Taxation - It's the Principle of the Matter

My primary job today is simple. I aim to convince you what the primary cause of most all the ills we see with the Federal Government today is.

And what are these ills I speak of. Let’s see; excessive government spending, or I should say excessive deficit spending; non-uniform taxation that is really pure wealth redistribution; out-of-control illegal immigration; Socialized Health-Care; and explicit Federal encouragement of criminal activities against Americans.

It pains me to hear enraged Americans complaining about issues such as these under the misguided assumption that they are somehow separate problems that can somehow be solved separately.

These are symptoms, not problems in and of themselves. And like any symptom, they won’t go away unless the underlying problem is taken care of. The symptoms may linger a bit and need to be addressed, but to do so while the underlying problem still persists is total futility.

So, what is the underlying problem?

It is money, which in terms of the Federal Government means taxation.

Now any form of government must have money to exist, and it is also a fact that the only way a government can get money is to confiscate it from its citizens. The trick, of course, is that a good form of government only confiscates as much money from its citizens as it needs to perform legitimate functions that only a Government can provide.

That definition of legitimate functions that only Government can provide was laid out for us in the late 1780s by a group of wise men in Philadelphia. The means of taxation to pay for those legitimate functions was also laid out. Our Founders explicitly forbid methods of collecting taxes that would allow the U.S. Government to even have enough money to think beyond those legitimate Constitutional functions they spelled out.

When taxation is boiled down to its simplest forms there are only two types; direct and indirect.

Direct taxation is, as it sounds, confiscation based on the fact that the citizen exists. That is not to say that all citizens have taxes directly taken, but those that are taxed are done so with no regard for choices they make but rather based on the fact that he or she actually lives.

Indirect taxation is, as it sounds, confiscation based on choices that the citizen makes. In all practicality, this means a usage tax or a sales tax.

If you have the slightest doubt which is preferable to freedom and success, please review the history of mankind. Direct taxation always ends badly, as in citizen revolt, totalitarianism, cronyism, economic collapse, etc. Indirect taxation, however, is always linked with freedom, economic growth and stable societies.

Our wise Founders knew history as well as common sense; Article I, Section IX of the U.S. Constitution says explicitly that NO direct tax could be imposed. They did, however, provide a caveat whereby direct taxation could be imposed (one must assume they meant for temporary emergencies) but ONLY if all citizens were required to pay the exact same amount.

Why do indirect taxes work whereas direct taxation always fails?

Indirect taxation is confiscation based on economic freedom. The tax system is self-regulating; if the taxes (ie usage tax, sales tax) are perceived to be onerous citizens exercise their free choice to curtail the activities subject to the tax. Thus, indirect taxes result in low taxes and efficient governments. Indirect taxation goes hand-in-hand with free market Capitalism.

Direct taxation is confiscation by violence. Citizens subject to these taxes (usually decided based on politics rather than fairness or equality) have no say over the amount taken from them unless you make the silly argument that they could CHOOSE to starve and/or die to escape the taxes. The government imposing such taxation has little incentive to limit taxes for any reason other than to try and stave off rebellion. Direct taxes result in high taxes and inefficient governments. Direct taxation goes hand-in-hand with Totalitarianism.

The United States was established as a Federal system with a small, limited central government with most governmental powers being reserved for its individual States. The national Government was never to have many powers and thus was purposely limited in the types of taxation it could impose. At the time that meant tariffs and excise taxes, effectively meaning sales taxes on luxury items.

And then along came the Progressive movement of the late 1800s and early 1900s.

Many attempts were made during this period to expand the Federal (or national) Government’s reach into areas that constitutionally they had no business getting involved in. The two forces holding back these early Progressive forces were the Supreme Court (back when they actually seemed to take their jobs seriously) and the U.S. Treasury (which had nowhere near the money to fund all the attempted Federal expansion).

Enter the 16th Amendment, ratified in 1913, whereby Congress obtained the keys to the confiscatory kingdom (ie direct taxation authority) in exchange for a promise never to impose such taxes over more than the richest 1% who would never pay more than a 1% income tax rate.

That deal worked out real well for one of the parties involved, didn’t it?

So since then we have allowed the existence, and ever-growing expansion, of Federal Income Taxes; individual income taxes, corporate income taxes, capital gains taxes, Social Security taxes, Medicare taxes, etc. And during that exact same period we have allowed the existence, and ever-growing expansion, of the United States Government.

ANY tax based off income or wealth is a direct tax. Contrary to what many Democrats and Republicans, from Joe Six-Pack voter to Congressmen to talk-radio hosts, will tell you, the name of the tax does not have to include the word Income for it to be a direct income-based tax.
I will allow some definition leeway in the most convoluted, strange Federal tax we have; the Corporate Tax. It is a direct tax in that it is based off of income made by a corporation, but 100% of such taxes are really collected indirectly from consumers (both domestic and foreign) as the corporations have to factor U.S. corporate taxes into the prices charged for their products. As such, U.S. Corporate Taxes are really indirect taxes on consumers elaborately hidden to appear to be direct taxes on non-living, legal entities known as corporations.

