The Fair Tax

[Morton Thomson Jr.]

The Fair Tax

And what’s wrong with it!

Here are the main problems I have with the proposed Fair Tax.

1. Those in favor of passing this legislation claim that it first requires that we repeal the 16^th Amendment. This is a false notion fueled by ignorance of the law. The Supreme Court said in Stanton Vs. Baltic Mining Co., 240 US 112 (1916), that the 16^th Amendment does not change Article I, section 8 of the Constitution, and “confers no new power of taxation.” Therefore repealing the amendment will change nothing and will not, in and of itself, eliminate the IRS. Therefore, even if one could successfully repeal the 16^th Amendment, the proposal is doomed from the onset. Other Supreme Court case law as in Brushaber Vs. Union Pacific Railroad Co., 240 US 1 (1916),  is being used as the legal backdrop for the authority to continue the fraud known as the Income Tax, so repealing the 16^th Amendment will not be enough.
2. The proposed sales tax claims to be “revenue neutral”. This means that it will do nothing to change the amount of money going into the coffers of the federal government. This does absolutely nothing to make the feds more fiscally responsible, which is what they claim to be trying to do with the Fair Tax proposal.
3. Because this is a sales tax and is “revenue neutral”, it’s too easy for everyone to lose track of how and where they are taxed, thus allowing the government and the public at large to easily forget that there is a tax being levied in the first place, and;
4. This makes it too easy for the tax to be increased by fiat, any time they feel like it. And don’t tell me that it will have to be voted on, because when you rob Peter to pay Paul, you can always count on the support of Paul. In other words, those constituents who benefit from government giveaways will always vote in favor of increased taxes. Eliminating giveaway programs is first and foremost at the heart of the problem, not eliminating the IRS. And:
5. Wasteful spending by the fed will not change just because the money comes from a different place. Reform needs to be based in correcting the problems that we know exist now, not in changing the source of revenue.
6. In addition, there must be serious reform of the corrupt cycle known as lobbying. When a politician can be persuaded to vote in favor of passing a law for a particular corporation to receive money based on the amount of begging and influence peddling they engage in, this is a problem. The Fair Tax will not change this.
7. Also, the government is in the habit of ignoring the will of the people in the first place, so what will stop them from simply printing more fiat money any time they feel like it? The answer is NOTHING. And:
8. Last but not least is the fact that taxes, like the economy, trickle down to the bottom. When corporations are taxed, industry wide, they do not actually pay the taxes directly. They either move the operation to a tax free environment, thereby eliminating American jobs, or they simply increase the cost of the end product to cover the increased taxes and the CONSUMER pays a higher price at the end of the line. So poor people end up paying the increased taxes levied against the “evil rich and competition will not keep corporations from raising the price of their products, due to the fact that the regulation or tax that increases those costs for a product are levied against an entire industry all at once, in order to make it “fair”. Some perfect examples are cigarettes, alcohol, beef, milk, etc. You name it, the fed has found a way to tax or regulate it, INDUSTRY WIDE. They don’t just tax or regulate one company, they tax them ALL, and the CONSUMER PAYS THE BILL. The Fair Tax WILL NOT CHANGE THAT. That’s trickle down economics 101. If you need proof, check the latest tax returns filed by Goldman Sachs, AIG, etc. You’ll see that not only were they able to differ an income tax liability of TWO BILLION DOLLARS by shipping jobs over-seas, they actually qualified for a TAX CREDIT of over ONE BILLION DOLLARS MORE, on top of that! We must eliminate the IRS AND STOP THE PAYMENTS. Not change the way they get the wealth.

In conclusion,

It is safe to say that the Fair Tax will do ABSOLUTELY NOTHING to change what’s wrong with our federal government in terms of how they borrow and spend and print new FRN’s (Quantitative Easing), anytime the Fed says it’s the right thing to do. Not to mention the Fair Tax does nothing to address the fact that they routinely ignore requests now for freedom of information and Redress of Grievances in regard to taxes and other issues. The fed will not change their attitude until “We The People” force them to.

