Posted on 02/08/2003 5:56:38 PM PST by Bigun
White House Floats Idea of Dropping Income Tax Overhaul By EDMUND L. ANDREWS
WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...
(Excerpt) Read more at nytimes.com ...
No problem. Simply disavow GATT and NAFTA as a violation of our Constitutional Sovereignty.
Foreign nations should have absolutely no jurisdiction over our method of taxation anyway.
"We are infinitely better off without treaties of commerce with any nation."
--Thomas Jefferson to James Madison, 1815.
Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department:
The following are PDF files:
The Effects of Fundamental Tax Reform and the Feasability of Dynamic Revenue Estimation, in Joint Committee on Taxation, Congress of the United States, The Modeling Project and 1997 Tax Symposium Papers, Washington, U.S. Government Printing Office, November 20, 1997 (with P.J. Wilcoxen), pp. 130-151.
The Economic Impact of Fundamental Tax Reform, in M. Boskin (ed.), Frontiers of Tax Reform, Stanford, Hoover Institution, 1996, pp. 181-196; reprinted in Joint Economic Committee, Congress of the United States, Roundtable Discussion on Tax Reform and Economic Growth, One Hundred Fourth Congress, First Session, 1996, pp 98-112.
Bush in '04 bump!!
You need to read this one Jim!
That beats the hell out of 28-40+%
It would be more on the order of 17%.
Works if you don't mind paying payroll(i.e. FICA) taxes along with sales taxes.
Billy Tauzin offers a 15% retail sales tax solution that replaces all income taxes but doesn't touch SS/Mediscare payroll taxes:
H.R.2717
Sponsor: Rep Tauzin, W. J. (Billy)(introduced 8/2/2001)
Title: To promote freedom, fairness, and economic opportunity for families by repealing the income tax, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
John Linder (R Georgia) offers the more comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement:
H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org
Nah. Even the Dims are scared of that monstrosity.
This is one of those juicy morsels that rightwing politicians love to float in front of the faithful, same as the Dims do with their constiuents on their pet issues. Just ploys to keep the faithful sheeple in each party salivating, panting, and ranting.
I hate to burst everybody's bubble but the income tax will be eliminated when the proverbial pigs fly.
So if we have to pick a tax, why not go with one whose primary effect will be to protect national sovereignty?
How does becoming dependant upon tariffs as a source of tax revenue protect national sovereignty?
A nation looses sovereignty in direct relation to a countries dependancy upon other governments for tax revenue. Consider the constraints of defense if the revenues necessary for maintaining the strength of your military is dependant upon tariffs collected from the vary nations you must defend against.
I can't understand for the life of me why otherwise reasonable people (read: conservatives) are so passionately driven to want to prostrate our economy to foreign influence.
Seems to me you have things a little bit backwards.
James Madison, Elliots Debates Vol 3 p128:
- Mr. Chairman, in considering this great subject, I trust we shall find that part which gives the general government the power of laying and collecting taxes indispensable, and essential to the existence of any efficient or well-organized system of government: if we consult reason, and be ruled by its dictates, we shall find its justification there: if we review the experience we have had or contemplate the history of nations, here we find ample reasons to prove its expediency. There is little reason to depend for necessary supplies on a body which is fully possed of the power of witholding them. If a government depends on other governments for its revenues -- if it must depend on the voluntary contributions of its members -- its [*129] existence must be precarious."
Certainly we should have fall-back options of collecting internal taxes as the need arises. But those have to be placed under constitutional limits, such as a supermajority in Congress, and a sunset provision.
There's no such thing as being completely dependent on foreign sources of revenue
That is true, however there are those who advocate such when they demand turning to tariffs as the primary source of tax revenues as adequate to the financial requirement of federal government.
Tariffs taken as a panacea to our federal tax ills, is a formula for disaster both from a foreign trade viewpoint as well as a tax revenue source.