ANY direct tax enables an inefficient, totalitarian, run-away Government.

ANY call for keeping, but reforming, a direct taxation system will at best result in prolonged acceptance of an inefficient, totalitarian, run-away Government.

Here is a handy rule of thumb; if the 16th Amendment is required for ANY so-called tax reform then the person or group championing such tax reform is championing the un-American, historically-failed concept of DIRECT TAXATION.

Let me be blunt. Most Democrats, Progressives and Socialists support direct taxation. They don’t try very well to hide it. The vast majority of Republicans and so-called Conservatives support direct taxation. They con themselves and others, either through malice or ignorance, by claiming they want LOWER INCOME TAXES.

There is NO acceptable reform of direct taxation. To coin a phrase from old Western movies; the only good direct tax is a dead direct tax.

If we, as a Nation, REFORM the U.S tax system rather than REPLACE the U.S. tax system then all we are doing is validating direct taxation and dooming the United States to bigger Government, greater taxation and less freedom.

The so-called Conservative answer, more often than not, to tax reform is The Flat Income Tax plan made famous over the last several decades by Steve Forbes, Dick Armey and Arlen Specter. This Flat Income Tax has never had any other form than a 100% direct tax. It was never worded in any way, either unofficially or as a bill before Congress, to even suggest that it would be anything other than a direct tax on income.

I will readily admit that the vast majority of people who have told me they support a flat tax either can’t tell me what they mean by a flat tax or they tell me some made up plan that has little semblance to the Armey Flat Income Tax that was actually before Congress for more than a decade. That plan has always been 100% dependant on the 16th Amendment because it is a 100% direct tax. It ‘flattens’ tax rates only for personal income taxes, not for corporate taxes or payroll taxes.

How hard is it to at least do a little homework before jumping on the bandwagon of the moment?

This brings us back to my original thesis which is that Americans who actually want to address the concerns of this country need to focus on the systemic, underlying problems and not just shotgun out words that they have sort of heard but haven’t really thought through.
Still don’t see the relationship between the systemic problem of direct taxation and those Federal Government ills I spoke of earlier? Well, let’s spell those relationships out.

Ill number one was excessive government spending.

If we do not assume a relationship between Government spending and Government tax revenues, then even talking about solving this ill is just silly. So I am going to make the admittedly crazy (but responsible) assumption that deficit spending would not occur.

Direct taxation is imposed not via any sort of market forces but by Government decree. Citizens cannot adjust their actions in response to the taxes and thus do not enjoy the self-limiting benefits of an indirect tax. Replace income-based taxation with consistent usage and sales taxes and when taxes get too high the folks slow down the usage and buying which lowers the taxes collected. Taxes must be lowered to get the usage and purchasing to pick up again.

If everyone was taxed on economic activity rather than political affiliation or income level then everyone would feel the pain of Federal taxation and everyone would have a stake in pressuring Government to be more frugal in its spending.

Ill number two is wealth redistribution. Direct taxation encourages this evil because direct taxation is always applied and manipulated to achieve political goals, with segments of the society exempted from the direct taxation based mainly on political expediency. In this way, governments use direct taxation to manipulate the public into allowing them the most political power.

What I am saying there is that the very acts of exempting some segments from direct taxation while still providing them Governmental benefits is nothing more than redistribution of wealth. Those who pay the taxes are paying their share as well as the share of all those who are exempted fully or partially. Their wealth is being forced to pay their tax bills as well as the bills of others. That is wealth redistribution the same as any other sort of theft.

As with the excessive spending solution, shifting to an indirect taxation system and thus stopping this wealth redistribution would also cut down on Federal spending as the moochers would have no incentive to support a lot of the Federal spending that they now see as an unpaid-for benefit.

Ill number three is illegal immigration. If the direct taxation is based on income, as in the U.S., then only reported income can be taxed. Illegal aliens do not report their incomes for the same reason criminals don’t – THE INCOME IS ILLEGAL. Thus, any illegal alien effectively receives a tax-free income by Congressional decree.

How many of our illustrious Congressmen will admit to that piece of genius?

Replace the U.S. Income Tax with an indirect usage/sales tax and illegal aliens who participate in the taxed activities (as in eating, housing, shopping, etc) will pay Federal taxes exactly the same as every legal American.

Ill number four is Socialized Health-Care. Socialized anything will be inefficient, but when I say Socialized Health-Care I don’t just mean any of the future national healthcare scenarios floated lately by Progressives. Contrary to Republican propaganda, Socialized Medicine is alive and well and HUGE in the U.S. today and its name is Medicare. They just don’t want to make a big deal out of that one because they helped fully in its expansion over the decades.

