Since Dennis Prager supports H.R. 25, an asserted fair tax, I thought it would be interesting to post some of my disagreements with it and see if Dennis or someone else is willing to respond and defend the alleged fair tax.


Dennis Prager agrees with an alleged fair tax, H.R. 25, which proposes to expand Congress’s taxing powers to reach property, real and personal, with a 23 percent tax, while H.R. 25 does nothing to remove from Congress’s powers the ability to calculate taxes from profits, gains, salaries and other “incomes”. In effect, H.R. 25 proposes to put a moratorium on certain “specific” taxes calculated from profits and gains, such as the corporate income tax, but may be lifted at any time, and, there is nothing in the language of H.R. 25 prohibiting Congress to dream up new taxes which may calculated from profits and gains, such as a “windfall profits excise tax” on those outrageous oil companies and their stockholders.


johnwk disagrees with such an expansion of government’s taxing powers under the weasel wording of H.R. 25 and proposes to accomplish the stated goals of the alleged fair tax by limiting Congress’s taxing powers as follows:


“The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay ``any`` tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money``

These words in fact would accomplish the stated goals of the alleged fair tax [ending all taxes calculated from profits, gains, salaries, etc.] and compel Congress to raise its revenue as our founding fathers intended, which includes the power to lay and collect excise taxes on articles of consumption.


Dennis Prager agrees with a proposal, the alleged fair tax, which would create a family consumption allowance.

The allowance would create a massive and dangerous voting block which would dwarf our existing social security voting block and this new voting block would likewise be dependent upon a monthly government check for its subsistence. The allowance would open the door for our socialists in Congress like Senator Ted Kennedy, to bribe voters during election time with a promise to increase the allowance to keep themselves in power! Were we not warned in the Federalist Papers that control over a man’s subsistence amounts to a power over his will?

The family consumption entitlement is also projected to cost approximately $600 BILLION a year, making Hillary Health Care look like chicken feed and would be the largest redistribution program ever created by our government.


Keep in mind the family consumption entitlement would be available to people who do not work for a living and are already on the public dole and would be paid for by hard working Americans who are having a hard time meeting their own economic needs. This is why the family consumption entitlement is another redistribution gimmick ___ welfare stay at home moms are entitled to the allowance and even those who steal other people’s property for a living are entitled to the allowance___ the allowance is available to those who do not contribute into the common treasury.


johnwk disagrees with the proposed family consumption allowance which is nothing more than a massive and blatant socialistic concept --- putting every American family on the public dole and making a majority of American citizens dependant upon government for a monthly subsistence government check.


Dennis Prager agrees with a proposal which is unconstitutional on its face and would subjugate the intentions for which the rule of apportionment was made part of our Constitution!


The intentions for which the rule of apportionment of direct taxes [taxes which reach real and personal property] was made part of our Constitution were that if imposts, duties [external taxes] and miscellaneous internal excise taxes including those laid upon specifically chosen articles of consumption, which Congress was authorized to lay, were found insufficient to fill the national treasury, and a general tax among the states [such as the alleged fair tax] was found necessary to meet Congress’s exigencies, and especially in a wealth based tax being used as a primary source to fill the national treasury, the people of the states carrying the lion’s share of such a tax would be compensated by a vote in Congress Assembled proportionately equal to their financial contribution___ a vote to be exercised in determining how their money would be spent by Congress ___ representation with proportional obligation, a concept which socialists and our Washington Establishment’s political plum job empire dreads with a passion!

H.R. 25 is another assault upon federalism, our Constitution’s plan, just as the income tax now is and proposes to subjugates our Constitution‘s fair share formula which was designed to determine each State’s share of any general tax among the States.



State`s population
------------------------------ X SUM TO BE RAISED = STATE`S SHARE OF GENERAL TAX
Total U.S. Population




johnwk disagrees with a proposal proposing to subjugate federalism and the rule of apportionment, a rule designed to enforce representation with proportional obligation.


