Thread: Income tax...legal or not...

Originally Posted by MW

Doesn't this belong in the "Other Topics" forum?

Yes actually it does MW.

Hey Judy!

Hows things?

The goldsmiths you mentioned, started in Medeivel Europe. What they eventually learned was that they could through issuing benk receipts for certain ammounts, was loan more than gold they had on hand. Since hardly anybody who kept their gold rarely demanded all of it at once, they could lend more slips of paper than gold that was on "reserve". That is very simplistic in explanation, but that is where it started. So the practice has been around for a long time.

Now, what you can do to fix that little part is is just as simple. If you are trying to use a savings bank, i.e.: vault for security, then you pay a fee for safeguarding your coin. What got the fractional reserve banking started up again was Lincoln knuckling under to the National Bank Act, I think in 1864(?), it may have been 1863. Sorry, I'm doing this under the need to get outta here and go run errands. And there were also influences from Europe manipulating Congress also. But the National Bank Act allowed the banks to gain their power to push for a central bank. Also of note from about 1879 - 1899, Capital Formation was going very well, in that businesses were not having to go to the banks to expand since their profits were paying for expansion. So why couldn't it do the same today without adding another tax, and by doing away with a mandatory illegal, unethical tax?

Oh, I was also talking to some of the folks here at a fairtax booth and they were talking about a 9% tax, until I figured out that they were talking about 9% state tax on top of the your national 23%. That means we are back to 1/3rd of our money going to tax. But what nobody could answer, and I'm hoping you can, is what mechanism is used to kepp either state or federal sides from continually raising it to outlandish rates, or from lowering the based ammount before it kicks in? If we have to feed a monster, I want to diligently monitor it, and there must be something there keeping our trustful public servants from putting us over a barrell again.

So to add to your mop and broken pipe analogy, do you grab your mop without the bucket? But here's the thing, for 137 years we had no income tax, and everything got paid for. There were no government freebes. There never should never be, unless we want to operate like Europe does now. The issue of the income tax and central banking are one and the same. Since the income tax collected goes to paying the interest owed by the government to the intenational financiers who control the government through the process. They have since gained control of the people through the bankruptcy declared on June 5th 1933(?) I think it was. The thing is the Fed Res was touted as a way of stabilizing the money, and it has done nothing of the sort. It has created chaos and instability and left us to pay ruinous interest for creating something out of nothing. Either way though, it needs to be weened off from. And for all our troubles, these financiers need to be on trial for treasonous reasons against the people of the united States of America. For it has been many years now that the labor of the people has been the collateral.

Anyways, gotta split, my Uncle is waiting. We can pick it up later but I'll look for it in other topics.

Hi judy:

I hate to tell you this but I think that bill is dead...not enough sponcers at 61.
http://www.govtrack.us/congress/bill.xpd?bill=h111-25

"This bill is in the first step in the legislative process. Introduced bills and resolutions first go to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills and resolutions never make it out of committee. [Last Updated: Feb 25, 2010 6:15AM]"

But you should take a look at HR 1207 it has 317 cosponcers and is really heating up...

http://www.youtube.com/watch?v=uAXzCCykRf0

Originally Posted by Hylander_1314

Actually Judy, the writing was on the wall along time ago. But they won't stop until the people have either been utterly broken, or they rise up and restore their Republic and legal government. Ya' know, --But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security.--

The interesting thing, is that every dollar in circulation is borrowed into circulation creating debt. Now as Andrew Jackson did after killing the 2nd Bank of the United States, with paying off the debt, there was no money of fiat in circulation. Therefore, the only Constitutional money of real coin only needs to have an ammount as Benjamin Franklin said in circulation that is needed to ease the flow of commerce.

Also the destructive practice of fractional reserve banking needs to be stopped. When a bank can loan out 10 times more than it has in reserves, that is insidious, even more than the mandatory tax, as it is a hidden tax that transfers wealth to the haves without people even knowing it.

But there is a slew of things that need to be stopped. Hopefully these 10th Ammendment legislations that are building steam will actually make a dent. That would be a start in the right direction. And it would finally reverse FDR's destructive and consolidating motives that in 1935 elevated the Federal Government above the States, and their Sovereignty.

My simple analogy...the powers that be have been working to take over all along. Instilling socialistic take over agenda is at the root. Our Constitution was so powerful that it has gotten us through all these 100's of years. But it is just about so shot full of holes that it can't hold wind anymore to protect us from evil men like BO or current congress and supreme injustice's.