- "Suppose, as has been contended for, the federal power of taxation were to be confined to duties on imports, it is evident that the government, for want of being able to command other resources, would frequently be tempted to extend these duties to an injurious excess. There are persons who imagine that they can never be carried to too great a length; since the higher they are, the more it is alleged they will tend to discourage an extravagant consumption, to produce a favorable balance of trade, and to promote domestic manufactures. But all extremes are pernicious in various ways. Exorbitant duties on imported articles would beget a general spirit of smuggling; which is always prejudicial to the fair trader, and eventually to the revenue itself: they tend to render other classes of the community tributary, in an improper degree, to the manufacturing classes, to whom they give a premature monopoly of the markets; they sometimes force industry out of its more natural channels into others in which it flows with less advantage; and in the last place, they oppress the merchant, who is often obliged to pay them himself without any retribution from the consumer. When the demand is equal to the quantity of goods at market, the consumer generally pays the duty; but when the markets happen to be overstocked, a great proportion falls upon the merchant, and sometimes not only exhausts his profits, but breaks in upon his capital."
Alexander Hamilton, Federalist #12:
- "The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
- "The more intelligent adversaries of the new Constitution ...qualify ... by a distinction between what they call INTERNAL and EXTERNAL taxation. The former they would reserve to the State governments; the latter, which they explain into commercial imposts, or rather duties on imported articles, they declare themselves willing to concede to the federal head. This distinction, however, would violate the maxim of good sense and sound policy, which dictates that every POWER ought to be in proportion to its OBJECT; and would still leave the general government in a kind of tutelage to the State governments, inconsistent with every idea of vigor or efficiency. Who can pretend that commercial imposts are, or would be, alone equal to the present and future exigencies of the Union? Taking into the account the existing debt, foreign and domestic, upon any plan of extinguishment which a man moderately impressed with the importance of public justice and public credit could approve, in addition to the establishments which all parties will acknowledge to be necessary, we could not reasonably flatter ourselves, that this resource alone, upon the most improved scale, would even suffice for its present necessities.
- "To say that deficiencies may be provided for by requisitions upon the States, is on the one hand to acknowledge that this system cannot be depended upon, and on the other hand to depend upon it for every thing beyond a certain limit. "
James Madison, Elliots Debates Vol 3 p128:
- "If a government depends on other governments for its revenues -- if it must depend on the voluntary contributions of its members -- its [*129] existence must be precarious."
Certainly we should have fall-back options of collecting internal taxes as the need arises.
I do not see tariffs to be particularly useful towards achieving the revenues necessary for modern government. At the levels of revenue required, trying to set a tariff rate sufficent to meet even the most minimal requirement would merely shut down foreign trade killing the source.
Somehow using internal taxes as a "fall-back option" didn't really seem to be the expectation of the founders, they appeared to be looking closer to home in contemplating where the nominal federal tax burden should lay.
James Wilson, Pennsylvania Ratifying Convention
4 Dec. 1787 Elliot 2:466--68
- No man is obliged to consume more than he pleases, and each buys in proportion only to his consumption. The price of the commodity is blended with the tax, and the person is often not sensible of the payment But would it have been proper to rest the matter there? Suppose this fund should not prove sufficient; ought the public debts to remain unpaid, or the exigencies of government be left unprovided for? should our tranquillity be exposed to the assaults of foreign enemies, or violence among ourselves, because the objects of commerce may not furnish a sufficient revenue to secure tham all? Certainly, Congress should possess the power of raising revenue from their constituents, for the purpose mentioned in the 8th section of the 1st article; that is, "to pay the debts and provide for the common defence and general welfare of the United States."
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;"
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;
The Records of the Federal Convention of 1787
(Farrand's Records)
James Mchenry before the Maryland House of Delegates.
Maryland Novr. 29th 1787--
Appendix A, CXLVIa, page 149, S9.
