My answer:
I favor a Sales Tax. A flat tax solves some problems, but it doesn’t solve all the problems associated with the tax including the huge compliance costs. (Although, the lack of deductions may save a little money.) As an Independent Contractor who freelances for various companies. This past tax year I have a W2 from my main job, and 8 different 1099s. Of these, the Flat Tax would get rid of 2 of these (one for a savings account that earned more than $10 in interest and another for some stock dividends.) My biggest challenge is calculating my income, not futzing with deductions or figuring out tax rates. In addition, the Fair Tax has several added benefits over a Flat Income Tax:
Taxing the underground economy.
Increased personal privacy and less reporting requirements for individuals.
Control over the incidents of taxation.
I could write many more arguments for the sales tax, but I’ll keep it pithy. As to your proposal of enacting a Flat Tax and refusing to enact a Fair Tax until a Constitutional Amendment passed 2/3 of Congress and is ratified by 38 states. While I think the flat tax would be an improvement on the current tax code, I believe the premise of the proposal you present is founded on a faulty premise.
The big fear you cite with the implementation of a Sales Tax without the repeal of the 16th Amendment is that politicians could doublecross us and we could end up with both an income tax and a sales tax and so therefore implementing the Flat Tax is a safeguard against a doublecross from shifty politicians who would implement both taxes. This to me raises a series of questions:
The first is, “What stops politicians from implementing both taxes right now?” There is no constitutional prohibition against a sales tax. The fact that we continue to have an income tax in no way stops Congress from imposing both taxes.
Secondly, if we cannot trust politicians not to try and bring upon us a twin curse of both an income and sales tax, how can we trust them to keep a Flat Tax flat? As the top income tax bracket did not begin at 91% (the point it reached prior to JFK’s tax cuts) and become a minefield of special interests loopholes overnight, it’s easy to see how the Flat Tax could be unflattened. Somebody says, “We really need a deduction for this or that very important thing (be it college tuition, health insurance, etc.) and we ought to make it so the middle class doesn’t pay so much and the wealthy pays a little more.” Within short order, you can unflatten the tax code gradually and you end up back where we are now. How can we keep the Flat Tax flat? Will special interests just give up as long as there’s money to be had, and favor to be curried. I think not. If we’re looking for a tax code that allows us to avert our gaze and trust our politicians, no such system exists. Without citizen involvement, either the Fair Tax or the Flat Tax will be corrupted.
Under a National Retail Sales Tax, it really becomes hard for Congress to bring back the Income Tax. H.R. 25, the Fair Tax Bill, repeals the old Internal Revenue Code and its onerous series of taxes and withholding. The most likely attempt to revive the income tax will come, not from the Congress that would enact the Fair Tax but a subsequent one, 2-4 years down the line. Unlike with the Flat Tax, with the Fair Tax, we’ve taken the system of income and payroll taxes and taken a sledgehammer to it. Unlike, gradually adding in loopholes and making the Flat Tax “more progressive,” those who’d like to bring the income tax would have to reconstitute the whole system, re-recruit tax collectors who’d moved to other jobs. Imagine being that hearty politician who steps to the floor of the House and proposes reconstituting the IRS and all that went with it. It would be political suicide, and no one in their right political mind would even go there.
If we’re not vigilant, however, no tax system will protect us: Fair Tax or Flat Tax.
We have no national sales tax now because it would apply to everyone and the uproar would be loud if they tried it.
My concern about getting the income tax back is that it would likely come back in small steps. For example, the first step might be a small tax that applied to only the 1% with income above $350,000. There would be some complaints, but since it doesn't involve many people, there would be little uproar. Most people wouldn't care and others would be happy to punish those evil rich leaches. Congress would pick up some easy revenue and get reelected anyway, the rich would be punished, and it would grow from there. If we look at the income tax history since 1913, we can see one scenario.
I agree with those that say we can't abolish the return of an income tax in the FairTax bill because a law can't change the Constitution. However, I believe that the FairTax should be somehow coupled with repeal of the income tax amendment.