So the death blow is to totally bankrupting not only the country (done) but the democracy of citizens as well so thoroughly deflating the American people into thinking our system has failed them that they will clamor for "change" and beg for socialism...


Oh wait...that has already happened!!!

Originally Posted by hardlineconstitutionalist

Hi judy:

I hate to tell you this but I think that bill is dead...not enough sponcers at 61.
http://www.govtrack.us/congress/bill.xpd?bill=h111-25

"This bill is in the first step in the legislative process. Introduced bills and resolutions first go to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills and resolutions never make it out of committee. [Last Updated: Feb 25, 2010 6:15AM]"

But you should take a look at HR 1207 it has 317 cosponcers and is really heating up...

http://www.youtube.com/watch?v=uAXzCCykRf0

I've already lobbied for HR 1207. It's a great bill to audit the Federal Reserve. 61 sponsors for the FairTax is a very high number of sponsors for a new tax bill. HB 3200, Obama Care only had 9 sponsors and that bill passed the US House of Representatives. So HB 25 isn't dead at all. It's stuck in Democratically controlled Ways and Means Committee. We're organizing a national PETITION drive to force the Chairman, Charles Rangel to hold a hearing on our bill so the debate can begin.

I have noticed a very common thread within a good deal of the people I know, am related to and have met over the last year, if not more than that. People are getting fed-up with being led, instead of being listened to.

My summary is more about our whole government telling us what we will, and will not do, all the while they do whatever they please, plus take from us (income taxes, property, rights), and expect us not to question them.

Here is, to me, an example of control over our very freedom in the pursuit of happiness. Town or neighborhood "covenants or codes. These codes or covenants dictate the color you paint your house, down to your doors, it tells you if you can, or not have a clothes line (saving money on your huge electric bills), if you can have a fire pit with a fire in it in your own yard, how many pets, or if any at all, chickens or not (again, some ability to be more self-reliant). I have heard about some covenants (which were backed up by the towns/cities they were in) to have vegetable gardens in the backyard!

My city now allows chickens, but only if you are in a home of your own, with a permit and yearly inspections. Not the change I had hoped for (still locks out the majority of the people, the many renters with limited incomes, who really need that little extra, those 18 eggs a week, to slightly improve their lives).

It would seem with the exhorbitant prices on land and homes, most people are locked out of owning, thus this thrusts us into tight neighborhoods, where we are then subjugated with these codes and covenants. This then limits our ability to be free to pursue happiness. This happiness to our founders, was the ability to pursue means to better our lives. Home based business? Not in some neighborhoods, and if allowed, the city will require a burdensome business license, even for a minimal income generating business.

Income taxes are another one of those burdens. However, I can agree with Ron Paul, we need to change it from within, and while doing that, voluntarily abide by what has been accepted and practiced for a while. We also need to be fighting to make those other changes from within.
Americans are getting fed-up with it all, I can say I have heard a lot of disgust and anger. Let's hope we can bottle that and use it to work from within to start fighting to change these things we know are wrong.

Originally Posted by AmericanElizabeth

I have noticed a very common thread within a good deal of the people I know, am related to and have met over the last year, if not more than that. People are getting fed-up with being led, instead of being listened to.

My summary is more about our whole government telling us what we will, and will not do, all the while they do whatever they please, plus take from us (income taxes, property, rights), and expect us not to question them.

Here is, to me, an example of control over our very freedom in the pursuit of happiness. Town or neighborhood "covenants or codes. These codes or covenants dictate the color you paint your house, down to your doors, it tells you if you can, or not have a clothes line (saving money on your huge electric bills), if you can have a fire pit with a fire in it in your own yard, how many pets, or if any at all, chickens or not (again, some ability to be more self-reliant). I have heard about some covenants (which were backed up by the towns/cities they were in) to have vegetable gardens in the backyard!

My city now allows chickens, but only if you are in a home of your own, with a permit and yearly inspections. Not the change I had hoped for (still locks out the majority of the people, the many renters with limited incomes, who really need that little extra, those 18 eggs a week, to slightly improve their lives).

It would seem with the exhorbitant prices on land and homes, most people are locked out of owning, thus this thrusts us into tight neighborhoods, where we are then subjugated with these codes and covenants. This then limits our ability to be free to pursue happiness. This happiness to our founders, was the ability to pursue means to better our lives. Home based business? Not in some neighborhoods, and if allowed, the city will require a burdensome business license, even for a minimal income generating business.