"Convention have also provided against any direct or Capitation Tax but according to an equal proportion among the respective States: This was thought a necessary precaution though it was the idea of every one that government would seldom have recourse to direct Taxation, and that the objects of Commerce would be more than Sufficient to answer the common exigencies of State and should further supplies be necessary, the power of Congress would not be exercised while the respective States would raise those supplies in any other manner more suitable to their own inclinations --"A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
"COMMERCE, trade, contracts.
The exchange of commodities for commodities; considered in a legal point of view, it consists in the various agreements which have for their object to facilitate the exchange of the products of the earth or industry of man, with an intent to realize a profit. Pard. Dr. Coin. n. 1. In a narrower sense, commerce signifies any reciprocal agreements between two persons, by which one delivers to the other a thing, which the latter accepts, and for which he pays a consideration; if the consideration be money, it is called a sale; if any other thing than money, it is called exchange or barter. Domat, Dr. Pub. liv. 1, tit. 7, s. 1, n. "
But those have to be placed under constitutional limits, such as a supermajority in Congress, and a sunset provision.
Unfortunately, I suspect that will be a while in coming.
But there's no denying that when we make our economy so accessible as we've been making it, we open it up to all sorts of improper influence on our economic, and by extension political affairs.
Perhaps you could provide a good example of how our political affairs have been adversely affect by foreign trade?
Certainly our businesses are challenged economically, that can be argued to be a good thing holding back inflation. From what I see it gives us very strong reason to modify our tax system to remove income and payroll taxes from the backs of our business to allow them to compete more readily with foreign markets. A properly structured retail sales tax provides a very good way of accomplishing that.
Consider that a retail sales tax is not levied against export goods or services, while income and payroll taxes become inextricably embedded into the cost of those goods and service. As a consequence anything we export, becomes much more competitive, by and advantage of 20-30% lower price on exports. At the same time all goods and service including foreign imports are levied a retail sales tax at the time of sale. This provides something on the order of a 40% advantage in our export goods over foreign imports into this country. That is a very strong correction factor for the foreign trade problems without application of any tariff at all.
Our own experience in the past few decades has proven this, and I maintain that decades to come will prove it even further if we don't reverse course.
I would suggest that most of our political and national fiscal problems arise from the income/payroll tax inequities that we experience more than foreign trade. When you have over half the population believing in the tooth fairy because of graduated and progressive tax structures, you've got a overpowering incentive for unbridled growth of government. A tariff does nothing to relieve that problem, as those articles subject to tariff are essentially avoided and we still have done nothing to encourage congress from re-instituting progressive income and payroll tax systems to overcome the deficiencies. Out of control tariffs were one of the major reasons income & payroll taxes and the 16th amendment were justified back in 1913.
If you're referring to what Hamilton called "exorbitant duties", it's safe enough to say that economic science has advanced somewhat in 200 years such that we can determine with a reasonable degree of certainty, what tariff rates would yield the greatest revenue without squelching trade or creating an unmanageable black market. And as for the latter, tax evasion is going to become a problem no matter what type of tax you levy. Certainly a 30% internal consumption tax wouldn't be free of that risk.
I do not see tariffs to be particularly useful towards achieving the revenues necessary for modern government.
It certainly wouldn't be able to maintain current levels of revenue, though I don't see why that would be a problem.
Somehow using internal taxes as a "fall-back option" didn't really seem to be the expectation of the founders, they appeared to be looking closer to home in contemplating where the nominal federal tax burden should lay.
The quotes you posted to bolster that point didn't do so. All they were talking about was indirect taxation vs. direct taxation, and about taxation of states vs. of individuals. Nothing about internal vs. external taxation.
The fact remains that for about the first century or more of our history, import duties formed the backbone of federal revenue, occasionally spiced by internal excises and direct taxes as it became necessary. And it was a time of great prosperity and of true national independence. We're still fairly prosperous for the moment, but I can't say much for our independence.
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