Neal Boortz supports fair tax proposal?

Neal Boortz web site ^ | Friday, December 10, 2004 | Neal Boortz

[JOHN W K]

You wrote: Given that, would you PLEASE be kind enough as to enlighten me as to what specific proposal(s) you would make to correct that situation?

ANSWER If you are referring to a system of taxation, I would work to enlight the public to our founding father's original tax plan, how it was supposed to work, and its benifits. Please see my post 195 for a summary.

[heckler]

http://www.ipi.org/ipi%5CIPIPublications.nsf/PublicationLookupFullText/A9A7AA39F78128BB86256AB700627702

Here's another place that explains "hidden" taxes. Just imagine running a business and start adding up some of these taxes and add some portion of them to the cost of youre product. Then take into account that some portions of youre product (raw materials like rubber, plastics, ag. products) may go through several stages of manufacture before you ever put them into youre final product.

Think of the raw materials in a car and how many different companys might handle them before they roll off show room floor. The sand that becomes tinted glass. The crude oil that becomes about 20 different types of plastics in a car, the rubber tree sap that becomes tires, the iron and aluminum ore that become steel and aluminum sheet-metal and casting and forgings that become gears that go into transmissions and engines. Try to think about all the different hands this stuff goes through before into rolls off the lot.

[Bigun]

I would work to enlight the public to our founding father's original tax plan, how it was supposed to work, and its benifits

A laudable project to be sure but we have the communist inspired progressive income tax in place NOW doing just what it is designed to do. Should we just leave that alone while you are working at educating the public?

[JOHN W K]

JOHN W K wrote;

That principle is the rule of abiding by the “legislative intent” of our constitution, as contemplated by those who framed it and the people who adopted it.

AG Responds

“…what was that legislative intent you were talking about? The closest provision of a plan I can find that most of the founding fathers of the Constitution could, in principle, agree on was expressed in:

Federalist #34:

To form a more precise judgment of the true merits of this question, it will be well to advert to the proportion between the objects that will require a federal provision in respect to revenue, and those which will require a State provision. We shall discover that the former are altogether unlimited, and that the latter are circumscribed within very moderate bounds. In pursuing this inquiry, we must bear in mind that we are not to confine our view to the present period, but to look forward to remote futurity. Constitutions of civil government are not to be framed upon a calculation of existing exigencies, but upon a combination of these with the probable exigencies of ages, according to the natural and tried course of human affairs. Nothing, therefore, can be more fallacious than to infer the extent of any power, proper to be lodged in the national government, from an estimate of its immediate necessities. There ought to be a CAPACITY to provide for future contingencies as they may happen; and as these are illimitable in their nature, it is impossible safely to limit that capacity.

ANSWER:

AG,

Do we agree that it was the legislative intent of the founding fathers to grant the power of direct taxation for emergency purposes, that is, if insufficient revenue was raised by indirect taxation the power of direct taxation was intended to be resorted to? If this is so, then the direct tax may provide for the contingencies which may occur in the future, as discussed in #34 which you referenced.

What was your point in referencing #34? Or have I answered it above? You seem hesitant to commit your thoughts to writing with regard to the legislative intent of our constitution.

Regards,

JWK

[lewislynn]

Dont forget to consider tax compliance costs. It's difficult to calculate

Then how did they arrive at the figures you posted?

Tax compliance is accounting (that won't end) and for a small business it's simple accounting and a turbo tax program.

According to the fairtax people, payroll taxes would be paid directly to the employee (no savings there) and wages and self-employment income would still be required to be reported to Social Security...no "compliance" savings there either.

Business taxes are paid on profits and gains. For a business to have even 20% of their gross at a 30% tax rate their profits and gains would have to exceed 60% of their gross.

The only way they could reduce prices 20+% would be to retain employee's withholding (income and payroll taxes).

Ten vendors/suppliers in the supply chain reducing their price 10% is a 10% reduction ...not 100%

Grade school math and simple logic.

[JOHN W K]

JOHN w k wrote:

I would work to enlight the public to our founding father's original tax plan, how it was supposed to work, and its benefits

Bigun responds:

A laudable project to be sure but we have the communist inspired progressive income tax in place NOW doing just what it is designed to do. Should we just leave that alone while you are working at educating the public?