Income taxes are another one of those burdens. However, I can agree with Ron Paul, we need to change it from within, and while doing that, voluntarily abide by what has been accepted and practiced for a while. We also need to be fighting to make those other changes from within.
Americans are getting fed-up with it all, I can say I have heard a lot of disgust and anger. Let's hope we can bottle that and use it to work from within to start fighting to change these things we know are wrong.

Start changing from within by passing the FairTax. Until we pass that legislation we're just whistling Dixie, because until the American People control the purse strings of the US government, that government and every other level of government that relies on mandated taxation to exert authority over the American People are just stealing our liberty, our prosperity, our happiness and our country and our means to stop it.

Ron Paul wants to cut the US government in half and rely upon corporate taxes to fund our government. While he has stated he will vote for the FairTax if it gets to the floor for a vote, he is promoting elimination of half of our government and relying on the very oligarchy we want to bust to fund it. That's not rational. That won't work. People really need to email Ron Paul and explain to him about the FairTax. Then after we're free from authoritarian tax rule, as we will be under the FairTax, then we can start whittling at the size and cost of our government.

It's the same issue as with health care reform. When you have a legislated market where the force of law is used to force you to fund that market, there will be no change in our best interest, because now the very people we're fighting control us, instead of the other way around. If you're forced to purchase health insurance, the prices go up. The same as if you're forced to pay income taxes, the size and cost of government will increase. Both systems are based on a legalized mafia using cartels to do whatever they want, which at the present time, is bankrupt the United States to end it.

A little old but still worth the read:

The Fair Tax Fraud
Mises Daily: Wednesday, May 18, 2005 by Laurence M. Vance

Since my recent article on the evils of the withholding tax, I have been inundated with e-mails by supporters of the " FairTax," including a request that I endorse "The Fair Tax Act of 2005" currently pending in the Congress. But like the calls for "fair trade" instead of "free trade," the FairTax is a fraud because it is based on the fallacy that government theft (taxation) should be done in a "fair" manner instead of eliminated altogether.

FairTax proponents are correct in their assessment of the Internal Revenue Code:

The current U.S. income tax code is widely regarded by just about everyone as unfair, complex, wasteful, confusing, and costly. Businesses and other organizations spend more than six billion hours each year complying with the federal tax code. Estimated compliance costs conservatively top $225 billion annually—costs that are ultimately embedded in retail prices paid by consumers.

The Internal Revenue Code cannot simply be "fixed," which is amply demonstrated by more than 35 years of attempted tax code reform, each round resulting in yet more complexity and unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing more than 2.8 million words).

But could the cure they offer be worse than the disease?

The FairTax is a consumption tax in the form of a national retail sales tax on new goods and services. It is designed to replace "federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes." The FairTax would also abolish the IRS and repeal the 16th Amendment.

The elimination of the 16th Amendment, the IRS, and all those taxes sounds like a great idea that all free market economists and advocates of liberty could agree with. So if the FairTax is such a great thing, why would anyone in their right mind oppose it?

That is exactly what I have been hearing:

"What could you possibly have against the FairTax?"
"The FairTax is the only way to go."
"I find it weird that you would oppose the concept of the Fair Tax."
"The choice boils down to the Fair Tax (H.R. 25) or the current 'system.'"
Even Ludwig von Mises, I was told, "would approve the Fair Tax idea, as do dozens & dozens of rational economists."

Various consumption tax proposals were recently critiqued on this site in an article by Murray Rothbard. So rather than just repeat them and apply them to the current FairTax scheme, I will focus instead on problems with the FairTax proposal itself.

The Fair Tax Act of 2005 is H.R. 25 in the House (introduced on January 4) and the identical S. 25 in the Senate (introduced on January 24). FairTax proponents who complain about the complexity of the Internal Revenue Code are going to have a hard time convincing those of us who have actually read this bill (it came to 59 pages when I printed it out from my computer) that it will simplify the tax code when it contains language exactly like that which appears in the tax code:

(b) Rebate Defined- For purposes of subsection (a) (2), the term 'rebate' means so much of an abatement, credit, refund, or other payment, as was made on the ground that the tax imposed by chapter 41, 42, 43, or 44 was less than the excess of the amount specified in subsection (a)(1) over the rebates previously made.'.

