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The “not so fair” Fair Tax

20 Nov

16th Amendmentby Travis Augustine, CPoW Member in Wausau, Wisconsin

You hear about it everywhere.  The Fair Tax this, the Fair Tax that.  Let’s take a little look at the so-called Fair Tax and I’m sure you’ll see that it is not so fair after all.  Nor does it do anything to reign-in big government spending.

The first thing to be considered when you look at the Fair Tax proposal the prebate.  What’s a prebate you ask?  It’s money you get every month from the government regardless of your income level to ensure that those below the poverty level are not as affected by the new sky high federal sales tax.  In other words, someone below the poverty line will get money from the government to cover their share of the Fair Tax and will not actually have any skin in the game with regard to federal spending.  Effectively they could, as they do today, actually have a negative tax rate, whereas someone who is wealthy [read: above the poverty line] will have an effective tax rate of the proposed 23%.  Sure sounds like a “tax the rich” progressive tax scheme to me.  Not very “fair”.

The second thing to consider with regard to the Fair Tax is that there is nothing to stop the federal government from raising this point of sale tax rate to 35%, 45%, insert your high percentage rate here.  Therefore, it does nothing to reign-in government spending.

By contrast, the Constitution Party opposes the Fair Tax proposal for several reasons, all of which are detailed in the party platform which can be viewed here, but let me share a couple of the high points here for you.

From the “tariff’s and trade” portion of the platform:

“Article I, Section 8 provides that duties, imposts, and excises are legitimate revenue-raising measures on which the United States government may properly rely. We support a tariff based revenue system, as did the Founding Fathers, which was the policy of the United States during most of the nation’s history. In no event will the U.S. tariff on any foreign import be less than the difference between the foreign item’s cost of production and the cost of production of a similar item produced in the United States. The cost of production of a U.S. product shall include, but not be limited to, all compensation, including fringe benefits, paid to American workers, and environmental costs of doing business imposed on business by federal, state, and local governments.

Tariffs are not only a constitutional source of revenue, but, wisely administered, are an aid to preservation of the national economy. Since the adoption of the 1934 Trade Agreements Act, the United States government has engaged in a free trade policy which has destroyed or endangered important segments of our domestic agriculture and industry, undercut the wages of our working men and women, and totally destroyed or shipped abroad the jobs of hundreds of thousands of workers. This free trade policy is being used to foster socialism in America through welfare and subsidy programs.”

From the “taxes” portion of the platform:

“The Constitution, in Article I, Section 8, gives Congress the power “to lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States.”

In Article I, Section 9, the original document made clear that “no Capitation, or other direct Tax shall be laid, unless in Proportion to the Census of Enumeration herein before directed to be taken.” It is moreover established that “No Tax or Duty shall be laid on Articles exported from any State.

Since 1913, our Constitutional rights to life, liberty, and property have been abridged and diminished by the imposition on each of us of Federal income, payroll, and estate taxes. This is an unconstitutional Federal assumption of direct taxing authority.”

“We propose legislation to abolish the Internal Revenue Service, and will veto any authorization, appropriation, or continuing resolution which contains any funding whatsoever for that illicit and unconstitutional agency. We are opposed to the flat-rate tax, national sales tax, and value added tax proposals that are being promoted as an improvement to the current tax system. The Sixteenth Amendment does not provide authority for an un-apportioned direct tax.

Moreover, it is our intention to replace, with a tariff based revenue system supplemented by excise taxes, the current tax system of the U.S. government (including income taxes, payroll taxes, and estate taxes.)

To the degree that tariffs on foreign products, and excises, are insufficient to cover the legitimate Constitutional costs of the federal government, we will offer an apportioned “state-rate tax” in which the responsibility for covering the cost of unmet obligations will be divided among the several states in accordance with their proportion of the total population of the United States, excluding the District of Columbia. Thus, if a state contains 10 percent of the nation’s citizens, it will be responsible for assuming payment of 10 percent of the annual deficit.

The effect of this “state-rate tax” will be to encourage politicians to argue for less, rather than more, federal spending, and less state spending as well.”

This abolishing of the 16th Amendment and forcing the federal government back onto a diet of tariffs and excise taxes with any deficit being apportioned among the states with regards to the various states’ population will bring the federal budget into the lime light far more than simply another direct tax on the people through a point of sale tax ever will.  The states themselves will have to cough up the money to cover the deficit which will put pressure on the state legislatures to pressure Washington to reduce spending in order to minimize the deficit.  A direct flow of money from the people, to the states, to the federal government will also help restore the balance of power and make it much harder for the federal government to use “federal dollars” to get the states to do what they want.

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One response to “The “not so fair” Fair Tax

  1. flattx

    November 21, 2013 at 4:57 PM

    Well done. I add to your comments that the Prebate MAY leave the poor with a negative tax rate – it is GUARANTEED to give them a very high negative tax rate.

    1st there are 3 items of the Prebate’s “over-assumed-spending and 3 items of spending where there is no FT paid.In combo these 6 operate to guarantee a large tax windfall to the poor, because the Prebate over-assumes their spending levels and assumes they will pay FT on all if it.

    Over-assumed spending: 1) Non-existent marriage penalty eliminated,
    2) extra non-existent adults via a limited definition of family, 3) all the poor who send BELOW the poverty limit are assumed to spend AT the limit.

    Spending but not FT paid; 1) Used goods, 2) Black market, 3) In-kind welfare.(Medicaid, Housing Allowance) – the poor do not pay the FT, WE pay it directly to the vendor.

     

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