Replacing the Income Tax Part II
December 20, 2010 · Filed under: Education
Nothing new to add, but the discussion thread for Replacing the Income Tax has reached close to 700. So I thought I would start a new thread of discussion where you can continue without having to load and wade through all the prior content. Such a long thread can cause issues on some browsers and most mobile devices when presented as a single page as we have on this blog. Please try to use this new thread and just refer back to the number of the old thread (if need be) if you’re replying to an older point of discussion.
256 Responses to “Replacing the Income Tax Part II”
Morphh,
Probably a good idea. 700 posts is a record for sure. Makes up for a lot of quiet time we had last year? Hope this post helps get folks started over here?
Stephen,
You asked for some recomputations of the Fairtax rate using some of the changes we suggested. I also prepared some 2009 data to compare to the BHI 2007 stuff just for interest.
To remind everyone, the 2006 BHI rate study used a 2007 taxable base of 81% of GDP($13881) which was $11244B, adjusted to $9355 to account for the prebate, and used revenue for the taxes to be replaced of $2228B. That resulted in an inclusive rate of 23.8% and an exclusive rate of 31.2%.
To estimate the impact of my changes, I removed $2009B of government consumption from the base, removed the Sec. 801 base value of $288B, and decreased the base by $1385B to reflect a 15% evasion/avoidance rate. These changes resulted in a taxable base of $7604B.
The 2007 BHI revenue was $2228B and I added $59B to account for the targeted prebate resulting in a revenue neutral amount of $2287B (Note: BHI reduced the base by $2T or so to account for the prebate, but there has always been some disagreement with that method, so I simply added the cost of the prebate to the needed revenue and left the base alone.)
The resulting inclusive rate would be 30.1% and the exclusive rate would be 43%.
If we also remove the FICA payments as I recommend, the inclusive rate would be 18.6% and the exclusive rate would be 22.9%. Leaving FICA out of the Fairtax plan eliminates two major criticisms of HR25: (1) 45 million workers between the ages of 18-64 would pay no net federal tax annually, yet would still receive full pension and health care benefits when eligible. That is the estimated result of the AFFT modified poverty level and the prebate. (2) All retirees who have paid into the Trust Funds for 45 years or so would have to resume paying for their benefits with their sales tax dollars. (To be fair, retirees should only have to pay a 14% sales tax because the remaining 9% goes to pay SS benefits.)
Just for the sake of interest, if we use 2009 data, (and a lot of extrapolation), the GDP was $14119B, Fairtax taxable base was $11436 (81%), removing government taxation and Sec. 801 plus adjusting for 15% evasion, results in a base of $7777B. The revenue for 2009 was down to $1953 due to the recession, and after adding the $59B allowance for a targeted prebate, the revenue neutral goal was $2012B. Leaving FICA in the mix means that the inclusive rate would be 25.9% and exclusive 34.9%.
If we take FICA out of the mix, the inclusive rate would be 15.3% and exclusive 18.1% in 2009. Compare that to the 2007 rates of 18.6 inclusive, 22.9% exclusive, a 5% rate reduction in just two years. Recessions are hell!
To Phelbers re: post # 677 of Part I
If you are unable to live without apportionment, then how is it that you have notbeen screaming about the 16th amendment?
To my Progressive friend Hayden re post # 678 of Part I
Whther a progressive tax system and some safety net lead to a fairer society is a matter of personal opinion (yours, but not mine).
I submit that a regressive tax system and no safety net would produce a more prosperous society than the one we have now.
Modern Europe, is now experiencing the predictable ultimate results of excesses of the welfare state mentality. It will ALWAYS go bad over a period of time.
To: HVG RE POST # 1
tTHANK YOU FOR GOOD EXPLANATION.
CAN YOU ESTIMATE THE TAX COLLECTIONS tp insure that your plan meets the targeted revenues, I.E., HOW much can we estimate retirees will spend vs non-retirees.
That is still a high sales tax rate and avoidance could go higher – you would have to raise the rate.
ps: I propose we end the SS system – as to new employees, just put the undunded debt on the books and go forward from there (new workers are responsible for their own retirement – there should be no more safety net).
Stephen
I have been doing nothing other THAN calling for the repeal of the 16th Amendment. That is my only purpose in participating in these postings. I would like to see it repealed, and replaced with a constitutional sales tax lawfully enacted as a legitimate excise.