Strangely absent from the list of co-sponsors of H.R. 25 is Congressman Ron Paul(R-TX). Representative Paul has consistently been named the "taxpayers' friend." If the FairTax proposal was as friendly to taxpayers as its proponents say it is, I would expect Congressman Paul's name to be first on the list of co-sponsors.

FairTax advocates claim that their plan would repeal of the 16th Amendment. However, all H.R. 25 does is repeal Subtitle A of the Internal Revenue Code of 1986 that relates to income taxes and self-employment taxes and Subtitle C that relates to payroll taxes and the withholding of income taxes. The only mention of the 16th Amendment in H.R. 25 is when it says: "Congress further finds that the 16th amendment to the United States Constitution should be repealed."

To repeal the 16th Amendment would require a constitutional amendment. Can Congress be relied on to pass a constitutional amendment that repeals the 16th amendment after a national sales tax has already been enacted? And even if Congress passed a constitutional amendment, it would still have to be approved by three-fourths of the states. Without the repeal of the 16th Amendment, what is to prevent an income tax from being imposed again after a national sales tax has been enacted?

Although the FairTax would eliminate the filing of all individual tax returns, the FairTax turns every business into a tax collector. Every small service business and every Internet business that does not currently collect state sales taxes will have to collect taxes for the federal government. Every doctor will now have to charge sales tax on his services. Where will this end? Will the neighborhood boy who mows lawns have to begin collecting federal sales tax on each lawn mowed? Will the neighborhood girl who baby sits have to do likewise?

The national retail sales tax rate under the FairTax plan is 23 percent. That is on top of state sales taxes that are currently collected by forty-five states. That is on top of the sales tax that many cities and counties also collect. That is on top of the special taxes that exist on hotel rooms in most areas of the country. I suppose that a national retail sales tax would also apply to gasoline. There is no mention of the federal gas tax anywhere in the Fair Tax Act of 2005. No list of taxes that are supposed to be eliminated under the FairTax includes the federal gas tax. Does this mean that there will be an additional 23 percent tax on each gallon of gasoline?

The FairTax will make it easier for Congress to raise taxes. The initial rate of 23 percent is supposed to begin in 2007. For years after 2007, "the rate of tax is the combined Federal tax rate percentage." This combined percentage is the total of three things: the general revenue rate (stated to be 14.91 percent); the old-age, survivors and disability insurance rate; and the hospital insurance rate. This is all but saying that the rate will be adjusted every year. And it will be very easy for Congress to do so. To raise several billion dollars of additional revenue, all that will be necessary is for Congress to raise the tax rate by one percentage point by small adjustments in one or more of the three items that make up the combined percentage rate. It will be sold to the American people as "a penny for progress," or some other deceitful scheme.

Under the FairTax system, there are no longer any Social Security and Medicare taxes. However, this does not mean that Social Security and Medicare will be eliminated. The inclusion in the combined percentage of the old-age, survivors and disability insurance and the hospital insurance rates means that the Ponzi scheme known as Social Security will continue as is—only the way it is funded will change.

The "underground economy" that income tax advocates complain about will certainly increase under the FairTax system. Even if the highly dubious claim that there will be an "average producer price reduction of 22 percent for goods and services in just the first year after the adoption of the FairTax" is true, not having to pay a 23 percent tax on an item is a tremendous incentive to make a purchase in the "underground economy."

The claim that the IRS will be eliminated under the FairTax is bogus. Although the national sales tax will be collected by the states from retailers, it is still a national sales tax, and as such, its collection will have to be overseen by some agency of the federal government. Just because the bureaucracy will no longer be called the IRS doesn't mean that it will be eliminated. According to The Fair Tax Act of 2005:

There shall be in the Department of the Treasury a Sales Tax Bureau to administer the national sales tax in those States where it is required pursuant to section 404, and to discharge other Federal duties and powers relating to the national sales tax (including those required by sections 402, 403, and 405). The Office of Revenue Allocation shall be within the Sales Tax Bureau.

Title II, chapter six, section 603 of The Fair Tax Act sets up the Problem Resolution Office and authorizes "problem resolution officers." There will still be tax courts according to title II, chapter six, section 602 and chapter nine, section 7451. Changing the phrase "Internal Revenue Service" to "Department of the Treasury" and "Commissioner of Internal Revenue" to "Secretary" doesn't eliminate the federal bureaucracy.