Let me tell you one highlight that would come from replacing our illustrious Income Tax with an indirect sales/usage tax. We’ll assume that Medicare remains supported, though personally I’d rather it got unplugged. The same Medicare program that today will be bankrupt within 10 years could remain fully funded far into the future simply because indirect taxation would widen the tax base and escape the demographic impossibility we currently face.

Ill number five is explicit Federal encouragement of criminal activities against Americans. Harsh words and a serious accusation, but it is without a doubt a true statement. Everything I said earlier regarding illegal immigration applies here. All criminal activities are essentially tax-exempt because our U.S. Income Tax Code can ONLY tax income that is reported. I doubt seriously that any criminal is stupid enough to report their loot as income. Could be the case but I am doubting it happens too often.

And what is more, by thus making every illegally-gained dollar 20% to 30% more valuable than a legally-gained-and-reported dollar our Federal Government is economically encouraging young entrepreneurs to try their hand at crime. Which seems ironic to me, because I see suburban teenagers at BurgerBiggie who appear barely able to make change but inner-city dope pushers who have no problem figuring out how to game the system by taking advantage of U.S. tax laws.

Replace the outrageously offensive direct taxes with indirect sales/usage taxes and dealers, prostitutes and common thieves have to pay taxes same as anybody else. Would stop the legal folks from having to subsidize the crooks and maybe cause would-be criminals to reassess the profitability of crime.

I definitely want to talk to you about what I think is the only viable indirect taxation plan that exists. However, to argue the merits of replacement plans without first reaching agreement that we need to completely replace what we have suffered under for last 96 years is to play right into the Socialist and Statist hands that want to preserve this direct taxation legacy left by the likes of Woodrow Wilson and Franklin Roosevelt.

I am a FairTax advocate. Also known as the National Retail Sales Tax. Also known as House Resolution 25. In no way would I ever hide this.

However, I also believe rational people can dicker over details of this replacement tax plan.

It is just that I also know that only irrational people can support direct taxation, be it an Income Tax or Head Tax or a Poll Tax. I say also that only irrational people can support direct taxation reform, whether it’s called lowering tax rates or reducing tax brackets.

Please choose the right principles. We can always argue the best ways to follow those principles, but if you don’t understand which is the underlying principles to fight for (ie freedom, indirect taxes, personal responsibility) then you are really only supporting the wrong principles (ie tyranny, direct taxes, enslavement).

FairTaxWarrior
www.fairtaxwarrior.com

Congress - Tear Down This Wall

Ronald Reagan, with a similar phrase in 1987, summed up the yearnings of freedom-loving people everywhere. It was perhaps one of the most meaningful phrases in history.

So why would I presume the right to steal a phrase from possibly our greatest President? Because it’s just so applicable to the insidious barrier erected, and still in place, within this country.

The wall I speak of has been built and extended by Congress and has the endorsement of all the major candidates for President in 2008, with the sole exception of Mike Huckabee.

We all know the sordid history of the Berlin wall that President Reagan spoke of. But Americans are seldom taught the sordid history behind the Income Tax wall I write of.

In 1913 the U.S. Congress completely spit on the memory of our Founding Fathers by deceitfully circumventing one of the most cherished freedoms spelled out in the Constitution. Article 1 Section 9 of the U.S. Constitution explicitly forbids the imposition of a direct Federal tax based on Income. The Founders also made clear in numerous writings of the time their complete disdain for such direct taxation. Why? Chiefly because throughout history direct taxation has been the tool of tyrants and has always led to societal decay. Congress tried repeatedly to make a grab for the increased spending power they would derive from an Income Tax but for more than 120 years the Supreme Court thwarted such actions.

In 1913 Congress decided to do what they oftentimes do so well and mislead the American public. The 16^th Amendment, giving Congress the authority to tax income, was sold to the public as a tax only on the most wealthy of Americans. Sound familiar?

Since then, Congressional spending has skyrocketed unchecked. Coincidence – I think not.

The Berlin Wall had the singular evil goal of preventing the escape of people from Communism to the Western democracies. The U.S. Income Tax has multiple goals that encourage behavior American society (at least the parts outside Washington D.C.) for the most part deem bad.

If we envision the U.S. Income Tax system as a wall, then it is a huge universal neon sign that flashes several messages. Most Americans don’t even see the messages, but you can bet most members of Congress (and I guess most Presidential candidates) do.

Those messages are:

• Spend, Congress, Spend
• Criminal Activity Pays
• Americans Are Suckers
  

The evils behind these messages will be explained in this paper, but it is important to realize that there is no way for any Income Tax to be modified to be ‘made right’. The Founders were not stupid; they expressly forbid direct taxation for good reasons. Those reasons are as valid now as they have been for thousands of years. No citizen should be penalized for their productivity or at some point they will stop being productive. No citizen should be taxed more or less than another simply because they make more money than another citizen; for then the ones that can hide their money will pay less than their share and the others will pay more than their share.