ANSWER

Well, should we leave the pinko inspired tax on income in place while those who are promoting the so called fair tax are attempting to educate the people?

I don’t think we have a real choice in the matter until enough people are educated. Hopefully a plan will emerge with checks and balances to prohibit Congress’ current communist spending and borrowing practices which may then be adopted when the people are educated. Oh, I just remembered, the fair tax is “revenue neutral” which means it allows Congress to raise existing levels of revenue to continue in its irresponsible and communist inspired spending and borrowing practices. Seems to me the founder’s tax plan does provide checks and balances to encourage Congress to follow sound fiscal policies which are contrary to communist thinking, unlike the impotent so-call fair tax fluff proposal which will be used to continue funding the communist spending programs now in place.

Have a great day and keep your powder dry!

JWK

[Remember_Salamis]

"No. Post the part of the "study" that demonstrates how prices could be reduced 20 to 40%."

-- For the 1,000th Time, I can't. Do you want to read it via e-mail?

[heckler]

Then how did they arrive at the figures you posted?

I dont know. They are the ones with the Masters and Doctorate degrees

Tax compliance is accounting (that won't end) and for a small business it's simple accounting and a turbo tax program.

What percentage of accounting is done purely for the purpose of retaining records needed for doing taxes(including payroll taxes).

According to the fairtax people, payroll taxes would be paid directly to the employee (no savings there) and wages and self-employment income would still be required to be reported to Social Security...no "compliance" savings there either.

All payroll taxes go away,both the employee and employers share, big savings no?(look at that savings added up for a raw material-finished product process that may include 3-5 seperate companys)

The only way they could reduce prices 20+% would be to retain employee's withholding (income and payroll taxes).

Guess what? You're getting there. THERE ARE NO INCOME AND PAYROLL TAXES.Those dissappear completely from the cost of their product. Some people fear that businesses would keep that as profit but competition will drive that out of the price of the product. ONE company is all it takes in a business segment to reduce the price of the product by that amount and they are all forced to do it.

Grade school math and simple logic.

Indeed.

[ancient_geezer]

Here's the index to the book show us any reference at all pp 140-178 as regards the Fair Tax Act, NRST or RST.

NRST is mentioned on pages 140-143, 145-146, 154, 157-158, 160-161, 176-177.

Quote them. I have noted frequently the word "consumption" reads NRST to you.

The index to the book does however indicate discussion of the rebate scheme for the Business Transfer Tax 155, and demogrant rebates for Social Security taxes on 175-177 expressly. Interesting the conclusion that you quote is directly from that the index entry for Social Security and wage demogrants for the BTT and Flat Tax systems reference. The only reference I see to demogrants specifically on 176-8 is a reference to the fact that such can be based on povertylevels or wages, to lower tax burdens and of course the general Conclusion of cost of demogrants for BTT & Flat tax consumption taxes as actually discussed in the chapter.

So far you have not provided anything at all that suggests the conclusion refers to the specific demogrant of the Fair Tax at all. Though it is very easy to see how that conclusion would relate to BTTs & Flat taxes both of which have overhead costs as well as tax embedded into goods and services that everyone purchase giving rise to those increased tax burdens economically incident on the quoted range of the middle class incomes.

It is to be noted that Chapter is actually does its distributive analysis on the basis of the 1983-1989 Survey of Consumer Finances and Consumer Expenditure Survey reports which it uses as reference for the distributing consumption tax burdens applicable, of course, to the BTT (effectively a corporate income tax) and the Flat Tax which is a combination of individual wage tax & corporate income tax similar in character to the the tax laws then prevalent and thus roughly comensurate with current income/payroll tax and consumer/supplier behaviours.

However, that distributive analysis is wholly inadequate for use with an NRST, as there are no intermediate business tax related costs to pass down in price to a customer in an NRST only system, and such overhead costs on final retail business as exist with a retail sales tax are in no manner comparable to those of either the BTT, or corportate income tax of the Armey/Spector Flat Tax.