If the 16th amendment was constitutionally applied and lawfully enforced, the tax (gross income) would not extend to wages, but only to the gains derived from them. It is clear from the Congressional record, and Supreme Court cases that income in the constitutional sense means ONLY gains and profits, not the items from which the gains and profits were derived. Wages and salaries are merely ‘sources’, not gross income, in Constitutional and lawful terms.
The amendment allows the government to tax only the GAINS without apportionment – which would be a relatively de-minimus amount (interest form savings of left-over wages, etc.), not the entirety of all monetary receipts.
M.E. Blatt and Co. v US made this absolutely clear. The government implements the income tax unconstitutionally and unlawfully. Any replacement will have to be worded so that they will be cut off from any more illegal activity. Every concerned citizen should read and learn this case.
Here again is Blatt [http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?friend=nytimes&court=us&vol=305&invol=267] Have you read it?
The last paragraph of this monumental holding underscores the principle that only the GAINS form receipts, NOT the receipts themselves, constitute income under the law.
The government flagrantly disregards this ruling, and we suffer from it. Am I the only one that understands this? Guess so . . . .
Thanks, Phelbers
Phelbers is having a problem posting to this new discussion thread
he posted # 679 on Part I
679. to Hayden
The best example is the US, which progressed in an unprecedented way for 160 years without one. Of course there were problems, but the lowest levels of society advanced farther and faster than with any other society in history. Progressivity in the tax system was not the reason – we advanced in spite of it.
There is not a single ‘progressive taxation’ society in the world today that is not deeply in debt and/or bankrupt (using the ‘liabilities exceed assets’ definition of bankruptcy, which is THE definition of the term).
I would not say that the extreme progressive tax system has worked well at all.
Thanks, Phelbers
(I’m unable to post to the new page)
Hayden,
Here is at least one interpretation of an OECD study specifically stating that a progressive tax system is bad for growth, http://www.cato-at-liberty.org/oecd-study-acknowledges-laffer-curve-admits-progressivity-bad-for-growth/. Here is a link to the study, http://www.oecd.org/document/46/0,3343,en_2649_33733_42514158_1_1_1_1,00.html. The one in the post is broken.
I’m sure you don’t trust a Cato interpretation, but do you have any opposing studies (as opposed to progressive theories) that state otherwise?
It should be basic common sense that Progressivism is anti-growth.
If producers are penalized for added success, they will be dis-incentivized.
The more one earns the less profitable each next layer of profits becomes – the incentive is reverse (perverse).
Taxes should go down (or be eliminated) as profits rise, so that the profit-generator will have incentive to continue the efforts of producing more.+
Got Phelbers post worked out.. his message ended up in the spam bucket (not sure why). It should work now.
Thanks Morph
I’ve probably said all I have to say, and much of it is probably spam anyway – your spam filters were just doing their job. This is a good site, but lots of repetition without much getting settled or agreed upon. Good thing the Constitutional Convention wasn’t run this way . . . . they’d still be in Independence Hall.
The real problem is the overall magnitude of taxation, progressivity (if that is really a word) doesn’t matter so much as the extremely high percentage of total taxation if taxes are at reasonably modest levels.
There are many statistics of government spending and taxation levels versus GNP, debt vs. GNP, deficit vs. GNP, unfunded liability vs GNP, and all of them set off alarm bells, being highest since the height of WWII, approaching or exceeding the levels of the collapsing European Community countries, and so on. We are on that same greased slide downward to collapse – it cannot be sustained. Government has to shrink – our government is right now making a last ditch effort, resorting to simply printing money (although they euphemistically call it Quantitative Easing). This is an admission of failure.
To prevent revolt (although some may prefer it) we will have to have a replacement tax system that at least approaches the present nanny-state levels to start. A NRST equitably designed (as equitably as such a tax could be) more along the original pre-hijacked AFFT fairtax would be constitutional and might work. The income tax has failed (unless you call our present situation a success – I do not).
Keep in mind that about 47% of Americans right now either are on the dole, or pay no income taxes (I heard this on NPR yesterday). This is a hopeless situation, but if we can hold that level with a properly formulated NRST, the tax could be freeloader neutral as well as revenue neutral (total income-tax wise).
Thanks, Phelbers
Andrew — I actually believe that CATO is one of the more respectable think-tanks out there. They make it clear that they come at things from a libertarian perspective so — yes — we progressives would take their reports with a healthy dose of salt, but in general I think they are less-inclined to shade the facts than some other “think-tanks” I can think of.