Stop the "voluntary compliance" with the misapplication of the current Internal Re-Venue Codes. This would immediately cripple the fed and wake them up. The Fair Tax WILL NOT! Instead, it will bury the issue of an overblown and corrupt government and put it on the back burner of the American conscience. People will continue to fund a corrupt, wasteful, SOCIALIST government. That’s why I don’t like the Fair Tax.

Comments?

[Rene Stover]

Morton, you are 100% correct, I have been saying much of the same thing ever since the So-Called Fair Tax became an issue.  The way I see it, not enough people are awake in this country to make a difference, and many that think they are awake, really aren't, and are smoked by the idea of creating a Lawful tax instead of getting rid of an unlawful one!

[Shavager]

The BEST part of the FAIR TAX--EVERYBODY IN THE U.S. WILL PAY THEIR PART--NO "free rides" depending on how much YOU spend or not. No dope dealers that deal underground get away free, no ILLEGALS collecting welfare, foodstamps, etc.--and estimates are 51% in the U.S. ARE on federal benefits programs if not more. Nothing in the FAIR TAX amendment eliminates the IRS or income tax--that MUST be done separately by those who pass the Fair Tax, but passage of the Fair Tax should include requirements to end the income tax--period!  The IRS could remain but it would only be an oversight agency to fulfill taxes collected, but with NO income tax--then there would be NO requirement for anyone to report their income to Feds and ALL tax dollars being forcibly taken by the Feds would be paid out on paychecks instead, excepting any STATE taxes.  C'MON MORTON--the Fair Tax was designed by 200 economic experts who've far greater experience in tax policy and the financial world.  FORGET ABOUT THE INCOME TAX ARGUMENT---even IF it was ILLEGAL it would be considered a FEDERAL PRECEDENT by the U.S. Supreme Court since it was adopted 102 years ago with so many years of enforcement. They would NOT repeal or rule against it.

[John Gaver]

Shavager, you are absolutely correct about the underground economy. But there is one important point about that issue that you failed to mention. Who do illegal aliens compete against for jobs? Poor working Americans - those living at or near the poverty line. Today, employers will hire an illegal alien at $0.20 below minimum wage, rather than a citizen, at minimum wage. So consider how much effective FairTax a citizen family living at or near the poverty line would pay. Very close to zero. The prebate will pretty much offset what they pay at the cash register, so they net out to close to zero FairTax. Then consider how much effective FairTax an illegal alien family would pay. 23%. They pay 23% at the cash register and get no prebate. Therefore, that equates to a 23% penalty for those who are here illegally and it's a penalty that they cannot avoid. Suddenly illegals would no longer be able to afford to work for $0.20 below minimum wage and as their income demands are forced up, U.S. citizens, not suffering under the same load would just as suddenly have a decided employment advantage over illegals. Employers would then rather hire a citizen at minimum wage than an illegal at $0.20 above minimum wage. The working poor would be big winners under the FairTax, at the expense of illegal aliens.

There was one point on which you were wrong. You said, "Nothing in the FAIR TAX amendment eliminates the IRS". Actually, H.R.25 does abolish the IRS. Here is Sec. 301 of the H.R.25 (albeit, without the proper indents):

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SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.

(a) Appropriations.—Appropriations for any expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year 2019 shall not be authorized.

(b) Records.—Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2019, except that any records necessary to calculate Social Security benefits shall be retained by the Social Security Administration and any records necessary to support ongoing litigation with respect to taxes owed or refunds due shall be retained until final disposition of such litigation.

(c) Conforming Amendments.—Section 7802 is amended—

(1) by striking subsections (a) and (b) and by redesignating subsections (c) and (d) as subsections (a) and (b),

(2) by striking “Internal Revenue Service” each place it appears and inserting “Department of the Treasury”, and

(3) by striking “Commissioner” or “Commissioner of Internal Revenue” each place they appear and inserting “Secretary”.

