the Baker Institute for Public Policy
Professor Joseph Kahn, Massachusetts Institute of Technology
The FairTax is a thoroughly and professionally-researched response to the question: "What do the American people want in their tax system?" In 1999, the Fair Tax plan was submitted in the US House as a bi-partisan bill - H.R. 2525 ("The Fair Tax Act of 1999") - by Rep. John Linder (R-GA) and Rep. Collin Peterson (D-MN). In January 2006, an additional $2 million was spent in research to make sure the Fair Tax was still the best tax replacement solution for our nation's current economic situation and the results concluded that it was.
It was then resubmitted in the 111th Congress in January 2009 as H.R. 25 ("The Fair Tax Act of 2009").
The studies conducted by Trotter, McNair, and Linbeck in the 1990's, and then continued in 2006, make the Fair Tax the most well-researched tax plan ever presented to Congress. The Fair Tax is also supported by a growing number of Americans, a growing number of groups across the political spectrum, and by a growing number of representatives in Washington DC. Governor Mike Huckabee is a huge supporter. In talking about the Fair Tax, he asks: "Wouldn't it be nice if April 15 were just another sunny spring day?"
It would be nice for hard-working Americans to enjoy the fruits of their education, mind, creativity, labor, and investment and have the flexibility to use them in the best way they deem fit to benefit their own families, their personal pursuits of happiness, and their retirement. It's time we had a system in which people didn't have to figure out ways to cheat in order to save their money.
If the Founding Fathers were here today, I believe they would support the Fair Tax. They favored a consumption tax and rejected an income tax. As James Madison said, "Taxes on consumption are always least burdensome because they are least felt and are borne, too, by those who are both willing and able to pay them..." Our Founders were students of history, and as their intention was to secure the Rights of Man as firmly and securely as possible, hopefully into perpetuity, they would have rejected the oppression that naturally comes when governments have the power of plunder. Thomas Paine wrote the following in The Rights of Man (1791): "If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude. Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute."
The United States Capitol, March 4, 2013, from the U.S. Arboretum: Above. photo by Stan Deatherage Click the image to expand to as much as 1000 pixels wide.
No one is suggesting that we don't need the revenue that taxes generate. We just need a system that is fair and aligns our government again with its purpose: to protect the "Life, Liberty, and Pursuit of Happiness" of every individual. The income tax and the IRS have perverted that purpose and have become instruments of wealth re-distribution and oppression.
We protested against the king and the parliament of Great Britain over a 3% tax on tea. Our early colonists were wise enough to understand that the protest wasn't really about the minute tax on tea but rather about the assault on individual liberty in general. As James Madison put it: "The people of the U.S. owe their Independence and their liberty to the wisdom of descrying in the minute tax of 3 pence on tea, the magnitude of the evil comprised in the precedent. Let them exert the same wisdom, in watching against every evil lurking under plausible disguises, and growing up from small beginnings." The income tax is far more oppressive and offensive than the Tea Act.
We don't need tax reform. We don't need Congress to amend or simplify the current Tax Code. We need it abolished. We need another tax protest and another tax revolution!
The following resolution addresses the many benefits of the Fair Tax and how it will restore property rights and the free exercise thereof.
RESOLUTION TO REPLACE THE INCOME TAX WITH THE FAIR TAX
The Fair Tax is a popular tax scheme that has become even more popular with the current IRS scandal and the growing population of Americans that contributes nothing to the revenue generated through federal income taxation. The Fair Tax plan replaces all federal income and payroll-based taxes with a national retail sales tax that is fair, simple, and understandable. Under this plan, no one pays any federal taxes on the purchase of basic necessities; yet it raises the same amount of revenue as does the income tax system. The Fair Tax Act of 2013 (H.R. 25/S. 122) is nonpartisan legislation that abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, 23% (inclusive) federal retail sales tax paid at the cash register. Individuals no longer file federal income tax returns and the IRS is eliminated through companion legislation. The FairTax applies to everyone in America, including illegal immigrants, foreign visitors (about 50,000 each year), and those who evade paying taxes under the income tax system. This innovative, extensively researched, grassroots supported tax system is a fair, efficient, transparent, and intelligent replacement of the frustrating, inequitable income tax system.