In any case, the report you cite discussed Japan, which has the highest corporate incomet tax rate in the world (40%) and a personal income tax that reaches 50% (when national and local taxes are combined) at an annual income of 18 million yen (which I calculated at $215,000). Plus, there’s a 5% VAT. (I couldn’t figure out that the capital gains tax rate is or whether there is a separate social security or medicare-type tax.) I have no idea what sort of deductions Japan might have in its income tax system, but I understand that no country other than the US allows deductions for home mortgage insurance.
So, I would agree that Japan’s tax rates are probably too high. In contrast, the effective tax rate on the wealthiest Americans is in the mid-20%s. (While the highest marginal tax rate might be 35%, when combined with the various permitted deductions and the 15% capital gains rate, the effective tax rate is much lower.) So, I would argue that Japan’s tax rate is far more progressive than ours, and perhaps hinders economic growth.
On the other hand, countries with even higher levels of taxations (such as the Scandinavian countries and Germany) have even higher levels of personal taxation, and yet routinely have higher levels of income (and equality) than the US despite their more progressive tax systems.
We could argue over how progressive is “too progressive,” and I suppose Stephen can argue that any progressivism is wrong, but I don’t really want to live in a Dickensian society and I doubt if most Americans do either (though we might soon get there if Republicans assume even more power).
Andrew, in answer to your question, I’m not aware of any studies showing progressive tax policies increase economic growth, but then again I haven’really looked. I suppose Paul Krugman could cite you a dozen off the top of his head. I think the obvious empirical evidence is that some degree of progressive taxation is necessary for a healthy and productive socieity, but even if you could prove otherwise, I’d certainly sacrifice some degree of economic growth for a more egalitarian society. It’s all a matter of degrees.
Progressives – that is egalitarian / Marxist / ultrtaliberals – have won the day, and are in command of the US. The idea of forced egalitarianism as nirvana, and the ultimate good goal of a society is firmly rooted in both the Republican and Democrat parties. No one seeking office dares challenge the egalitarian principles of free health care, free food, shelter, transportation, education, clothing for all that are in need, or that all capable of providing it must do so.
But what is overlooked by them is that it is only the American marketplace, the greatest invention ever, which is the vehicle for the wonderful egalitarian states (the Scandinavian countries were cited). Where would Japan, China, or even the Scandinavian countries be without the US market to dump their stuff? All these countries have huge multi-billion dollar trade surpluses with the US.
Progressives (an euphemism for from-each-according-to-ability-to-each-according-to-need Marxist-at -heart liberals) always say things like, “Everyone needs “affordable” this, or “decent” that, but NEVER define these terms. What is “decent, affordable” housing? 800 square feet per person? Carpeted or oak flooring? $300 maximum rent? $5 internet and cable TV?
It is the undefined nature of progressiveness that insures there neither can nor will be egalitarianism, only ever-increasing need for more highly paid, expenses-covered government administrators to define and force us to pay more to better approach what they deem is ‘decent’ and ‘affordable’.
The ideal progressive pie-in-the-sky nirvana egalitarian state can in reality only be one where everyone is miserably poor, without hope for self-improvement, void of basic human desire to improve one’s lot in life. All incentive is destroyed. Cuba, North Korea, the former Soviet Union, are examples if ideal progressive Marxist egalitarian states. States where the only hope for self-improvementis for membership in the always-first-in-line privileged ministries, bureaus, councils, and commissions to minister to the poor.
Marxism sounds good. What could be better than everyone having exactly the same level of existence for all? No one better off than anyone else? It appeals to those without the means or desire to advance themselves, and to those who want to administer Marxism.
But history, and present day experience show that this forced egalitarianism cannot work with people – it is an anathema to the human spirit. Only misery results.
Also overlooked is the fact that anti-forced egalitarianism is the underlying principle of the US. It’s what the Constitution is all about. THat once great system, with all it’s terrible flaws, allowed the best standard of living to develop for the most people, ever, But destroy it the egalitarians will.
Sadly, egalitarian progressives have taken over in the US. Only taking away the power from them to directly tax our productive effort from us can stop the inevitable fall to egalitarian progressiveness – hopeless Marxism.
Thanks, Phelbers
To: Phelbers re post # 10
I agree with most all of what you say with a couple of exceptions.
Progressivity (you are right – I think I just made up that word) would still be wrong in principle, even if we had a lot less government fund raising. It would just be a lot less painful.
A NRST is not feasable – it would have to be too high top replace all the revenue that HR 25 targets and is still too high even at HVG’s reduced goals of replacing all but payroll taxes.