All Income Taxation must be replaced. The Founders allowed for consumption taxes (ie excise taxes, duties, tariffs, etc). Only 1 piece of legislation has ever been introduced to totally replace all Federal Income Taxes.

It is called The FairTax (HR25). It would replace all Federal income taxes with a consumption tax on all retail (final consumer) spending above that necessary to maintain a poverty-level lifestyle. It will kick off the Constitutionally-mandated process to repeal the infamous 16^th amendment. It will eliminate all Federal withholding from American paychecks. It will reign-in Congressional spending. It will stop rewarding criminal activity in America. It will immediately remove Congressional mandates on the American public of $500 BILLION per year.

All Democratic candidates as well as Republicans Rudi Gulliani and Mitt Romney vocally support the U.S. Income Tax system and oppose The FairTax. Why? Both will generate the same amount of taxes for the Federal government, but The FairTax will make the massive over-taxing of the American public totally visible for the first time since 1913. The Income Tax mandates that Americans transfer $500 BILLION yearly to a made-up industry created by Congress. I have to assume members of that industry are contributing huge sums to keep up the money flow.

Mike Huckabee is alone among the top-tier candidates for President calling on Congress to TEAR DOWN THAT WALL. He alone is willing to lead Americans in an attempt to take back our government. The attacks on him have stepped up greatly over the last month, not only because he has surged in national polls but because he is threatening to upset quite a few very rotten apple carts.

But now, let’s get back to the meaning behind those evil messages being flashed by ‘The Income Tax Wall’.

Message #1 – Spend, Congress, Spend

By directly taxing the incomes of legal Americans, especially by confiscating the money straight out of their paychecks, Congress guarantees itself a steady (and massive) stream of funds. The only way to reduce Federal taxes you pay is basically to choose to lower your income. Maybe to Income Tax supporters this is a valid choice but I’ve never seen it done.

If Congress were to allow Americans to actually see the amount of Income Taxes they pay then there would almost certainly be a revolt. But have you ever tried looking into the 60,000-plus pages of the U.S. Income Tax Code? It is incomprehensible to even the IRS. No one is treated the same. Only individuals pay taxes (who else can actually pay anything) but illusions are spun so that there are individual taxes, corporate taxes, payroll taxes, FICA taxes, estate taxes, and so on and so on. NO American can say how much they pay the Federal government in taxes.

So Congress can raise taxes every day without fearing retaliation. Just raise taxes on certain corporations and most Americans say ‘yeah, soak those corporate goons’. Just raise tax rates for individuals above a certain income level and most Americans say ‘yeah, soak the rich’. Use the ability to tax certain groups to buy the votes of other groups.

Most members of Congress are deathly afraid of the consequences of ONE visible-to-everyone tax rate that is applicable to EVERY American. That would make it political suicide to vote for a tax increase without a very valid reason. Congress would actually have to do what it did 100 years ago, LIVE WITHIN IT’S MEANS.

Message #2 – Criminal Activity Pays

The Greek philosopher Plato said over 2000 years ago: “When there is an income tax, the just man will pay more and the unjust man less on the same amount of income.” True then, true now.

A government can only tax reported income. How could it do anything else? Criminals don’t report their income. Thus, criminal activity is exempt from taxation.

But Congress does not reduce needed government revenues because it estimates 25 to 30% of Americans mis-report their taxes. Those are Treasury Department estimates, not mine. No, Congress collects those missed taxes from legal, law-abiding Americans.

About $700 BILLION per year is the estimate of taxes that are not collected from Americans on income from either illegal activities or non-reported legal activities. Given a roughly $2.5 TRILLION dollar revenue stream to the Feds in 2006 that means every legal, law-abiding American was forced to pay about 28% extra tax on the average just to make up what the crooks didn’t pay.

So, given a choice between earning $1000 in a legal manner or $1000 selling drugs our Government essentially has in place a system which favors the drug-seller. He gets to keep all his $1000 while the poor working citizen gets to keep only $600 to $750 of his earnings (depending on the tax-bracket). That is insane! But yet candidates who support this policy brag of how they will ‘vigorously fight crime’. Why not change the policy that makes crime tax-exempt? That’s a major part of Mike Huckabee’s plan.

Consider illegal aliens. Our Government essentially has a neon sign flashing all along the Mexican border saying to PLEASE cross here illegally. Get paid under-the-table in the U.S. and your $1 is worth $1 while the $1 of an American citizen is only worth 60 to 75 cents because of our tax system. That is insane! But yet candidates who support this policy brag of how they will ‘secure our borders’. Why not change the policy that makes illegals tax-exempt? That’s a major part of Mike Huckabee’s plan.