In fact the mode of taxation under the NRST is so significantly different as to cause substantive changes in both business and customer's behaviors as regards investment and spending patterns rendering that distributive analysis totally void as regards anything to do with retail sales taxes collected from the consumer in a direct manner instead of being embedded into product pricing.

Obviously the difference is substantive as the effective tax rate comparisons of the Fair Tax with the 2003 tax law(with SS/Medicare taxes, child credits, with personal exemption and standard deduction applied indicates) As illustrated by the tax burden of a typical family of four wouldl have at various annual expenditure levels as compared to that same family under the current tax law, (2004 income plus FICA/MC):

Considering that the incentive to save/invest under the NRST is strongly enhance this effective rate chart on the NRST side strongly overstates the actual rates the typical family would experience with respect to their gross income.

 

H.R.25 "The FairTax Act

[lewislynn]

For the 1,000th Time, I can't.

So you don't know how to copy and paste?

Do you want to read it via e-mail?

For the 1,000th Time...NO!

[Remember_Salamis]

Copy+Paste 40+ pages of a PDF??? That ain't gonna happen.

[lewislynn]

All payroll taxes go away,both the employee and employers share, big savings no?

That's exactly what I wrote before..The only way prices could be reduced even 20% is if the employer retained the employee's withholding and did NOT pass the employee's income and payroll tax on to the employee who earned it.

Your dreamland scenarios are interesting but no one has been able to prove how it can happen...not even the one with the doctorate... unless you can post that part of "the study" which shows up to a 40% reduction you claim exists..

Besides that, there isn't anything statutory that says the employer has to reduce prices OR pay the employee "100% of his/her paycheck".

[heckler]

I didn't claim 40% on ALL products!

Besides that, there isn't anything statutory that says the employer has to reduce prices OR pay the employee "100% of his/her paycheck".

If the employer was not required to withold income tax and he kept youre pay I'm pretty sure he'd end up in jail promptly.Competion would virtually guarantee prices would come down. I'll dig up a link to the study by Dale Jorgensen for you, but I get the distinct feeling, based upon some of your comments that it doesnt matter what I say, you are opposed to a NRST regardless

[Your Nightmare]

Quote them. I have noted frequently the word "consumption" reads NRST to you.

1. on Page 140: "... to the existing federal income tax system? The popular perception is that the introduction of a national retail sales tax (NRST) or a Hall-Rabushka type flat tax (FT) in place of existing federal income taxes will significantly increase the tax burden ..."
2. on Page 141: "... and increase the real wage. Third, estimated consumption by income level is used to allocate the tax burden of an NRST. Although this method is in accord with the procedure used by other studies of an NRST, it conflicts with the ..."
3. on Page 142: "... basis of long-run allocative and distributional factors. There is greater administrative familiarity with the VAT and FT than with the NRST. Indeed, some skeptics (Slemrod, 1996, and Gale, 1998b) argue that a high-rate NRST could not be administered effectively. Accordingly, the ..."
4. on Page 143: "... $540, and government expenditures or consumption are equal to $60. The replacement of a PCT of 10 percent with a NRST imposed at a tax-inclusive rate of 11.11 percent would have no real effects. The nominal price of consumption goods increases ..."
5. on Page 145: "... the current period by persons in proportion to their current consumption just as it is under the PCT or an NRST. All consumption- based tax systems (PCT, NRST, VAT, and FT) are equivalent for each individual on a period by period ..."
6. on Page 146: "... project. Only the risk premium p is taxed under this response to the accelerated depreciation associated with expensing. Under the NRST, PCT, or FT the returns to risk taking, economic rents, above-normal earnings to entrepreneurial activity, and other investment activity will ..."
7. on Page 154: "... tax burdens on the rich will be reduced if the present personal taxes were replaced by either the FT or NRST. Analyses in Which Consumption Is Used as a Proxy for Lifetime Income Poterba (1989, 1991) was the first to use ..."
8. on Page 157: "... rather than 16 percent." Feenberg, Mitrusi, and Poterba (1997) also use CES data to calculate the effects of implementing an NRST. They link the consumption data from CES to a more detailed income tax data base. The latter data set has ..."
9. on Page 158: "... 1.4 percent ranked by consumption is estimated to have its taxes increased by 30 percent by the introduction of an NRST. Intertemporal Lifetime Approaches to Distributional Analysis Studies of the distributive effects of taxes based on the distribution of income for ..."
10. on Page 160: "... the current federal tax system. Our objective is to estimate the short-run distributive impact of substituting a fully comprehensive, single-rate NRST for the major federal taxes on personal income, estates and gifts, corporate profits, and payrolls . The estimates are based ..."
11. on Page 161: "... coupled with a demogrant, indexation seems an overly generous means of protecting recipients of transfer income from the payment of NRST. Estimating the Distribution of Tax Burdens under the Current Federal Tax System The basic source of data on the characteristics ..."
12. on Page 176: "... burden on low-income groups. One of these provides for a rebate on Social Security taxes. If the adoption of an NRST results in an increase in absolute prices, this is equivalent to the indexing of Social Security benefits for inflation. This ..."
13. on Page 177: "... at incomes below $25,000, although they are smaller than for the existing tax system and significantly smaller than for an NRST without any tax relief. The important point is that it is possible to design a demogrant system that will lower ..."