(d) Effective Date.—The amendments made by subsection (c) shall take effect on January 1, 2019.
======

As you suggested, there would still be a department within the U.S. Treasury. But even that "department" would likely not rise to the level of "agency". That department would audit the state collection agencies (collectively referred to "Sales Tax Administration Authorities", of which 45 already exist), those STAA's would audit about 25 million businesses, and nobody would audit individual consumers (at least not without due process, which is sorely lacking in the income tax). The only way an individual consumer might be audited under the FairTax, is the same way they might be audited if suspected of any other crime. If a routine audit of a retail business turned up evidence against a particular consumer, suggesting that he was colluding with the retailer to evade taxes, then the STAA would have to take that evidence to a STATE court (not a federal court) and convince a judge that there was probable cause for a court order.

So the individual consumer is doubly protected, in that not only does a court order have to be issued, before a consumer could be audited, but that order would have to come from a STATE court.

As mentioned above, remember that any American can be audited for any other suspected crime. If your neighbor, co-worker, brother-in-law, or someone else you know is caught dealing drugs and the investigation turns up probable cause that you may be hiding money for him, you can be audited, under the same exact conditions. What the FairTax does is put tax investigation on an equal constitutional footing with all other types of crimes, in that it brings "Due Process" back into the picture.

The final nail in the income tax would be H.J.Res.16, which sends an amendment to the states to repeal the 16th Amendment. Personally, I would prefer a bill like H.J.Res.104, from the previous Congress (113th), which would have taken repeal a step further, by permanently prohibiting the taxation of income (proportional or otherwise).

[Morton Thomson Jr.]

The Income Tax as it currently exists is supposedly a system of "Voluntary Compliance." Tell me again how new laws are better than just eliminating old ones.

They don't follow their own rules now. They allow people to think that they are Liable for a tax they are not liable for. They make the laws as confusing as they can. They don't talk about the Constitution when you have a beef. They drag you into their "Tax Courts" instead of "Common Law" court.

Is their any reason I should take their word for anything?

[Morton Thomson Jr.]

I don't know if you can hear your own voice Shav,

Your words speak of jealousy and anger toward those who would "bypass" the "system". The system we currently "enjoy" has a name. It's called SOCIALISM. And that is the problem.

Also, I don't give a hoot about some "expert's" opinion or their experience. You said it yourself; "Nothing in the FAIR TAX amendment eliminates the IRS or income tax...".

It is time to wake up and smell the coffee. We are at a crossroads. As far as I can tell, there is no turning back now and the "Fair Tax" will not change their spending habits on the "Hill".

[Mike]

Let's look at the income tax and the IRS a in another way. During the Reagan years an independent study found that, "not one nickel goes to funding the services of the government", or something to that effect.

With that little tidbit of information from a government sponsored study, tell us WHY we need to prop up, reform, replace, or improve something that isn't necessary in the first place?

We can bicker all we want on whether an income tax is Constitutional or not, but everyone is missing the point that the money is being extorted from us and magically disappears and hasn't been accounted for.

Are the IRS and Federal Reserve US government agencies or private corporations? Does the money go into the US treasury or the IMF and fund anti-American, UN sponsored activities? We are missing the point and not asking the correct questions.

Secondarily, why are we expecting a known corrupt Congress to act on our behalf in the first place? They are all too aware of the same facts that we have discussed in these forums, yet they continue to violate their oath of office and never FIX any past wrongdoings of their predecessors. Once again, we need to ask why and who do they really work for?

[Dr Richard W Biek]

2 thirds of every dollar of federal revenue goes to foreign stockholders of UNITED STATES INC (Wash., DC) who allow 1 third to run our federal bureaucracy and military. They don't need our income tax payments but do not want too many Americans to accumulate wealth. Congress has no control of this distribution.

[Robert Holtzclaw]

The study to which you refer is the "Grace Commission Report," coordinated by Peter Grace.

[Mike]

Thanks Robert. I believe the summary on the first page of the report is all most Americans need to learn. It's not that this report is secret. So why doesn't anyone ask the next question?

I hear the same argument from the ill-informed when speaking of repealing the IRS. They ALWAYS ask, "... Without paying our fair share, who's going to maintain the roads and bridges"? The simple-minded have no clue that there are untold numbers of OTHER taxing methods, like fuel, tire, battery excise taxes to fund our infrastructure. They forget about the cigarette taxes, all the license fees on just about everything.