Message #3 – Americans Are Suckers

In the early 1900s rumor has it Congress considered trying to save the buggy industry even after the horse-and-buggy’s demise. Outrageous, you say? Well, consider the tax-compliance industry created solely by Congressional mandate.

Americans spend approximately $500 BILLION per year in tax preparation, tax lawyers, tax planning, etc. No shelter is provided, nor clothing, nor food, nor entertainment. The ONLY reason this $500 BILLION per year industry exists is for Americans to comply with the complicated U.S. Income Tax.

Thus, the $2.5 TRILLION in tax revenues to the Federal Government in 2006 actually cost the American public $3.0 TRILLION. Does no one see a problem in the Government making us pay an average of 17 cents to a tax-preparer for the privilege of sending $1.00 in taxes to Washington?

Mike Huckabee does, it seems.

President George Bush passed some tax cuts in his first term that amounts to maybe $125 BILLION per year. These are applauded by most of the Republican candidates because each year that is $125 BILLION more that gets freed up to fuel our national economy. He was right to do this, in my opinion.

Mike Huckabee (through support of The FairTax) wants to eliminate the $500 BILLION per year that buys us NOTHING. Without even counting any tax cuts that is $500 BILLION freed up to fuel the American economy. The cost of doing this; that tax-compliance industry goes the way of the buggy-makers and those people move into actual productive jobs.

There is nothing at all wrong with tax lawyers and such. The problem is that the only reason anyone uses their services is because the Federal Government says we have to.

Conclusion

If the reader still does not see the U.S. Income Tax as a barrier of a similar magnitude as the Berlin Wall, it can only be because their livelihood somehow revolves about the U.S. Income Tax.

I thus end with the title of this paper. I’d love to hear a U.S. President issue this challenge to the tax-and-spend branch of our Federal Government.

Congress – Tear Down This Wall!!!!!

The Federal Income Tax: Economic Encouragement for Crime

Some of the most glaring examples of unintended consequences throughout history have been the effect of government taxation on societal trends. In this paper we will concentrate on the United States Federal Income Tax and its implicit (and effective) encouragement of illegal activity.

There are some general assumptions I have necessarily made and which I will state here.

· Some mechanism must exist in any governmental system for the collection of taxes from the governed. Otherwise that government could not function. Whether the functions of that government are just and derived from the governed is irrelevant for purposes of this paper.

· Every society defines certain activities as illegal. Common examples are drug-dealing, robbery and not paying taxes owed to the government. Another such activity of particular interest to the United States at this point in time is that of illegal immigration.

· Citizens of any society will tend to maximize activities that are in their self interests. That is just human nature. There is of course a balance between self interests and societal interests but unless there is a direct conflict the self interests usually win out.

The U.S. Government assesses Federal taxes in several general areas. On individuals, taxes are assessed on income attributed to that individual. There are 2 main areas of federal individual income taxes; ‘standard’ income tax and FICA. On organizations (chiefly corporations), taxes are assessed on profits.

The U.S. Government officially grants tax-exempt status to certain profit-generating organizations that it deems beneficial to society. For the most part these are charitable organizations. This is done to encourage activities these organizations perform.

In the individual arena, notice the fact that ‘income attributed to the individual’ is taxed. Ideally, that would be the same as ‘income earned by the individual’. However, this has never been the case throughout history and certainly is not in the present-day United States.

Income is ‘attributed’ to an individual if the individual voluntarily reports that income to the Government or if the organization employing the individual reports that income to the Government. Individuals engaged in illegal activities never report their income, of course, and not even all individuals engaged in legal activities report their income.

As already stated in the general assumptions above, not paying taxes owed to the Government is itself considered an illegal activity.

The IRS estimates that at least 30% of all income earned in the U.S. economy is never reported, and thus never taxed. The word ‘earned’ in some of these cases may seem strange, but what else would you call money ‘received’ from illicit activities? That 30% figure includes money made by overt criminals (drug-dealers, thieves, etc), illegal aliens and otherwise-legal citizens that just don’t report their income to the IRS.

Individual Federal income taxes in 2005 amounted to approximately $2 trillion. Estimates by the IRS as to ‘lost’ income taxes from unreported ‘income’ was $700 billion. The breakdown of that unreported ‘income’ estimate was $300 billion gained from illegal activities and $400 billion gained from legal activities (mostly involving cash transactions).

The effects of a Federal Income Tax in the U.S. in 2005 were as follows:

· Americans who earned their income legally and paid taxes on that income were forced as a group to pay $700 billion (over 30% of the $2 trillion total) more Federal taxes than was their fair share. Assuming you were a legal American in 2005, over 30% of your Federal tax bill went directly to pay the tax bill of criminals.

· Every dollar earned thru criminal activity was effectively exempt from Federal taxation. Every dollar earned legally was subject to Federal taxation. At average individual income tax rates of 30%, this means that ‘income’ from criminal activity benefits it’s ‘earner’ 30% more than the income of legal earners.