The index to the book does however indicate discussion of the rebate scheme for the Business Transfer Tax 155, and demogrant rebates for Social Security taxes on 175-177 expressly.

They look at several consumption taxes, but mainly a NRST

So far you have not provided anything at all that suggests the conclusion refers to the specific demogrant of the Fair Tax at all.

Whoa! When have you ever posted a paper, other than AFT BS, that modeled the FairTax? Even the Jorgenson paper you (mis)quote incessantly wasn't modeling the FairTax.

Interesting the conclusion that you quote is directly from that the index entry for Social Security and wage demogrants for the BTT and Flat Tax systems reference. The only reference I see to demogrants specifically on 176-8 is a reference to the fact that such can be based on povertylevels or wages, to lower tax burdens and of course the general Conclusion of cost of demogrants for BTT & Flat tax consumption taxes as actually discussed in the chapter.

Well, I've read the paper and they were discussing a NRST.

It is to be noted that Chapter is actually does its distributive analysis on the basis of the 1983-1989 Survey of Consumer Finances and Consumer Expenditure Survey reports which it uses as reference for the distributing consumption tax burdens applicable, of course, to the BTT (effectively a corporate income tax) and the Flat Tax which is a combination of individual wage tax & corporate income tax similar in character to the the tax laws then prevalent and thus roughly comensurate with current income/payroll tax and consumer/supplier behaviours.

However, that distributive analysis is wholly inadequate for use with an NRST, as there are no intermediate business tax related costs to pass down in price to a customer in an NRST only system, and such overhead costs on final retail business as exist with a retail sales tax are in no manner comparable to those of either the BTT, or corportate income tax of the Armey/Spector Flat Tax.

In fact the mode of taxation under the NRST is so significantly different as to cause substantive changes in both business and customer's behaviors as regards investment and spending patterns rendering that distributive analysis totally void as regards anything to do with retail sales taxes collected from the consumer in a direct manner instead of being embedded into product pricing.

Obviously the difference is substantive as the effective tax rate comparisons of the Fair Tax with the 2003 tax law(with SS/Medicare taxes, child credits, with personal exemption and standard deduction applied indicates) As illustrated by the tax burden of a typical family of four wouldl have at various annual expenditure levels as compared to that same family under the current tax law, (2004 income plus FICA/MC):

Considering that the incentive to save/invest under the NRST is strongly enhance this effective rate chart on the NRST side strongly overstates the actual rates the typical family would experience with respect to their gross income.

Blah, blah, blah, blah, blah... You went 5 whold paragraphs without quoting someone who's been dead over 200 years. You must be proud of yourself.

Look, as I said before, it doesn't take a PhD to get that if the lower class is paying nothing (or less than nothing) and the upper class is pay a lot less, that only leaves the middle class to make up the difference. Or are you trying to get us to believe that everyone will pay less while the government generates the same revenue?

