L. Neil Smith's
Number 307, February 20, 2005

Happy 90th Birthday, Dad!

The Tax Man Goeth
by Charles Stone, Jr.

Exclusive to TLE

"That the power to tax involves the power to destroy ... [is] not to be denied"
—Chief Justice John Marshall (McCulloch v. Maryland. 1819)

Think of it. April 15th just another date on the calendar, a happy payday for some. The voluminous buildings now occupied by the Internal Revwnue Service converted to low income housing. And best of all, tens of thousands of hack news-losers forced to actually look for news to cover during the previous week.

Impossible, you say? Not something that could ever come to pass? Don't bet on it!

Some powerful forces are arraying themselves behind a plan that would do all of the above and more. A national retail sales tax.

How would that help? How would more taxes make things better in America. Because it's not an additional tax. It replaces the Federal income tax, all the so-called payroll taxes, like Social Security, unemployment, Medicare, etc. The bogus corporate income taxes, gift taxes, capital gains taxes and the malignant estate (or death) taxes. You get a paycheck, you get the whole thing. 100%, every nickle.

Is it possible to get enough money to run the government through such a system? Certainly, it would be more than enough if the Federal government was reduced to its Constitutonal limits, but that's a discussion for another time.

The most plausible proposal is provided by "Americans for Fair Taxation" (link below) that in the last Congress was sponsored by Rep. John Linder in the House as HR 25 and in the Senate by Zell Miller as S 1493. Hopefully, there will be more sponsors in the upcoming session. It is designed to be revenue neutral, that is, the amount of money coming in to the government would be the same as it is under the current system. That should satisfy the spenders in Congress (but it won't).

How would it affect the economy? There are studies that indicate the Fair Tax plan would cause explosive growth in American business and an attendant expansion of jobs. Our international trade would boom as US made goods became cheaper and foreign firms would flock to America to do business. The built in tax advantage currently enjoyed by foreign firms and investors would disappear.

There would be an estimated $500,000,000 saving in preparation expenses because there would be nothing to prepare.

The underground economy that now pays no income taxes would suddenly be paying their share.

Prices of American made goods would drop sharply as the embedded taxes within the current system disappear.

The lobbyists that today spend millions of dollars on greedy politicians in order to procure tax breaks for their clients would be out of work (good riddance).

Workers would be encouraged to work harder, better and smarter because they wouldn't have to factor taxes into their decisions.

In fact, almost every facet of American life with the exception of politics would be better under the Fair Tax plan.

Are there downsides to a sales tax plan? are there people who would be hurt? What about the poor who spent the best part of their income on necessities of life?

They address that too. Every household would receive a stipend equal to the the sales tax the would pay on the necessities. EVERY household. How would this be possible? How could there be that many checks sent out without crippling the government?

Well, the Social Security Administration already sends out millions of checks and direct deposits each month. They also wouldn't have to worry about keeping up the pretext of having an "account" waiting for every worker. Social Security would now be paid out of general revenues.

And don't forget all that computer power now thrown down a rathole by the IRS. If they can use it to extort money, it should be easy to switch over to paying money out. An essential part of the Plan is that the 16th Amendment, implementing the income tax, would be repealed and the IRS would simply cease to exist.

What about the things just above the level of "necessity" like cars and TVs and such. The beauty of the Fair Tax system is that everybody gets a chance to determine how much tax they want to pay. A person buying a $12,000 basic transportation vehicle would pay perhaps $2400 dollars in embedded taxes for a vehicle, while a person who could afford to buy a $60,000 SUV to do his weekly shopping would pay $12,000. A person who can live with a $200 television would pay $40, the purchaser of a super-deluxe $8,000 48 inch plasma set would pay $1600. Sounds fair to me. You decide how much you can afford and you buy within your means. What's wrong with that?

Would there be cheaters? Would somebody find a way to avoid paying the sales tax? Probably. Man is an inventive creature. but the amount of cheating would be less just because the total tax bite would be less. Also, the tax only applies to new retail sales. If you wanted to buy or sell a used car or house, the tax wouldn't apply.

I think that the American people would really support the national retail sales tax if it was explained to them. Unfortunately, the opposition to the plan will come mostly from the obstructionist Left and their minions in the media.

The best thing the reader can do to find out about how the plan will work is go to the Americans for Fair Taxation Website at: http://www.fairtax.org/. They explain all this and much more in exquisite detail.

© 2005 Charles Stone, Jr.


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