The first effect, forcing legal Americans to subsidize criminals, is immoral and some would argue un-Constitutional. That it is immoral for any government to force its citizens to subsidize officially-recognized criminals should be clear. That it is maybe un-constitutional depends on interpretation of article 1 section 8 of The U.S. Constitution (‘all Duties, Imposts and Excises shall be uniform throughout the United States’).

The second effect, making criminal economic activity more profitable than legal economic activity, could be construed as a criminal offense itself. The arguments could be made that this is encouraging anarchy and acting as an accessory to crime.

Making criminal activities more economically profitable (dollar for dollar) than legal activities without a doubt introduces severe conflicts between self interest and societal interest.

It is highly doubtful that any supporter of the Federal Income Tax will ever address these unintended consequences. I will give our Government the benefit of the doubt that these consequences were indeed unintended, though it is also strange that our Founding Fathers clearly recognized the historical economic evils of an income tax in the 1780s but their wisdom was later ignored.

Plato, in The Republic, wrote that “When there is an income tax, the just man will pay more and the unjust man less on the same amount of income.” He wrote that over 23 centuries ago! It was true then and it’s true now.

Law-abiding Americans should demand that their government stop giving economic enticements to criminals. This has gone on long enough! Replace the Federal Income Tax with a form of taxation where criminals can’t escape it just by mis-reporting their income.

There is a bill before the U.S. Congress to completely replace the Federal Income Tax system with a National Retail Sales Tax for spending above the Federal poverty level. Along with its many benefits is the fact that criminals cannot escape paying their share. If they eat they pay the tax. If they buy clothes or a car they pay the tax. They pay just like the rest of us, based on what we decide to purchase. But just like them, we law-abiding Americans get to receive all our income rather than having the Government confiscate it from us as it is earned.

This bill (HR25 / S25) is commonly known as The FairTax. It lowers the tax bill for every law-abiding American primarily because it forces the criminals to pay their own tax bill.

Now isn’t that Fair?

Implications to Churches, Charities & Overall Morality

see www.FairTaxWarrior.com for further info

For some reason many Americans seem unable to grasp the enormous economic benefits to be derived from shifting ALL Federal funding from an Income Tax system to a consumption tax like The FairTax. There is absolutely no case for keeping the current (or any) Income Tax system, but most Americans refuse to even discuss the possibility that their government has misled them on taxation for so long (approximately 90 years now).

So, this paper will attempt to point out non-economic reasons for replacing all Federal funding with The FairTax.

• Increase in disposable income for every American (due to NO Federal withholding) means increased charitable giving.
1. Every study shows that charitable giving in this country is directly related to the amount of wealth of it’s citizens. The FairTax increases the wealth of EVERY American except criminals. And criminals are not big donors to charity in the first place.
2. Income-Tax proponents will have you believe that giving is directly related to income tax rates, because of tax deductions. That is an utter falsehood. Relatively few Americans even file itemized deductions and besides, most charitable giving is obviously done because of a sense of helpfulness and not as some kind of financial calculation.
• Removal of the ‘tax-exempt’ and ‘tax-deductable’ statuses means decreased control by Government.
1. Currently the Government grants tax-exempt status to organizations who fall within guidelines the Government establishes. If an organization wants to retain that coveted tax-exempt status then they need to toe the Government line.
2. Similar situation with money given to a tax-exempt organization. The giver is ‘rewarded’ by being able to deduct a portion of that money from his year-end Federal tax bill.
3. Tax-Exemption is thus a tool the Government uses to encourage organizations to operate as the Government deems acceptable. Is that really freedom? I know the U.S. Constitution never gave that power to the any branch of Government. I doubt the Bible says a government should have such control? Same for the Torah and the Koran.
• Removal of ALL Federal withholding means all non-government education is un-taxed.
1. Currently, most Americans are forced to share the cost of public schools through local taxation. The Federal Government has for decades now more or less mandated how public schools operate. They do this mainly through Federal funding monies (‘comply or we hold back money’) and a Department of Education (‘comply or else’) that was also clearly never mentioned in the U.S. Constitution. Thus, many of us interchange public schools with the term government schools.
2. To send our children to non-government schools costs money in the form of tuition (usually quite expensive). The Government does not even allow such tuition to be tax-deductible, meaning that not only do parents have to pay that tuition PLUS public school funding but they also have to pay that tuition out of money they have to pay full Federal Income Taxes on.
3. Under The FairTax, ALL Federal revenues come from the sale of retail goods and services. ALL investment expenses (including investment in our children) are not taxed at all. Thus, parents still have to pay private tuition in addition to funding public school BUT the private tuition is NEVER taxed by the Federal Government.
• Removal of the ‘reported-income’ loophole means criminal activity is NO LONGER granted tax-exempt status by our Government.
1. Under ours (or ANY) Income Tax, all that can be taxed is reported income. Drug-dealers, pornographers, etc NEVER report their income and thus NEVER pay any Federal taxes on it. Of course there are laws saying Americans must report their income but if you don’t get a paycheck or run a business how in the heck is that law supposed to be enforced?
2. Every American taxpayer has their tax bill inflated by approximately 30% (this is the IRS estimate) because they must make up for the taxes that these criminals do not pay.
3. This means we financially SUBSIDIZE the very immoral activity that most of us do not want to even exist. This is INSANITY! But that is also an Income Tax.
• No Federal taxation at all for ANY legal American to buy bare necessities for their family means the end to the ‘serfdom tax’.
1. Under current Income Tax system, working Americans who live at the poverty level pay various taxes out of their meager salaries. This situation is analogous to the serfdom taxes of the Middle Ages where dirt-poor serfs were taxed in part to insure they would never climb out of poverty.
2. Under The FairTax EVERY American is supplied with a monthly stipend to cover the consumption tax on purchases needed to support them up to the Federal poverty level. Thus, all Federal taxes up to poverty level are 100% paid for already.
3. Thus, The FairTax encourages poor Americans to climb out of poverty rather than takes a portion of their money from them before they even get to see it.
• The FairTax follows the saying to ‘Render onto Cesar what is Cesar’s’, unlike the Income Tax system.
1. The Income Tax system effectively follows the saying ‘Render onto Cesar what is Cesar’s AND whatever criminals choose not to render to Cesar’.
2. I doubt that saying is part of any religious tradition.