Wow! A chart from FairTax.org! How useful. /sarcasm

[Your Nightmare]

Hey, heckler. Do you believe the labor supply could increase 30% in one year?

[lewislynn]

If the employer was not required to withold income tax and he kept youre pay I'm pretty sure he'd end up in jail promptly.

For what?

Competion would virtually guarantee prices would come down.

Really? What, other than what ONE economist says, would be the determining factor?

I'll dig up a link to the study by Dale Jorgensen for you,

I've been hearing that for years, if you do it you'll be the first.

but I get the distinct feeling, based upon some of your comments that it doesnt matter what I say, you are opposed to a NRST regardless

I'm not opposed to an nrst. I'm opposed to anything that's trying to be sold using lies and conjecture.

[ancient_geezer]

I simply wanted to know what the links are supposed to confirm in reference to our founding father’s original tax plan.

You obviously have already determined that for you own beliefs. Who am I to tell you how to read.

As you know AG, there are many Supreme Court cases in which the S.C. renders an opinion which is not in harmony with the legislative intent of our constitution as contemplated by those who framed and ratified the document.

A 1942 case I note and not dealing with the issue of taxation at all, and quite separate from this first tax case, before the Supreme Court in 1792, where the majority of judges of were also founding fathers and delegates to that constitutional convention authoring that Constitution?

Hylton v. United States(1796), 3 U.S. 171

"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. "

"the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution."

"Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"

"[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."

And this one a few short years later:

McCulloch v. Maryland, 17 U.S. 316 (1819)

• "The power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation."

Again restated in 1868

LICENSE TAX CASES, 72 U.S. 462 (1866)

• "It is true that the power of Congress to tax is a very extensive power. It is given in the Constitution, with only one exception, and only two qualifications. Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. Thus limited, and thus only, it reaches every subject, and may be exercised at discretion."

Once more in in that same year:

PACIFIC INS. CO. v. SOULE, 74 U.S. 433 (1868),7 Wall. 433

• "Congress may prescribe the basis, fix the rates, and require payment as it may deem proper. Within the limits of the Constitution it is supreme in its action. No power of supervision or control is lodged in either of the other departments of the government."

 

---

 

For it is well established from the intent of the founding fathers of the Constitution that:

United States v. Cruikshank(1876), 92 U.S. 542:

• "The people of the United States resident within any State are subject to two governments: one State, and the other National. ..."

As made very clear by one of the foremost among the founders in framing the wording of that Constitution:

James Madison, Federalist #39:

• "The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"

Especially as regards taxation:

Federalist #31:

"A government ought to contain in itself every power requisite to the full accomplishment of the objects committed to its care, and to the complete execution of the trusts for which it is responsible, free from every other control but a regard to the public good and to the sense of the people."

"As revenue is the essential engine by which the means of answering the national exigencies must be procured, the power of procuring that article in its full extent must necessarily be comprehended in that of providing for those exigencies."

"As theory and practice conspire to prove that the power of procuring revenue is unavailing when exercised over the States in their collective capacities, the federal government must of necessity be invested with an unqualified power of taxation in the ordinary modes. "

 

James Madison, Federalist #45:

• "The change relating to taxation may be regarded as the most important; and yet the present [Continental] sic Congress have as complete authority to REQUIRE of the States indefinite supplies of money for the common defense and general welfare, as the future [Constitutional] Congress will have to require them of individual citizens;

For,

Federalist #34:

• In pursuing this inquiry, we must bear in mind that we are not to confine our view to the present period, but to look forward to remote futurity. Constitutions of civil government are not to be framed upon a calculation of existing exigencies, but upon a combination of these with the probable exigencies of ages, according to the natural and tried course of human affairs. Nothing, therefore, can be more fallacious than to infer the extent of any power, proper to be lodged in the national government, from an estimate of its immediate necessities. There ought to be a CAPACITY to provide for future contingencies as they may happen; and as these are illimitable in their nature, it is impossible safely to limit that capacity.

• ``A CONCURRENT JURISDICTION in the article of taxation was the only admissible substitute for an entire subordination, in respect to this branch of power, of State authority to that of the Union.'' Any separation of the objects of revenue that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the Union to the POWER of the individual States. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident that it has at least the merit of reconciling an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities.