With the FairTax, the federal government will also be a tax collector in a new way: at the post office. There is no exemption of postal goods and services mentioned anywhere in the Fair Tax Act of 2005. I suppose this means that stamps, P.O. Box rental services, and package mailing services will be subject to the new 23 percent tax.

The FairTax is progressive. What could possibly be fair about a progressive tax where some people have to pay a higher percentage than others merely because they are deemed to be "rich"? How is the FairTax progressive? I thought it was a flat 23 percent on all new goods and services? It is and it isn't. Under the FairTax plan, everyone pays the 23 percent tax on everything, but "every household receives a rebate that is equal to the FairTax paid on essential goods and services." The rebate is given out each month, and is based on family size and the poverty level. But like the current tax code, the FairTax can also function as a tool for income redistribution because "the poor [will] actually pay less than zero-percent retail sales tax on their spending. Much like with the earned income tax credit of today, the rebate may give them more money than they actually spend on retail taxes."

The real problem with the FairTax is threefold. In " An Open Letter to the President, the Congress, and the American People Concerning Reform of the Federal Tax Code," which is posted on the FairTax website along with the endorsement of seventy-five "professional and university economists," we can see the trouble with the FairTax immediately:

We are not calling for elimination of federal taxation, which would be irresponsible and undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax code, including payroll withholding taxes.

There is only one word to describe the fact that the federal government now spends almost $3 trillion a year: obscene. At least 90 percent of what the federal government spends is unconstitutional, wasteful, or against the limited-government principles of the Founders. The only thing the FairTax does is change the way the state confiscates the wealth of its citizens. As Congressman Ron Paul says: "The real issue is total spending by government, not tax reform."

Because the FairTax is a consumption tax, Murray Rothbard's conclusion about consumption taxes is apropos:

The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life, unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax.

The FairTax does nothing to tame the federal leviathan. The solution is nothing less than a drastic reduction or wholesale elimination of its revenue source. What is fair about allowing the government to confiscate 23 percent of the value of every new good and service? FairTax proponents may call it necessary legislation, but I call it highway robbery.

————————

Laurence M. Vance is a freelance writer and an adjunct instructor in accounting and economics at Pensacola Junior College in Pensacola, FL. See his Mises.org archive. Vancepub@juno.com. Comment on the Blog.

http://mises.org/story/1814

IMO, the so-called "Fair Tax" isn't so fair.

This is not immigration related and should be in the "Other Topics" forum (IMO). Thank you.

Originally Posted by MW

A little old but still worth the read:

The Fair Tax Fraud
Mises Daily: Wednesday, May 18, 2005 by Laurence M. Vance

Since my recent article on the evils of the withholding tax, I have been inundated with e-mails by supporters of the " FairTax," including a request that I endorse "The Fair Tax Act of 2005" currently pending in the Congress. But like the calls for "fair trade" instead of "free trade," the FairTax is a fraud because it is based on the fallacy that government theft (taxation) should be done in a "fair" manner instead of eliminated altogether.

FairTax proponents are correct in their assessment of the Internal Revenue Code:

The current U.S. income tax code is widely regarded by just about everyone as unfair, complex, wasteful, confusing, and costly. Businesses and other organizations spend more than six billion hours each year complying with the federal tax code. Estimated compliance costs conservatively top $225 billion annually—costs that are ultimately embedded in retail prices paid by consumers.

The Internal Revenue Code cannot simply be "fixed," which is amply demonstrated by more than 35 years of attempted tax code reform, each round resulting in yet more complexity and unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing more than 2.8 million words).

But could the cure they offer be worse than the disease?

The FairTax is a consumption tax in the form of a national retail sales tax on new goods and services. It is designed to replace "federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes." The FairTax would also abolish the IRS and repeal the 16th Amendment.

The elimination of the 16th Amendment, the IRS, and all those taxes sounds like a great idea that all free market economists and advocates of liberty could agree with. So if the FairTax is such a great thing, why would anyone in their right mind oppose it?

That is exactly what I have been hearing:

"What could you possibly have against the FairTax?"
"The FairTax is the only way to go."
"I find it weird that you would oppose the concept of the Fair Tax."
"The choice boils down to the Fair Tax (H.R. 25) or the current 'system.'"
Even Ludwig von Mises, I was told, "would approve the Fair Tax idea, as do dozens & dozens of rational economists."