Dennis Prager agrees with a proposal which is intended to raise existing levels of revenue without any provisions to make Congress fiscally accountable or extinguish annual deficits created by borrowing nor has anything to make every member of Congress immediately accountable for deficits when they are created.
johnwk disagrees with the alleged fair tax which is specifically intended to perpetuate the American Taxpayer being kept as a tax slave to prop up the Washington Establishment’s political plum job empire.


johnwk agrees with a return to our founding father’s original tax plan which can be put back into practice by adding the following words to our Constitution:



“The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay ``any`` tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money``


JWK



If we can make the majority of America’s population dependent upon a federal government check, [H.R.25‘s family consumption allowance], we can then bribe them for their vote, keep ourselves in power, and keep the remaining portion of America’s population enslaved to pay the bills.

First of all, excellent post!

I have been an advocate of a flat tax - both for individuals and businesses.  Mostly because it is simple, easily understandible, and (to my mind) fair.  Obviously the limits would have to be clearly defined; but I think everyone understands exactly what a flat tax involves.

I have raised the issue of the unfairness of a "fair tax" before, and I was justifiably reprimanded for not knowing all of the ins and outs of the various "fair-tax" proposals.  I still don't understand the "fairness" justification for a so-called "fair-tax" mostly because there is not just one idea or interpretation of what a "fair-tax" would entail.

Excellent job of explaining what this particular "fair-tax" proposal is and what it involves.  

The re-distributionist nature of this particular proposal, and its inevitable bizarre result of granting greater Federal political power to richer States, should be anathema to anyone who believes in the free-market, opposes redistribution of wealth, and believes in the equality of states within the Union.

Anyone read "the FairTax Book" by Neil Bortz? Been a while since I read it , but I remember him putting forward some pretty compelling ideas, and a good argument for a flat national sales tax to replace all other taxes. I've heard a lot of holes poked through his ideas, but I think most of the problems could be addressed. I think most people would like the idea of effectively getting rid of the IRS, and not having to do a tax return every year. I think the number was something like 26% whwich is a lot less than I pay in just income tax right now.

Ronnie Raygun wrote:Anyone read "the FairTax Book" by Neil Bortz? Been a while since I read it , but I remember him putting forward some pretty compelling ideas, and a good argument for a flat national sales tax to replace all other taxes. I've heard a lot of holes poked through his ideas, but I think most of the problems could be addressed. I think most people would like the idea of effectively getting rid of the IRS, and not having to do a tax return every year. I think the number was something like 26% whwich is a lot less than I pay in just income tax right now.

I suggest you read the
TEXT OF H.R. 25, and not its fairy tale version put into book form by Boortz and Linder.

BTW, I am one who wants to end the misery of taxes calculated from profits, gains, salaries and other “incomes” which Boortz suggests would be accomplished under the alleged fair tax.  But his suggestion is not supported by the text of H.R. 25, AKA the fair tax.

In any event the suggested objective of the alleged fair tax could be accomplished by adding the following words to our Constitution:

“The Sixteenth Amendment is hereby repealed and Congress is henceforth forbidden to lay ``any`` tax or burden calculated from profits, gains, interest, salaries, wages, tips, inheritances or any other lawfully realized money``

Adding these words to our Constitution would compel Congress to raise its revenue by taxes on consumption, which I thought was the object of Boortz’s alleged fair tax. But as it turns out, as is documented in the text of H.R. 25, the alleged fair tax is intentionally designed to allow our folks in Washington to tighten its iron grip over the people’s productivity, expanding that grip to reach people’s property, real and personal, while keeping alive Congress’s power to lay and collect taxes calculated from profits, gains, salaries and other “incomes”.

Regards,
JWK


If we can make the majority of America’s population dependent upon a monthly federal government check, [H.R. 25’s family consumption allowance] we can then buy their vote, keep ourselves in power and keep the remaining portion of America’s population enslaved to pay the bills

All right, feel free to call me an idiot; but I still don't understand how a sales tax is NOT regressive -- that is, how it would not have a greater impact on lower income people as opposed to wealthier individuals.

I don't approve of progressive taxes, but a regressive tax (if this is one) seems nuts.

What I mean is that a 10% tax on good X represents a greater percentage of a poor person's wealth and a lesser percentage of a wealthier person's wealth.

To answer your question Evas, taxing consumption, as our founding fathers intended, and was not intended to tax the necessities of life, would not have the negative impact upon lower income people you elude to.