The most fundamental principle of constitutional law as stated by Jefferson is:

"On every question of construction [of the Constitution], let us carry ourselves back to the time when the Constitution was adopted, recollect the spirit manifested in the debates, and instead of trying what meaning may be squeezed out of the text, or invented against it, conform to the probable one in which it was passed."Johnson, June 12, 1823--Jeffeson in a letter to William

Indeed as we have seen above.

 

“No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.” [Art. 1, Sec. 9]

As well as was provided for in the uniformity clause as regards all indirect taxes:

 

Constitution for the United States of America:

• Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
  to pay the debts and provide for the common defense and general welfare of the United States;
  but all duties, imposts and excises shall be uniform throughout the United States; "

Made abundantly clear in the 1792 tax decisions of the Supreme Court:

Hylton v. United States(1796), 3 U.S. 171

"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. "

"the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution."

"Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"

"[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."

 

As pointed out in Federalist Paper No. 42 concerning the intent of the power to regulate commerce, Madison states the following:

We are not here discussing the commerce clause and regulation of trade among the states other than the fact that tax law cannot be used to advantage one state over another or punish for that matter.

We are discussing the taxing clauses, and commerce as it is regarded for purpose of raising revenue as opposed to taxes for the distinct function of regulating or restricting trade in specific items throughout the states uniformly. That latter being something you appear to promote inspite of all your rhetoric against how the commerce clause is used to inappropriately regulating trade among the states.

The taxation clauses require that the indirect tax(and specifically regarding "duties imposts and excises") laws be uniform with no regard to state or location of where the tax is collected.

Fix a rate that rate must be the same in all states, tax an item that item must be taxed the same in all states, tax an industry, profession, trade or occupation, those activities must be taxes by the same law in all states giving neither preference nor disadvantage to any of them. To expessly prevent the use of federal taxes to regulate the flow of trade among the states.

Constitution for the United States of America:

• Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
  to pay the debts and provide for the common defense and general welfare of the United States;
  but all duties, imposts and excises shall be uniform throughout the United States; "

Establishing a rule preventing tax law established for a defacto purpose of giveing preference to one state over another for any reason and reinforced in Article1 Section 9 as regards movement of goods into and among the states specifically:

“No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.”

For it must be noted from Madison's notes on the constitutional convention the primary concern of delegates concerning taxation was that the tax law not be used to advantage or punish states in regards trade or commerce. That all the laws enacted by Congress must be the same for all.

In fact it is interesting to note how Article 1 section 8 taxation clause was refined, specifically excluding equal taxation throughout the states in favor merely being treat by a uniform law. The idea that each state's population bear equal amounts of tax to every other was proposed & expressly rejected in fact. And discussion of the tax laws always revolved around one law without regard specific state in which tax law operated for indirect taxes. Even apportionment for the direct(capitations and on land) taxes was based in population not wealth of state or trade relationships to assuring taxation impacted on the basis of individuals as opposed to state interests as a whole.

 

August 25: Mr. Mc Henry & Genl. Pickney proposed and was submitted to committee:

"All duties imposts & excises, prohibitions or restraints laid or made by the Legislature of the U. S. shall be uniform & equal throughout the U. S."

Aug 28: Mr. SHERMAN from the Committee to whom were referred several propositions on the 25th. instant, made the following report- [FN2]

That there be inserted after the 4 clause of [FN3] 7th. section

"Nor shall any regulation of commerce or revenue give preference to the ports of one State over those of another, or oblige vessels bound to or from any State to enter, clear or pay duties in another and all tonnage, duties, imposts & excises laid by the Legislature shall be uniform throughout the U. S."

 

Sept 12:

"Sect. 8. The Congress may by joint ballot appoint a treasurer. They shall have power

To lay and collect taxes, duties, imposts and excises; to pay the debts and provide for the common defence and general welfare of the United States. "

Sept 14:

"Art 1. sect. 8. [FN10] "but all such duties imposts & excises, shall be uniform throughout the U.S." was [FN11] unanimously annexed to the power of taxation. "

 

My question to you was simply to determine if the point(s) you were trying to make were in harmony with the legislative intent

Obviously they are, as shown above the rules regarding uniform tax law in regard to all states. That is the only consideration in taxes, that the law imposing an indirect tax be the same regardless of where the duty, impost or excise be laid.