It's folks like these that have been indoctrinated that we MUST keep the IRS or a new and improved version of this extortion program. It's all they have ever known, and they refuse to accept change, even when it benefits them. Facts and news reports of waste, abuse, and non-accountability has no effect on their reasoning. Since this is America, these same people still are permitted to vote!

[Morton Thomson Jr.]

You're absolutely correct Mike. People begin to become attached to their misery and pain and become quite offended if you wake them from their dreamworld. "Even if it benefits them."

[John Gaver]

Mike, the problem with all of those taxes is that, regardless of stated "intent", all of those taxes end up in some other bucket. We currently have a gasoline tax. The stated purpose of gasoline taxes is to maintain roads and infrastructure. But only a small fraction of those taxes actually get to anything even remotely connected to infrastructure. The point here is that we have two separate and distinct problems in government that we need to address SEPARATELY - TAXES and SPENDING.

Members of Congress actively perpetrate the myth that taxes and spending are joined at the hip, in order to take part of the focus off of their spending addiction. By perpetrating this myth, they fool a portion of the people into focusing on taxes, as a way to force Congress to cut spending. You see, they know that we know that getting Congress to cut spending is far more difficult than getting them to cut taxes or change the tax system. So they have people out there pushing this myth that taxes and spending are two sides of the same coin. The flawed logic that comes from accepting that premise is that if we focus on taxes, we will force Congress to cut spending. But what it means for Congress is that they have taken a large part of the focus off of what they really want to do - spend more of our money. I used to be a professional magician and in magic, we call that "mis-direction". In one part of my act, I would invite a gentleman onto the stage and within the first 10 seconds, I would pick his pocket and take his watch. I would get him focused on something else, while I picked his pocket. This is what Congress is doing to us. They get us to focus on taxes, while they print more money, which is effectively picking our pockets.

In fact, we know that when revenue is down, it's usually because the economy is down and when the economy is down, is when Congress spends the most on social programs and economic stimulus packages. But the big-spenders in DC know that if they can get a sizable portion of the voters to focus on taxes, it will be easier for them to continue spending, borrowing, and printing more money. Taxes are indeed a problem. But taxes are an issue that only affects us today. Spending affects our children and grandchildren for many years to come. We should devote far more attention to spending. After all, if we get spending down significantly and nothing happens to taxes, the worst that will happen is that we will see the national debt start to drop. But the more likely scenario is that we could then start doing something about taxes, in a way designed to keep taxes as low as possible, while maintaining a continuously declining debt. But this will only work if we never take our eye off the ball and that ball is "spending."

But if we get sucked into thinking that taxes and spending are in some way tied together, then we have fallen into the trap that the big-spenders in Congress have set for us. When we try to tie the two together, it makes us less effective and that's what the big-spenders are counting on.

[Bob Podolsky]

Quite right, Mike.

Consider the following scenario:

• A group of men and women decide (conspiratorially) that they want to spend other people's money.
• They know that because theft is immoral, it would be illegal for them, individually or collectively, to acquire other people's money through violence or coercion - and further, that such an act is illegal and could result in jail time.
• So they put on suits and retire to a room under a big dome, where they perform a magical ritual involving writing and voting.
• And when they are done, they produce a piece of paper that they call a tax law, that supposedly (magically) makes it legal for them to do collectively what would be illegal and immoral for any of them to do alone.

When the above procedure is challenged by reason or ethics, these same "legislators" claim they have the right to do these immoral things because we, the public, elected them to office - an office that was constitutionally defined by other "legislators" using similar magical rituals. And of course the election ritual is itself still another magical process that deceives us into believing we consent to being immorally coerced.

Make no mistake, the Constitution isn't the solution to this problem of hallucinated "authority". It is, in fact, a big part of the problem - because it perpetuates belief in the superstition of ""authority'.

As long as we believe someone else (anyone else) has a right to rule us, there will be those who eagerly take the role of rulers unto themselves.

Getting free is simple. The moment you recognize the fictional nature of "authority", you are free. The tough part is living free, because our culture penalizes freedom, rather than encouraging and supporting it.