Our current tax scheme allows the government to assess and tax one of the fundamental legs of our very freedom - our property..... the fruits of our mind and labor and one of our most sacred pursuits of solitude, privacy, and happiness. The Fair Tax, on the other hand, is a consumption tax and therefore fair, non-arbitrary, and non-destructive of freedom. Since it is not an income tax, the Fair Tax renders the Sixteenth Amendment useless (so it can be repealed and off the books forever!) and the IRS as well (so it can be defunded and dismantled).
The Fair Tax is a national sales tax that would apply to every person that makes a purchase of new goods and services in the United States. It has been proposed by the US House as bill H.R. 25. The Fair Tax rate is 23%, which was calculated to equal to the lowest current income tax bracket (15%) combined with employee payroll taxes (7.65%), both of which will be eliminated. It achieves three goals at once: tax reform, boosts the economy, and generates jobs. The Congressional Joint Committee on Taxation studied what would happen if a national consumption tax were implemented (in place of our current progressive income tax) and economists from both ends of the political spectrum - from the far left to the far right - agreed that America's economy would grow faster if the switch were made to a true consumption tax. With the Fair Tax, not only will businesses be encouraged to stay in the United States and new businesses attracted to do business here, the people with their money offshore could bring it back to invest in our country, which would give a huge boost to our economy. It's the biggest stimulation package there is. As the FairTax website says, "Think of it as the World's Biggest Economic Jumper Cable."
The Fair Tax treats every person equally, broadens the tax base enormously, allows American businesses to thrive, encourages businesses which have left the country because of an onerous tax burden to return (as well as inviting new businesses here), all while generating the same or greater tax revenue as the current four-million-word-plus word tax code. Under the Fair Tax, every person living in the United States pays a sales tax (23%) on purchases of new goods and services, excluding those which are considered essential goods and services (ie, basic necessities) due to what's called a "prebate."
Under the Fair Tax, every American (irregardless of income earned or generated) can purchase essential goods and services tax-free up to the national poverty level through a tool called the prebate. A prebate would be a check from the federal government sent to every registered family at the beginning of each month to cover the costs of basic living. The amount of the prebate that each family would receive would be based on the U.S. Health and Human Services report of the Federal poverty level, estimated at the beginning of each year. This estimate would determine just how much money a family needs to meet their basic living expenses, and these expenses would be made totally tax free.
Whereas, the Fair Tax would tax consumption rather than production, providing a more transparent method of taxation and would repeal the 16th Amendment to the US Constitution thus eliminating the Internal Revenue Service. All taxes would be collected at the point of purchase and withholding taxes from citizen's paychecks and all hidden taxes passed to consumers would be eliminated; and
Whereas, the Fair Tax plan replaces all federal income and payroll-based taxes with a national retail sales tax that is fair, simple, understandable, and sure to cause no undue hardship on any consumer (see below regarding embedded taxes); and
Whereas, the Fair Tax would eliminate all federal taxes on businesses and corporations (the Fair Tax is strictly a personal consumption tax), providing a much better environment in which to conduct business, thereby improving the financial health of the United States and creating jobs; and
Whereas, the Fair Tax would encourage individuals, businesses, and corporations who are holding their money in offshore accounts (in order to shield those funds from excessive US taxation) to reinvest those funds in the US economy, also revitalizing the US economy;
Whereas, the IRS scandal has renewed interest in the Fair Tax, in particular because it renders the IRS unnecessary;
Whereas: There are currently bills in Congress - H.R.25, sponsored by Rep. Woodall (R-Ga.) with 67 co-sponsors including NC Representatives (Republican) Virginia Foxx and Mark Meadows, and S.122, sponsored by Senator Chambliss (Ga.) with seven co-sponsors including NC Senator Richard Burr - to pass legislation implementing the FairTax ; and