Spending-Cut Talk is Cheap

One of the things that infuriates me most is so-called Conservatives whose whole fiscal policy consists of the words 'I favor Spending Cuts'.

Few have any details except that there is STUFF they think oughta be CUT. Don't bother them with boring details like what they would cut and by how much. Ssssh. 'That does not win votes' whispers Mr. Conservative.

Well, there is bunches that need to be cut. Let's try EVERYTHING that supports STUFF not mentioned in The Constitution. And while Mr. Repu ... uh ... I mean Mr. Conservative often feels the same way he of course feels that winning votes is more important than some little thing like the good of the country.

But wait .... is tax-cutting even a wise thing to do? Of course it is, but following tax-related money from a U.S. taxpayer to the IRS suggests that it only makes sense after another major step.

Taking 2004 as an example, the U.S. Treasury pulled in approx $2 TRILLION in tax revenue. Taxpayers, however, were forced to pay approx $2.5 TRILLION out of their pockets.
Where is the $500 BILLION difference? Well, the U.S. Government mandates that it's citizens (individually or via corporations) follow a complicated procedure of administrative collecting & reporting known as the U.S. Income Tax Code. The cost to us of complying with this mandate IS that $500 BILLION.

Are there so few of us who understand what the words WASTE, INEFFICIENCY and EXTORTION means? If I owe you $100 (whether I think it should really be that much or not) but you tell me I MUST pay your friend Myron $120 and he will in turn pay off your $1o0 debt, why in hell should I accept that as an acceptable idea.

Yet that is exactly what our government does every year and apparently 95% of this country thinks nothing of it .... but they sure as heck want spending to be CUT. Oh yeah!
Are we all brain-dead? I know schools rarily teach economics but this is a very simple concept. The 60% or so of us Americans who actually pay our taxes shell out $1.20 to the tax 'system' to provide our government with $1.00 in actual taxes. Why would we do something that STUPID? Because it is the LAW!

Mr. Conservative, if forced, can tell you about at most maybe $50 BILLION in spending cuts he wants to make. I'm sure it makes him feel all macho and stuff, but why on Earth would that be done before stopping the total waste of that $500 BILLION each year.

Every Repub ... eh ... Conservative will proudly point to President Bush's roughly $100 BILLION per year tax cuts and tell you how much it helped this country. Yeah, they'll say, Congress spent $450 BILLION more than it took in but WE cut those taxes some.

$500 BILLION people!!! Come on, I know it's a big number but figure it out. That is 5 times your celebrated tax cuts and approx the same as the entire Federal budget deficit.

Replace this damn Income Tax insanity. Be an American first, then you can crow all you want about being Mr. RepubliConservative.

Taxation Without Truth

Current taxation by the U.S. Government is a travesty. Its purpose is to keep citizens in the dark about obscene fiscal policies yet fleece those citizens to the maximum extent without their knowledge.

And its successful. The vast majority of Americans have no real idea of how much taxes they pay and they blindly keep electing politicians who perpetuate the shell game we call ‘the U.S. Tax Code’.

The first step to any real reform must be to get the truth out so American taxpayers get angry; and they should be VERY angry.

There are currently 3 main vehicles for federal taxation. One is actually called Federal Income Tax. That’s the tax vehicle whereby LAW-ABIDING wage-earners (not nearly everyone) have 20%, 30% or more of their paychecks confiscated and then are allowed to spend time and money to try and get a small portion of that confiscated money returned back to them on April 15^th. This form of taxation is proclaimed as being ‘progressive’ since it burdens lower-income Americans less than higher-income ones.