Various consumption tax proposals were recently critiqued on this site in an article by Murray Rothbard. So rather than just repeat them and apply them to the current FairTax scheme, I will focus instead on problems with the FairTax proposal itself.

The Fair Tax Act of 2005 is H.R. 25 in the House (introduced on January 4) and the identical S. 25 in the Senate (introduced on January 24). FairTax proponents who complain about the complexity of the Internal Revenue Code are going to have a hard time convincing those of us who have actually read this bill (it came to 59 pages when I printed it out from my computer) that it will simplify the tax code when it contains language exactly like that which appears in the tax code:

(b) Rebate Defined- For purposes of subsection (a) (2), the term 'rebate' means so much of an abatement, credit, refund, or other payment, as was made on the ground that the tax imposed by chapter 41, 42, 43, or 44 was less than the excess of the amount specified in subsection (a)(1) over the rebates previously made.'.

Strangely absent from the list of co-sponsors of H.R. 25 is Congressman Ron Paul(R-TX). Representative Paul has consistently been named the "taxpayers' friend." If the FairTax proposal was as friendly to taxpayers as its proponents say it is, I would expect Congressman Paul's name to be first on the list of co-sponsors.

FairTax advocates claim that their plan would repeal of the 16th Amendment. However, all H.R. 25 does is repeal Subtitle A of the Internal Revenue Code of 1986 that relates to income taxes and self-employment taxes and Subtitle C that relates to payroll taxes and the withholding of income taxes. The only mention of the 16th Amendment in H.R. 25 is when it says: "Congress further finds that the 16th amendment to the United States Constitution should be repealed."

To repeal the 16th Amendment would require a constitutional amendment. Can Congress be relied on to pass a constitutional amendment that repeals the 16th amendment after a national sales tax has already been enacted? And even if Congress passed a constitutional amendment, it would still have to be approved by three-fourths of the states. Without the repeal of the 16th Amendment, what is to prevent an income tax from being imposed again after a national sales tax has been enacted?

Although the FairTax would eliminate the filing of all individual tax returns, the FairTax turns every business into a tax collector. Every small service business and every Internet business that does not currently collect state sales taxes will have to collect taxes for the federal government. Every doctor will now have to charge sales tax on his services. Where will this end? Will the neighborhood boy who mows lawns have to begin collecting federal sales tax on each lawn mowed? Will the neighborhood girl who baby sits have to do likewise?

The national retail sales tax rate under the FairTax plan is 23 percent. That is on top of state sales taxes that are currently collected by forty-five states. That is on top of the sales tax that many cities and counties also collect. That is on top of the special taxes that exist on hotel rooms in most areas of the country. I suppose that a national retail sales tax would also apply to gasoline. There is no mention of the federal gas tax anywhere in the Fair Tax Act of 2005. No list of taxes that are supposed to be eliminated under the FairTax includes the federal gas tax. Does this mean that there will be an additional 23 percent tax on each gallon of gasoline?

The FairTax will make it easier for Congress to raise taxes. The initial rate of 23 percent is supposed to begin in 2007. For years after 2007, "the rate of tax is the combined Federal tax rate percentage." This combined percentage is the total of three things: the general revenue rate (stated to be 14.91 percent); the old-age, survivors and disability insurance rate; and the hospital insurance rate. This is all but saying that the rate will be adjusted every year. And it will be very easy for Congress to do so. To raise several billion dollars of additional revenue, all that will be necessary is for Congress to raise the tax rate by one percentage point by small adjustments in one or more of the three items that make up the combined percentage rate. It will be sold to the American people as "a penny for progress," or some other deceitful scheme.

Under the FairTax system, there are no longer any Social Security and Medicare taxes. However, this does not mean that Social Security and Medicare will be eliminated. The inclusion in the combined percentage of the old-age, survivors and disability insurance and the hospital insurance rates means that the Ponzi scheme known as Social Security will continue as is—only the way it is funded will change.

The "underground economy" that income tax advocates complain about will certainly increase under the FairTax system. Even if the highly dubious claim that there will be an "average producer price reduction of 22 percent for goods and services in just the first year after the adoption of the FairTax" is true, not having to pay a 23 percent tax on an item is a tremendous incentive to make a purchase in the "underground economy."