To: Hayden re post # 11
In Sweden, when I last looked, not only were tax rates progressive but income distribution was also progressive. I was told that the highest paid employee of a Swedish company (including the President) is not permitted to earn more than 5 times the salary of the lowest paid worker. While Sweden’s success is difficult to explain (they may have oil, like Norway), I believe that even they are experiencing the eventual pain of Socialism.
America grants you the freedom to share your wealth with any poor person that YOU chose. You want to deny the rest of us the freedom to give to the people of our choice.
Re: post # 12
The FF understood that once you give the power of deretemining just what is it that every American is entitled to in order to achieve “social justice” over to a bunch of pandering politicians, you are finished!
Phelbers is right. Our system of individual responsibility will produce a better result for virtually everyone.
Hank,
Very interesting about your calculations. If I am correct, the 15% tax leakage would be around $315B.
In addition, I believe the cost to collect the tax would be around $10B.
Therefore, doesn’t it make sense to work on this $325B so that there is very little tax leakage. If say we can eliminate 90% or $290B, how does that effect your rates?
Instead of saying that is given, maybe we should concentrate on how to make the FT tax collection, compliance and auditing stronger. A $290B payday is real money and worth a lot of effort.
Stephen and Hayden, re post #14 and #11
I think one of the complications in comparing different contry’s goverments and economies is that there are so many factors that come into play. For instance, I believe (maybe incorrectly) that it’s a lot easier to get a small population (9 million) highly homogeneous group of people (Swedes) to go along with something and have it be successful than to get a large group (310 million) group of widely diverse individuals (such as the US).
What might be worthwhile is to examine the countries where socialism appears to be working and see what’s unique about them (are they all relatively small? are they all homogeneous in language, culture, religion, etc.? how is their wealth generated?) relative to the U.S.
Also, it might be more instructive to say socialism does or doesn’t work by looking at the entire world, not just a few countries. For instance, rank countries and see how many countries where capitalism is king and countries where socialism is king and see how they compare on an economic level (at a minimum). I’ve seen this done on a web site somewhere, I’ll try to dig up the link. If I recall, Sweden was #1 or #2 over the U.S., but when you look at the big picture (comparing all 200 countries, or however many they compared) how did the socialistic countries fare compared to capitalistic?
I just found the link (http://www.newsweek.com/2010/08/15/interactive-infographic-of-the-worlds-best-countries.html). A caveat on data used to create such cool web sites is that reliable is the data? The U.S.’s own data on debt, inflation and unemployment are really tainted by the gate keepers in DC and Fed Reserve to the point of being criminal. I have also heard (while I can’t substaintiate the claims) that other countries use different standards when counting things such as infant mortality (i.e. a child has to survive for so many hours or days outside the womb before it’s counted as a birth….if it dies prior to that it’s not counted as a death, if it dies after it is counted as an infant death); and also educational statistics (for testing purposes the US I believe tests all students in school, for a particular grade level and that gets compared to other countries who only test college bound students thus skewing the results).
One thing that I find interesting is that despite the view that the US is a capitalistic economy, I think it’s sufficiently interfered with by the government, especially at the federal level to the point that the US is hindered from reaching it’s true potential (i.e. if the feds were to get out of our pockets, out of labor markets, and got out of education then unemployment and poverty (or economic inequality) would shrink to almost trivial levels.
John — You said in post no. 16, ” if the feds were to get out of our pockets, out of labor markets, and got out of education then unemployment and poverty (or economic inequality) would shrink to almost trivial levels.”
With all due respect, I would suggest you go to the library and read a few books by Dickens, Steinbeck and Upton Sinclair to see how folks lived under your “utopia” of laissez-faire worked out for the masses. However, you are probably correct in your assertion that if the government got out of our pockets (i.e., no progressive tax system), labor markets (i.e., no child labor laws, no collective bargaining, no minimu wage, no overtime), and eduction (i.e., no free public schools or state universities), then unemployment would drop. Mainly because we’d have hoards of starving, uneducated, destitute people with no hope for the future willing to work for a couple of dollars a day just to put food in their mouths until they drop dead. Wow. What a pretty sight! It’s a sight I’ve seen often in third world countries where your preferred system of economics thrive.
Guys, as I said earlier, it’s all a matter of degrees. Nobody is claiming that Cuba or North Korea are thriving socialist paradises. (OK, maybe some complete nutcases are, but certainly not your mainstream “progressive” politician. And a book from a few years back called, “Heaven on Earth: The Rise and Fall of Socialism” did a pretty good job detailing the dismal history of attempts at “pure” socialism. But Western Europe, Canada, and even the United States has shown that capitalism combined with social safety nets and a progresive tax system can thrive and prosper better than any other economic system thats ever been devised.