The second form of tax is called FICA, where LAW-ABIDING wage-earners (again not nearly everyone) have 15% of their paychecks confiscated in the name of 2 other BROKE shell games called Social Security and Medicaire. This form of taxation is definitely ‘regressive’ in that all below-$90,000 wage-earners pay exactly the same rate while higher-level wage-earners pay effectively a LOWER RATE.

The third form of tax is the most hidden (and regressive) of all. It is corporate income taxes. This tax is a cost of doing business just as is labor or material costs, so it is simply built into the price of American goods and services. Probably the biggest tax lie is that corporations somehow pay taxes. All they can do is collect taxes from consumers in the form of higher prices for their goods and services. These taxes (in the form of higher prices) are paid by not only the final consumer but by every manufacturer in every step of production along the whole production life-cycle. And prices are higher not only because of this insidious corporate income tax but also because of the huge compliance costs these corporations have to pay (lawyers, accountants, lobbyists, etc). It is estimated that 15-25% of the cost of EVERY good or service in the U.S. is attributable to the corporate income tax ‘scheme’.

Mad yet? Thought you knew from those infamous Federal Income Tax tables what your tax rate was? That published rate isn’t even close! In most cases, not even half-way. Thought that all Americans paid personal income taxes? Nearly half don’t (mostly those that don’t rely on a conventional paycheck), leaving the other half to pick up their slack.

What’s the remedy? Well, how about telling the TRUTH about the rate of taxation. And how about SLASHING the REAL effective tax rate approximately in half from what it is now. And how about forcing all Americans to ACTUALLY pay their share of that tax.

There is legislation before the Congress to do just that! In the House of Representatives it’s called HR25. In the Senate it’s called S25. In plain English it’s called the Fair Tax.

Basically, the Fair Tax will consist of

· A single sales tax paid for each RETAIL purchase

· A single payment each month to every American to offset ALL sales taxes on essential spending

I will leave the specifics of The FairTax for you to discover, which I truly hope you will do. But the specifics all revolve around those 2 simple basics.

When our Founding Fathers formed this Republic, they never in their wildest dreams conceived of a populace having their income taxed. Taxation without representation was a call to arms that formed the United States. And taxation then was an import tax on luxury items, which the wealthy in effect chose to pay by their lifestyles.

Somewhere in the early 20^th century the Founder’s dreams went wildly wrong. In a nation founded upon a Constitution, an evil called ‘implied powers’ was naively adopted as a means of circumventing the document that was meant to be the blueprint for humanity’s grand experiment. What has resulted is a bloated, inefficient government where the vast majority of its functions have ABSOLUTELY no Constitutional basis.

And what feeds ‘implied powers’ and this runaway cycle of unwarranted federal expansion: MONEY. It’s citizens’ money, in the form of taxes. So in 1913 an evil con job gets fostered on the Constitution to give the United States government a license to confiscate money from its citizens in almost unlimited fashion. That con was called the 16^th Amendment. And since then the money flow (and resulting growth thru ‘implied powers’) has never abated.

By the way, another fact about The FairTax is that it starts the Constitutional process for repeal of that 16^th Amendment.

As I have already pointed out, United States federal taxation is all based on lies and convoluted rules that can’t easily be comprehended. After all, no amount of ‘implied powers’ would be tolerated if Americans really knew that the 25% Federal tax rate they occasionally complain about was effectively more like 50%.

And even that obnoxious rate isn’t high enough for the Washington politicians of the past 50 years. We can’t even pay for the United States government to function each year, much less pay for the approximately $200 BILLION (and growing) interest payments on the accumulated national debt our esteemed leaders have piled up.

Taxation without representation really wasn’t all that bad when the alternative is TAXATION BY LIE (with representation, though)!

Few Washington politicians will ever expose the shell game, though. They can’t! A revolt would surely ensue. And if you think it makes a bit of difference whether those politicians are Democrat or Republican then you are just part of the problem. They all spend your money with reckless abandon. Their primary responsibility IS NOT to the United States but IS to promise increased spending to get re-elected.

That makes change entirely up to the American people. This is incidentally where the framers of the Constitution meant Governmental change to emanate from.

It’s called GRASS ROOTS. And don’t tell me it can’t work. I refuse to believe the United States of America is so far gone that we the people can’t effect our own government. I refuse to believe we can’t reclaim our Constitution.

Educate yourself on the Fair Tax. Visit www.FairTaxWarrior.com or www.fairatx.org and check out the facts. Read our arguments. Locate and attend local volunteer meetings. Get involved. Call your Representative and Senators.

We need all the help we can get. This country deserves to be put back on track.

Let's Get Started

If this looks to be working right my intent is to bloviate here every week or so.