The claim that the IRS will be eliminated under the FairTax is bogus. Although the national sales tax will be collected by the states from retailers, it is still a national sales tax, and as such, its collection will have to be overseen by some agency of the federal government. Just because the bureaucracy will no longer be called the IRS doesn't mean that it will be eliminated. According to The Fair Tax Act of 2005:

There shall be in the Department of the Treasury a Sales Tax Bureau to administer the national sales tax in those States where it is required pursuant to section 404, and to discharge other Federal duties and powers relating to the national sales tax (including those required by sections 402, 403, and 405). The Office of Revenue Allocation shall be within the Sales Tax Bureau.

Title II, chapter six, section 603 of The Fair Tax Act sets up the Problem Resolution Office and authorizes "problem resolution officers." There will still be tax courts according to title II, chapter six, section 602 and chapter nine, section 7451. Changing the phrase "Internal Revenue Service" to "Department of the Treasury" and "Commissioner of Internal Revenue" to "Secretary" doesn't eliminate the federal bureaucracy.

With the FairTax, the federal government will also be a tax collector in a new way: at the post office. There is no exemption of postal goods and services mentioned anywhere in the Fair Tax Act of 2005. I suppose this means that stamps, P.O. Box rental services, and package mailing services will be subject to the new 23 percent tax.

The FairTax is progressive. What could possibly be fair about a progressive tax where some people have to pay a higher percentage than others merely because they are deemed to be "rich"? How is the FairTax progressive? I thought it was a flat 23 percent on all new goods and services? It is and it isn't. Under the FairTax plan, everyone pays the 23 percent tax on everything, but "every household receives a rebate that is equal to the FairTax paid on essential goods and services." The rebate is given out each month, and is based on family size and the poverty level. But like the current tax code, the FairTax can also function as a tool for income redistribution because "the poor [will] actually pay less than zero-percent retail sales tax on their spending. Much like with the earned income tax credit of today, the rebate may give them more money than they actually spend on retail taxes."

The real problem with the FairTax is threefold. In " An Open Letter to the President, the Congress, and the American People Concerning Reform of the Federal Tax Code," which is posted on the FairTax website along with the endorsement of seventy-five "professional and university economists," we can see the trouble with the FairTax immediately:

We are not calling for elimination of federal taxation, which would be irresponsible and undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax code, including payroll withholding taxes.

There is only one word to describe the fact that the federal government now spends almost $3 trillion a year: obscene. At least 90 percent of what the federal government spends is unconstitutional, wasteful, or against the limited-government principles of the Founders. The only thing the FairTax does is change the way the state confiscates the wealth of its citizens. As Congressman Ron Paul says: "The real issue is total spending by government, not tax reform."

Because the FairTax is a consumption tax, Murray Rothbard's conclusion about consumption taxes is apropos:

The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life, unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax.

The FairTax does nothing to tame the federal leviathan. The solution is nothing less than a drastic reduction or wholesale elimination of its revenue source. What is fair about allowing the government to confiscate 23 percent of the value of every new good and service? FairTax proponents may call it necessary legislation, but I call it highway robbery.

————————

Laurence M. Vance is a freelance writer and an adjunct instructor in accounting and economics at Pensacola Junior College in Pensacola, FL. See his Mises.org archive. Vancepub@juno.com. Comment on the Blog.

http://mises.org/story/1814

IMO, the so-called "Fair Tax" isn't so fair.

This is not immigration related and should be in the "Other Topics" forum (IMO). Thank you.

Yes, MW, it's very old and has been debunked about 100,000 times.



But thank you again for another opportunity to debunk it again. We'll start with the author of the article.

1. Mr. Vance is an accountant who both works in tax accounting and is paid by the Junior College in Pensacola to teach tax accounting so he profits from the existing income tax code.

2. Then lets move to Ron Paul. Ron Paul stated in 2007 that he supports the FairTax and will vote for it if the bill gets to the floor of the US Congress, but that he didn't think it ever would. I believe it will. So we'll see if he's a man of his word ... soon.

http://iowaindependent.com/653/romney-s ... n-fair-tax

3. The FairTax is a new and better tax collection system and has nothing whatsoever to do with the reduction of government spending beyond the $12 billion we'd save on the IRS and the $300 billion we'd save on welfare because of the new jobs it would create. So any claims that the FairTax doesn't do anything about the "federal leviathon" are simply totally and absolutely wrong. Any time you increase the net expendable income of the Americans and the net retained earnings of our corporations, businesses and employers, you've created private wealth in the US for every individual and business in the country that was formerly subject to mandated government theft.