Re: 15
Yes, but we are stuck with anti-liberty ultraliberalism for a long time to come. So, the welfare state will have to be incorporated (total revenue / welfare neutral-wise) initially in any income tax replacement tax plan.
Ultraliberalism / redistributive Marxism, will not give up the progressive income tax easily.
The progressive income tax is the mainstay, the underpinning, the bulwark, the life-blood of redistributive ultraliberalism. Only without it can we recover some semblance of liberty.
Thanks, Phelbers
Hayden
I’ve read all those books. No one is suggesting ‘no child labor laws’ or no overtime.
But collective bargaining and minimum wage limit employment. Workers have the unalienable right to not work for corrupt, slave labor businesses. Unfortunately, ultraliberalism believes that jobs are an inalienable right, and that all businesses are evil money-grubbing scoundrels that are required to supply them at unsustainable wage levels, or lose money.
I remember the manager of the Indian Raleigh Bicycle plant in 1970 telling me that 100,000 penniless unemployed lined up for weeks in monsoon weather to apply for 200 jobs – at $0.10 per hour, all begging to be what ultraliberalism calls ‘exploited’.
Another ultraliberal quip is ‘living wage’, and ‘working poor’ – never defined except possibly by an arbitrary ‘poverty’ level. Poverty here is royalty anywhere in the third world. Americans do not know what true abject poverty is.
The minimum wage, collective bargaining, overtime, workman’s comp, unemployment comp, and benefits have driven American companies out of the US, aided, abetted, encouraged and financed by our corrupt government, to have free access to the US market with the same products they formerly made here, without paying any of these restrictive ultraliberalism penalties.
At the very least we need laws that require any product with any American direct or indirect ownership or interest to pay the same wage taxes, and benefits as if the product was made here. But, Congressional lobbyist bribes (campaign contributions) bought about the demise of American manufacturing by not requiring such penalties.
Also, ultraliberalism encourages illegal immigration by promising amnesty and not enforcing the border. Both the Democrat and Republican parties desire illegal immigrants, except that the Republicans (some of them at least), have to pretend not to.
Our system, as well as those mentioned, are bankrupt, with unpayable ever-expanding debt.
Cuba and North Korea are mentioned only because they represent the ideal Marxist state, and the inevitable end result of Marxism. All the European suicide rates are higher than here with only the former Soviet states higher (looked it up today on the WHO site). We’re gaining here too.
The Irish are fleeing their bankrupt, welfare-trimming homeland at a rate only exceeded by the Irish potato famine. Unfortunately, there is no longer any place to go to escape ultraliberalism, or to find an ultraliberal state that works.
Thanks, Phelbers
Phelbers, I agree with almost everything you said, ecept that it appears incongruent (an incorrect) that govt should set minimum wages.
Education benefits most all citizens (fewere poor, more taxpayers, better citizens). Should we pay for College and beyond? The Constitution gioves the FEDERAL govt NO ROLE in education – it needs to get out!
Hayden, I agree that govt has a role e.g., in setting child labor laws, but that role must be very limited. The govt has extended its interstate commerce authority to the point that it is suffocating our industries.
Phelbers — Even though we disagree, I have to say I enjoy reading your polite, thoughtful posts. (Although I would still take exception to your claim that mildly progressive policies are the product of “untraliberal marxists.”)
You point about the Irish fleeing their homeland cracks me up. It wasn’t too long ago that the right in this country were holding up Ireland as the model for America to follow. Boortz and other right-wing radio hosts were trumpeting its lower corporate tax rates as proof that lower tax rates leads to economic nirvana. And now that their economy is brought down by the same forces of boom and bust in the real estate and lending markets that hurt our economy, the rightwingers no longer hold it up as a model to emulate.
By the way, I think the suicide rate in Scandinavia has more to do with six months of dismal winter than “socialist” economic policies. I think Portland, Oregon and Seattle, Washington, which have long rainy seasons, also have pretty high suicide rates (but I could be wrong.)
Anyway, I actually agree with you and Stephen that the minimum wage does more harm than good, as does rent control, although our current minimum wage is already set so low that I doubt it really causes much harm. I’ve got a small business in a depressed area of Alabama, and I sure wouldn’t pay anyone $7.25 an hour and expect any real work from them.
I
Hayden
I wouldn’t say that our tax policies are in any way only mildly progressive. But we’d first have to agree upon just what ‘mildly’ means before we could have a meaningful dialog about it.