It‘s amazing that knowing how the definition of one word used by the founding fathers, as they intended it,

Yep sure is, uniformity of tax law being the primary rule to prevent the creation of privilege status in trade of one state over others.

It is to be noted there are no requirement of equality of amount or rate of taxation as regards the circumstance of individuals however. For bottom line:

 

James Madison, Federalist #39:

• "The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"

As attested to even by the opponents of the Constitution:

Anti-Federalist Papers #3 NEW CONSTITUTION CREATES A NATIONAL GOVERNMENT;

There are but two modes by which men are connected in society, the one which operates on individuals, this always has been, and ought still to be called, national government; the other which binds States and governments together (not corporations, for there is no considerable nation on earth, despotic, monarchical, or republican, that does not contain many subordinate corporations with various constitutions) this last has heretofore been denominated a league or confederacy. The term federalists is therefore improperly applied to themselves, by the friends and supporters of the proposed constitution.

 

McCray laid out the bottomline where federal taxes impinge on the individual:

MCCRAY v. U S, 195 U.S. 27 (1904)

• "'But if what Congress does is within the limits of its power, and is simply unwise or injurious, the remedy is that suggested by Chief Justice Marshall in Gibbons v. Ogden [9 Wheat. 1, 6 L. ed. 23], when [195 U.S. 27, 56]   he said: 'The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments."

• "Let us concede that if a case was presented where the abuse of the taxing power was so extreme as to be beyond the principles which we have previously stated, and where it was plain to the judicial mind that the power had been called into play, not for revenue, but solely for the purpose of destroying rights which could not be rightfully destroyed consistently with the principles of freedom and justice upon which the Constitution rests, that it would be the duty of the courts to say that such an arbitrary act was not merely an abuse of a delegated power, but was the exercise of an authority not conferred. "

[ancient_geezer]

Even the Jorgenson paper you (mis)quote incessantly wasn't modeling the FairTax.

You mean this one done by Jorgenson to establish the revenue neutral rate on the federal portion of the NRST?

The one to establish the revenue neutral tax rate and effects on the economy by Jorgenson in '97 applying his inter-temporal equilibrium models with the Fair Tax act provision that include both replacement of income and payroll taxes as well as addressing progressivity on the expenditure side of the budget in the manner that HR25 does with its FCA.

Here's the text summary of results of that testing, that were passed on to me at request for the results of that specific work:

 

THE ECONOMIC IMPACT OF THE
NATIONAL RETAIL SALES TAX

By
Dale W.Jorgenson

INTRODUCTION AND SUMMARY

The purpose of this report is to analyze the economic impact of substituting the National
Retail Sales Tax (NRST)for individual and corporate income taxes,the Medicare,Social
Security, and FUTA payroll taxes,and the estate and gift taxes.1 I consider a revenue
neutral substitution-one that leaves the government deficit unchanged. Finally,I focus
on the impact of this fundamental tax reform on economic growth over the next quarter
century.

         1 The NRST is described in detail by Laura Dale (1996)

I have summarized my conclusions in a series of charts:

1.The revenue neutral substitution of the NRST for existing taxes would have an
immediate and powerful impact of the level of economic activity.The first chart gives a
projection of GDP under current tax law. The second chart shows that GDP would
increase by almost 10.5 percent in the first year.This increase would gradually decline to
a little under 5.4 percent over the next twenty-five years.

2.Taxation of consumption would induce a radical shift in the composition of economic
activity-away from consumption toward investment. The third chart shows that real
investment would initially leap by a staggering 76.4 percent and then gradually fall to
about 15 percent higher than under existing taxes. The third chart reveals that real
consumption would initially decline by 9.1 percent. However,consumption would overtake
the level under existing taxes within five years and grow rapidly under the NRST.

