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

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.

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.