It’s very rare indeed to have a ‘progressive’ (is that a more comfortable term for liberal, Marxist, ‘third way’ or ‘moderate’?) actually engage in any response to a radical, right-wing, ultraconservative constitutionalist textualist. We’re usually dismissed as ignorant buffoons – the politeness is very much from your end – thanks.
Ireland did not collapse because of the housing crisis, that was merely the accelerant, the catalyst – it collapsed under the strain of it’s ultraliberalist dole state. And the housing collapse is the direct product of Congressionally (Dodd – Frank) mandated (and Fannie/Ginnie Mae government backed) loan-to-unqualified-borrowers ultraliberal no-collateral loan policies. There were corrupt mortgagers, for sure, but without the Dodd-Frank policy of government backing and loan-or-be-sued mandate, even these crooks would not have made the sub-prime loans.
Any economic downturn would have deep-sixed the Irish – or Greek – or Spanish – or Portuguese – economy. They were all heavily mortgaged themselves by their ultraliberal policies of the dole state before the crisis.
Personally, I never held Ireland up as a nirvana – it was always a dole state to me, and – if you had ever been there as I was – a moribund, dreary, dismal welfare state even with its scenic, verdant, breathtaking vistas. And I am probably as offended by Boortz as you, although he does from time to time make some rational and entertaining statements (aside form HR 25 comments).
I haven’t looked at the Pacific Northwest suicide rates – but my daughter lives there, and is very happy. I visit once a year to experience and interact with the most ultra ultraliberalism. But, a conversation such as this is not possible. Any hint that you are less than a Kool-Aid consuming progressive, and you might as well be speaking Klingon. And it rains as much or more in Ireland. I was there in June, and the highest temp was 50° F.
The minimum wage is way too high, except for the fact that it gives the ultraliberal government more payroll tax (the real reason for the minimum wage). And, I bet I could find at least 3 billion third-world workers (if the government would let them come) for you that would die to get $7.25 an hour, and do an outstanding job.
As a businessman, nothing is stopping you from paying a ‘living’ wage. You are not forbidden to pay 28°° per hour, or 37°° per hour. Why don’t you? I bet you’d get some willing workers at those rates . . . maybe some union folks?
And, lastly, rent control is no different than the minimum wage – it’s government ultraliberalism meddling in private business and free enterprise. Also, when welfare/unemployment/SSI pays 7.50 per hour without taxes, why work for 7.25?
Thanks, Phelbers
Free market capitalism does not insure a smooth and problem-free ride. There will be periods of boom and bust/bankruptcies and there will be market manipulations and fraud. These events do not prove that capitalism is evil or unworkable.
The problems arise most from govt intervention. For example, the Progressive feel good project to put poor people in houses has led us to a terrible financial crisis (albeit later exacerbated by runaway Wall Street greed and investor ignorance).
I submit that govt intervention to “save us” (e.g. regulating industries to “protect the public”) have done more harm than good. Instead, we would be better served with private sector litigation and insurance as part of a program of self regulation by professional private sector people who are at risk for failure.
The FF were wise enough to dirtect that the federal govt is supposed to do little more than the military. Progresivism simply can not tolerate that wisdom – it must interefere in our lives, in the name of “social justice”.
Phelbers, I agree. Most Progressives not only seem unable to grasp this simple truth, but they look upon Constitutional Conservatives as aliens.
Hayden
It may be a case of the chicken or the egg.
It might be that the majority of the world’s influential political classes are highly depressed, and inflicted ‘progressiveness’ upon the productive classes as a way to make themselves feel as though they have done something good through the income tax and Marxism (or its equivalent by any other name).
That is, depression (and so now with the ubiquitous use of SSRIs, suicide) may be the cause, not the symptom of ultraliberalism.
Or, maybe the progressives desire, subconsciously perhaps, to make the rest of us as miserable as they are with their repressive taxation and redistribution scheme. If so, they have made great strides in that direction.
Thanks, Phelbers
Why do progressives believe that we must be deprived of our freedom and FORCED to support (OR CARRY) a group of people (no Pastor would ever FORCE a parishioner – except Jim Wallis, Obama’s new spiritual advisor)?
Do progressives fail to understand that once we tell that group “you are not responsible, and we will take care of you”, a light goes off in their heads and they lose the spark necessary to provide for themselves?.
Do progressives fail to understand that that also sets in motion, the crazed blood lust of pandering politicians to use “social justice” to buy the votes of the poor?