3.Holding net foreign investment constant,the fourth chart shows that exports would jump
by 26.4 percent under the NRST, while imports would rise only modestly. This is the
consequence of excluding exports from the tax base while including imports. The initial
export boom would gradually subside, but exports would ultimately remain more than
13.3 percent above the level under the current tax system, while imports would fall a
modest 0.9 percent below this level.

4.As a consequence of the elimination of taxes on capital income,individuals would
sharply curtail consumption of both goods and leisure. In addition,the implied subsidy to
leisure time would drop to zero under the NRST; under the existing tax system this is
equal to the marginal tax rate on labor income. The fifth chart shows that the NRST
would generate dramatic growth in the capital stock and a sharp initial rise in the labor
supply that would gradually decline over time.

5.Since producers would no longer pay taxes on profits or other forms of capital income
under the NRST and workers would no longer pay taxes on wages, prices received by
producers, shown in the sixth chart,would fall by an average of twenty percent.The
seventh chart shows that industry outputs would rise by an average of twenty percent
with substantial relative gains for investment goods producers.

6.In the long run producers’ prices, shown in the eighth chart,would fall by almost thirty
percent under the NRST.In addition,the shift in the composition of economic activity
toward investment and away from consumption would drastically redistribute economic
activity among industries.The ninth chart shows that production would rise in all
industries,but the increase in production of investment goods would be relatively
greater.

7.The imposition of the NRST would produce a sharply higher tax rate on consumer goods
and services, but the tenth chart shows that the initial consumption tax rate would be
twenty-three percent at both federal and state and local levels or only 18.4 percent at
the federal level. This would gradually rise over time,but remain below thirty percent
or 23.8 percent at the federal level.

 

Or are you trying to get us to believe that everyone will pay less while the government generates the same revenue?

Expansion of the economy remember? Means people earn more, invest more, spend more, pay the same in amount of taxes, but all can pays less as a percentage of their total resources.

The issue of distribution is one of proportion, all can pay less as a percentage of there gross income, while the government may receive an increase in total revenues. That is what economic growth and the expansion of the tax base assures lower tax rates on the individual taxpayer across the board.

Of course if you happen to be in one of those catagories that do not pay income and payroll taxes today:

• those evading by not reporting income or wages,
• those involved in illegal activities,
• illegal alians operating off the books,
• foreign visitors not recieving income or wage in the United States,
• ... etc.

Guess what, you would be paying a 23% tax whenever you head out to that legitimate business to buy that little goodie you always wanted.

Of course if you are a legal resident in a sitiuation where you figure telling government your residential address to have FCA checks delivered to is safe to do, you get the taxrate percentage of the HHS povertylevel expenditure back as a refund of excess NRST paid. Granted not here as an legal residenty, or not behaving yourself, does have a bit tax bite to it but a good direction for expansion of the tax base.

[Your Nightmare]

THE ECONOMIC IMPACT OF THE NATIONAL RETAIL SALES TAX

It looks like he's starting with 18.4% (and it goes up from there) and I don't see a demogrant in the details. That's not the FairTax.

Expansion of the economy remember? Means people earn more, invest more, spend more, pay the same in amount of taxes, but all can pays less as a percentage of their total resources.

Sure, but only if they are willing to work 30% more, as Jorgenson's model has us doing. Works great in a computer model, not so well in real life. Jorgenson's model is limited and the results are flawed, particularly in the short term.

It also needs to be pointed out again that Jorgenson has since realized that his "revenue neutral" rate isn't revenue neutral at all. It would have to be much higher than even the AFT proposed rate.

[JOHN W K]

Now that you have posted an abundance of documentation without specifying its purpose, will you please inform me what is the documentation supposed to confirm? Are you suggesting the documentation you posted confirms that a tax, as laid out in the fair tax proposal, or the NRST is within Congress’ powers? If so, I am at a loss to fit such a tax into the delegated taxing powers granted to Congress by the constitution. Please enlighten me as to what heading the tax comes under…a direct tax? An excise? An impost, a duty? What kind of tax is it, and can you give an example of such a tax being applied during the contemporary time our constitution was being framed and ratified?

Sincerely,

JWK