Whereas, Congress bears a moral responsibility to protect individual property rights, the right to Pursue Happiness (not burden or punish that pursuit), and economic liberty; and
Whereas, it has become a moral imperative and an urgent imperative to secure fundamental notions of liberty and abolish the federal progressive tax, it is our position that it should be replaced with the Fair Tax (a national sales tax of about 23%, on new items for personal consumption only, that would replace both federal income tax and the payroll tax );
Whereas, the Fair Tax is supported because it is the most studied legislative proposal in the history of the United States; and
Whereas, the Fair Tax would provide the country a more reliable tax base during both periods of economic expansion and periods of economic contraction; and
Whereas, the Fair Tax is better than an income tax for the following reasons:
-- It eliminates the inherent unfairness, problems, and costs associated with the progressive income tax mentioned above; and
-- It renders the Sixteenth Amendment obsolete (enabling it to be repealed), eliminates the voluminous, incomprehensible Tax Code, eliminates the IRS (and all audits of federal income tax returns), and eliminates income tax entirely!! In other words, it eliminates payroll taxes of all kinds, including Social Security and Medicare taxes, as well as corporate, gift, estate, capital gains, death, self-employment, and alternative minimum taxes. It also eliminates the income tax credit. (They are all gone!) Social Security and Medicare benefits would continue; only the means of collecting revenue to fund these programs changes;
-- It makes federal tax collection fairer, smarter and apolitical; and
-- It alleviates the criticisms and objections of ordinary Americans who feel that
corporations, wealthy individuals and families, and special interest groups have unfair access to loopholes and exemptions that help them avoid paying their "fair share"; and
-- It ends the unhealthy relationship which exists between the tax lobbyist, the wealthy client, and certain members of congress; and
-- It broadens the tax base; it includes EVERY person who spends money in the US, including tourists!! (tourists alone will add some 51 million extra taxpayers every year); and
-- It treats everyone the same with no deductions, exemptions, loopholes or interference by lobbyists; and
-- The Fair Tax is the only system that shows Americans clearly and concisely exactly how much money they are sending to the federal government - 23% on every purchase of new goods and services. It is the only proposal to completely eliminate all loopholes, exceptions, and exemptions so that all Americans know their neighbor has just as much skin in the game as they do; and
-- The Fair Tax is the only system that puts Americans in control of how much they want to contribute to the federal government. Since the tax is only on NEW goods and products, individuals can keep more of their money if they choose to purchase used items or make the effort to shop frugally; and
-- It requires very little bureaucracy. Collection of the national sales tax (Fair Tax) can use systems already in place at the state level without adding any additional (significant) burden. The Fair Tax lays out a plan for the states to easily collect and transfer money to the federal government; and
-- It saves a lot of money and time for the American taxpayer. Saving and collecting records and receipts is time-consuming, a hassle, and a big headache. Just complying with our voluminous and complicated federal tax system costs Americans about $431 billion a year, according to economist Arthur Laffer (although other estimates go as high as $600 billion). American taxpaying families often have to hire a CPA. Furthermore, another $1000 to $2000 in embedded costs are passed on to the average consumer each year by businesses who have to add the cost of tax compliance to their "cost of doing business" and therefore to the cost of their products and services (for every dollar sent to the IRS, it costs 30 cents in compliance); and
-- It is mindful of the poverty limit. It provides a prebate to ensure that no American pays federal taxes on spending up to the poverty level. (Another option discussed, to avoid any arbitrary assignment of "poverty limit," is to not tax food items); and
-- It would force drug dealers and other criminals to pay their fair share in taxes. Gang members, mafioso, and drug dealers don't pay income tax on their sometimes considerable ill-gotten income, but with the Fair Tax, they would pay their taxes just like everyone else; and