Why can’t progressives accept providing all the “social justice” they desire as PRIVATE CITIZENS, execrising their personal freedom (protected by the Constitution)? Why must they FORCE us?
Federalist Paper 21 – Hamilton
A good summary of the evils of direct taxation (land, buildings, head/capitation/individual wealth), and the benefits of indirect taxation is in the later paragraphs of Federalist Paper 21. It should be noted that an income tax was not envisioned by the FFs, but it is a direct tax on everything a person can ever hope to have, and includes all those items.
After citing many historical failures, miseries, and inadequacies of direct taxation, Alexander Hamilton said this in favor of indirect taxes:
“There is no method of steering clear of this inconvenience, [direct taxation] but by authorizing the national government to raise its own revenues in its own way. Imposts, excises, and, in general, all duties upon articles of consumption, 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 at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. If inequalities should arise in some States from duties on particular objects, these will, in all probability, be counterbalanced by proportional inequalities in other States, from the duties on other objects. In the course of time and things, an equilibrium, as far as it is attainable in so complicated a subject, will be established everywhere. Or, if inequalities should still exist, they would neither be so great in their degree, so uniform in their operation, nor so odious in their appearance, as those which would necessarily spring from quotas, upon any scale that can possibly be devised.
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 cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. When applied to this object, the saying is as just as it is witty, that, “in political arithmetic, two and two do not always make four.” If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.”
I agree. (I wish there was a way to italicize or embolden type for emphasis of key text).
We need a NRST, selectively prebated where feasible, imposed upon the seller, distributor, or wholesaler (not directly upon the buyer a la HR 25) as a uniform excise, at a known and visible rate and amount, without multiple, cascading, embedded or hidden amounts, or amounts upon other entities (state and local governments) that will be simply passed on.
Thanks, Phelbers
Hayden re: post #17
I am not sure I believe a completely capitalistic society is the best as I do not know if it is even possible for one to exist without some elements of socialism in it. Nor do I believe the Federal government should have no place other than national security. I apologize for painting with a broad brush in my previous post. I did not want to fully explain the details as it would/could get lengthy and I am not a skilled enough writer nor have the time to condense the information effectively without loss of clarity.
I am curious; can you give examples of third World countries where capitalism is thriving?
I’ll address the cases mentioned (picking our pockets education, labor,) one at a time.
Picking our pockets – was meant to be less of a poke at progressive taxation and more about how the Federal government is reaching into citizen’s pockets to do whatever they want (constitutional or not) and what they can’t get away with by financing through direct taxation (not in the strict terms being bantered about by Phelbers and Stephen, but in contrast with taxation via inflation) they borrow and tax us via inflation. I certainly don’t see a need for the general citizens to fund bailouts of institutions (financial, auto, unions, etc.) who made promises they were not able to live up to. Regarding the progressive/regressive taxation issue I do not see a way for a taxation system to be neither regressive nor progressive (i.e. just right). I am more in favor of a tax that would be considered more regressive or at least less progressive. I see how regressive taxation is argued to be a bad thing. Likewise, I see how progressive taxation can also be a bad thing. I do not claim to know which is more bad or more good. I am not in favor of what Stephen is proposing (i.e. everyone paying the same amount), but I think when close to 50% of workers are not paying income tax the system is may be too progressive.
Education – While I do not like the idea of public education, I take a position similar to Milton Friedman regarding primary education. It’s in society’s best interest to have an educated population and the mechanism to fairly distribute the burden is sufficiently difficult, thus publicly funded education may be the best we can hope for. Friedman also advocated vouchers so that education could be publically funded, but operate in more of a free market fashion. I also think the Federal government should get out of the picture. Over the past 30-40 years Federal spending on education has increased tremendously with essentially nothing to show for it. The only thing I might support would be some guidelines as to what standards the states should be targeting (what’s expected of a 4th grader, 8th grader, high school graduate). I am not opposed to state governments or local governments being more involved in educational matters.
Labor – while I truly dislike labor unions, I am of the opinion people have a right to form unions. I think the original need or benefit of labor unions have outlived their usefulness. I think they should be treated much like monopolies in situations where they monopolize the labor force. Again, I do think the Federal government does indeed have a roll, but not to the extent they have now. I don’t think the government should setting upper or lower limits on wages. I don’t see why collective bargaining would disappear. Trade unions could still negotiate with employers. The roll of the government would be to enforce contractual agreements between the relevant parties. It seems to me that both unions and corporations are sufficiently guilty of abuse. I do not deny that over the years there have been some positive results of the Federal government intruding. In the case of child labor laws, I don’t see federal involvement as being undesired from a libertarian stance. The government is protecting a citizen who cannot speak for himself (or herself). The child (unlike an adult) is not necessarily in a position to adequately make decisions for himself (or herself). Their normal chain of command (through the parent) may be compromised by the fact that their parent may be the involved in over working (to the point of abuse in some cases) the child.