4. As to the Rebate, the FairTax doesn't tax households, it Rebates the FairTaxes to the households for their consumption of essentials products and services no matter what the source of their income, no matter what they spend. So the claim that the "Rebate may give them more money than they spend on retail services" is false. It's not giving them any money, it's Rebating what the taxes are on their consumption, whether they paid for it or not. The actuarial upon which it is based is the same family consumption allowance used by DHHS to determine the amount required to survive in the United States and that amount of consumption by Americans is tax-exempt. The mechanism to achieve that is the Rebate to households who want it and sign up for it. It's not automatic and it's not mandatory. It's up to each household who wants it, and the households are limited to US citizens and Legal Residents. Illegal aliens are excluded from applying for the Rebate.

5. Raising the tax rate. The tax rates are set by the legislation. The Congress may raise or lower the rate, like they can any rate of tax. But unlike the present system where you raise 1 rate at the expense of another, when they raise the FairTax rate it's raised on everyone so there is no more "lower mine and raise theirs" which is an unfair attitude that's resulted through the present income tax mechanism in the creation of a $14 trillion debt on the people of the United States with presently no end in sight and no means to pay it off.

6. The IRS is abolished, 1 year after implementation of the FairTax, all future funding for it prohibited by the FairTax legislation and all tax records destroyed by mandate of the FairTax legislation. Any claim that the IRS is not abolished is simply false. The Sales Tax Bureau is a small agency that will collect the 50 reports and 50 deposits from 50 states each month, instead of 173 million tax returns and 190 billion deposits every year under the present system. Since the 50 states will be collecting FairTax from approximately 6 million retail entities, of course there will be some issues or disputes over something and the Sales Tax Bureau will work with the 50 states to resolve those issues.

7. "Underground economy". That is laughable. On the one hand Mr. Vance is worried about "taxation theft" and then on the other attacks people potentially evading it at a flea market (yes, MW, I remember our debate about the FairTax from a couple of years ago and your concern with "fraud" ... smile and hugs) as an "underground economy" as if they aren't already evading taxes now. The FairTax estimates of revenue generation assume a 15% evasion factor, the same as for the present income tax. In reality, the FairTax will be much easier to monitor because there's nothing hidden about it. If agents show up at a Flea Market, they do as they do now, ask to see their books, and collect the 23% from the vendor, whether the vendor collected it from his/her customers or not.

8. The FairTax is not a tax on the "right to live". Your right to live is under your control under the FairTax. You're free to work, earn, pay your bills for your necessities tax-free. You're free to spend your money on used items tax-free. You're free to give your money to anyone you want tax-free. You're free to invest and save your money tax-free. You're free to choose what new products and services you want to spend your money on in what amounts and at what times you choose, and if and when you do, there's a FairTax national retail sales tax on those items, just like you pay in 45 states today to state governments except it's included in the price rather than added to it, and it's also shown on every receipt so people know exactly what portion of their payment is FairTax. I've read no complaints or issues about state sales tax from Mr. Vance, Ron Paul or anyone else.

9. Mr. Vance is also a Free Trade Traitor, who opposes protecting our trade the same as he opposes the FairTax. Well, he's free to be a globalist, but many of US who aren't, like the FairTax very much because it frees all our businesses and individuals from mandated taxation for the first time in US history along with creating a wage disadvantage for illegal aliens by excluding them from FairTax Rebates and charging the FairTax on all new products and services including imported products now evading federal tax on that huge business segment of our economy. It is truly a brilliant and historic piece of legislation that finally sets Americans truly free.

www.fairtax.org

[quote]
Fair Tax Isn’t Fair
by peggy nuckles in Issues, November 26, 2009

A Fair Tax isn’t Fair.

Suzy Smith and Jenny Jones were twin sisters. Suzy worked at a small mid-western plant making $20,000 a year. Jenny made about the same amount after business deductions in her beauty shop.

Suzy never married but had two teenage daughters. The three of them struggled to make it on Suzy’s salary, but they got by, renting a small house for $400.00 a month.

Her sister Jenny was married to Frank Jones who also worked at the plant as a skilled technician making $40,000 a year. They had a fifteen year old daughter and made mortgage payments of $1,000 a month.

Back before the Fair Tax was passed into law, Suzy took her standard deduction of $8.000 as a head of household plus $1,000 for each of her two children. She then paid a tax of 10% on her remaining $10,000. “Life is hard enough,â€