As Hamilton states with reference to a tax on articles of consumption, they:

may be compared to a fluid, which will in time find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be by his own option, and can be regulated by an attention to his own resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by [B]a judicious selection of objects proper for such impositions__ It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. They prescribe their own limit, which can not be exceeded without defeating the end proposed, that is, an extension of the revenue[/B]__see FEDERALIST NO. 21

Surely there is a clear enough distinction between such foods as caviar and chicken eggs, between wine and milk, between silk and cotton underwear, between a Chevy Nova and BMW to truthfully say one is a luxury and the other a necessity.

In any event, the beauty of limiting Congress’ power to taxing specifically chosen articles of luxury is this. If Congress does its job properly and the nation as a whole is productive and prosperous, the purchase of articles of luxury will undoubtedly increase, and with it, the flow of revenue into the common treasury. But, if the legislative policies of Congress are burdensome and its regulatory requirements upon business, industry and upon our nation’s labor force impede a flourishing economy, or any particular article is excessively taxed by Congress, the first sign would be is a decline in the flow of revenue into the national treasury, just as Hamilton explains above___ it prevents an extension of the revenue! And thus, our founder’s method of taxing consumption allows the market place to determine the limit of tax on every article selected for taxation!

For a recent confirmation of Hamilton`s thinking see:
CLICK HERE and then click on 4. “Omnibus Budget Reconciliation Act of 1990 (Enrolled as Agreed to or Passed by Both House and Senate)[H.R.5835.ENR]”, after which you may scroll down to TITLE XI--REVENUE PROVISIONS, and then click on :
PART III--TAXES ON LUXURY ITEMS
SEC. 11221. TAXES ON LUXURY ITEMS.

`SEC. 4001. PASSENGER VEHICLES.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any passenger vehicle a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $30,000.

`SEC. 4002. BOATS.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any boat a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $100,000.

`SEC. 4003. AIRCRAFT.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any aircraft a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $250,000.

`SEC. 4006. JEWELRY.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of any jewelry a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $10,000.

`SEC. 4007. FURS.
`(a) IMPOSITION OF TAX- There is hereby imposed on the 1st retail sale of the following articles a tax equal to 10 percent of the price for which so sold to the extent such price exceeds $10,000:

Had the tax only been one or two percent it probably would have been paid without much resistance or outcry. But, the tax was an outrageous 10 percent and the market place responded. People refused to purchase the luxury articles selected; the affected industries began to feel the consequences and the market place rejection of the tax led to its immediate repeal! see: the 1991 legislation to repeal the luxury excise tax on boats!

Regards,
JWK
If we can make the majority of America’s population dependent upon a monthly federal government check, [H.R.25`s "family consumption allowance" which Dennis Prager supports], we can then bribe them for their vote, keep ourselves in power, and keep the remaining portion of America’s population enslaved to pay the bills.

Eyas,

A good question.  I don't know if it is still the case but in Washington, DC in 1980, groceries were not subject to sales tax.  I lived downtown for a year when I went to The George Washington University and found it nice to pay no taxes on my groceries.  

Johnwk,

A wonderful response.  Reading one of your notes should be worth a semester in any modern American university.  Well done!  You post too seldomly.  

Taxes should be imposed for the purposes of raising funds for the legitimate expenses of government and not for the redistribution of wealth.  There is a tremendous flexibility in imposing consumption taxes.  Now, if we could just remind everyone in Washington, DC what are and are not legitimate expenses for government.

In a recent Bloomberg News article, Obama is quoted as saying that Warren Buffet and other investors have indicated that capital gains tax rates of 20% “will probably not have any significant impact in terms of investment.”

In fact, this may very well be the case as Jesse Drucker (WSJ, page A1, “IRS Targets Billionaire's Lucrative Tax Strategy”, June 9, 2008) exposed a popular tax scheme used by wealthy individuals to effectively sell their shares but postpone capital gains taxes. This scheme involves “lending” the shares to a major investment bank in exchange for cash and an agreement turn over ownership of the shares at some point in the future, effectively postponing tax liabilities for often more than a decade. The middle class investor, obviously, does not have the same access to such tax avoidance schemes.

http://www.beyondthemargin.net/2008/06/capital-gains-shenanigans.html