John (28)
I know you were addressing Hayden, but there’s one good point you make that I’d like to comment on if it’s OK: picking our pockets.
The hidden ramping rates of progressiveness in our income tax code, and what allowed top base and marginal rates to fall to ~35 – 40% from 94% has indeed been inflation of the money supply and resulting wage and price increases. These inflationary rises result in ‘bracket creep’ which eventually will move everyone into the top brackets, and take an ever-increasing percentage of our money receipts, productivity, and GDP. And QE II will accelerate bracket creep.
The gift tax serves as an example. The 10,000°° limit has not changed in my memory. Yet, inflation has resulted in at least a ten-fold increase in average salaries over that same period. The gift tax should in fairness be 100,000°° using this comparison.
Another is the AMT, which severely harms now modest incomes through bracket creep, where just recently it affected only the most wealthy.
Government controlled inflation and resulting price rises and bracket-creep is the secret, silent, deadly weapon of an ultrtaliberal ‘progressive’ government.
Thanks, Phelbers
Phelbers re: post #29
Certainly, feel free to chime in. I had not read your response (#20) to Hayden regarding minimum wage, child labor, and trade unions when I wrote and submitted my reply to him. Very well stated.
Regarding the bracket creep – Thank you for pointing it out. I wasn’t really even considering the increased taxes paid due to bracket creep caused by inflation, but was thinking along the lines of reduction in purchasing power due to inflation. For instance, if I purchase an asset at $100,000 and sell it later for $200,000 but inflation over that time eroded the value of the $ by 50% (meaning I essentially just have the same amount of real money as before). So the government sees a $100,000 gain which I then get taxed at a capital gains tax of 15% ($15,000). So now I have only $185,000 (nominal dollars). While it appears my after tax rate of return on that investment should be 85% ($185,000/$200,000), it is really more like a negateive 7.5%. How is that so? Well in real terms the $15,000 paid in taxes are equivalent to pre-inflation value of $7,500 so my after-tax real cash would be $92,500 ($100,000-$7,500). And the after-tax return in real dollars would be a NEGATIVE $7,500 ($92,500-$100,000 or my after-tax cash minus the initial investment). Divide that by the initial investment ($100,000) and you get a NEGATIVE 7.5% real rate of return. While I might have more nominal dollars in my hand, what I am able to purchase with them is certainly different story. If I haven’t expressed that well then maybe this table makes it easier to see.
Nominal $ Real $
Purchase Price $100,000 $100,000
Sales Price $200,000 $100,000
Pre-tax cash gain $100,000 $0
Taxes -$15,000 -$7,500
After-Tax Cash $185,000 $92,500
After-Tax Return $85,000 -$7,500
After-Tax Return (%) 85% -7.5%
actually, the table doesn’t look as good as it did in my window before I submitted it.
Hi John
Yes, you are right, and your table is clear. There is a double whammy inflicted upon us all through the government’s unconstitutional printing of ‘money’. In essence, a double theft, both at the heart of and essential to advancing liberalism.
The Framers were very acutely aware of the knavery of printing paper money, and DID NOT GRANT THE POWER to Congress. But an ignorant populous – kept that way through ultraliberal teacher’s unions policies of assuring an ignorant falsely educated youth – simply does not understand the basic fundamentals of money. “The power to coin money, and regulate the value . . . ” Coining is the physical stamping of metal into disks with embossings denoting value, and in no way includes ‘printing’. The Constitution has never been amended to allow printing of money – printing is simply lawless usurpation big time.
The Framers knew what printing was. Remember, Ben Franklin was a printer by profession, and if you read Madison’s notes on the Constitutional Convention, you’d be stunned at how strongly printed money was rejected and struck forever (what a sad joke) form the power of Congress. “The people would rather accept the Mark of the Beast than take paper money”, and similar statements were made.
The original money clause was “congress shall have the power to coin money AND EMIT BILLS, and regulate . . .” but was rejected 10 to 2 by the states.
We’ve been fleeced big time by a nakedly criminal government. But, we are so cowardly, so meek, that we are scared to death to hold government accountable on the real issues.
Thanks, Phelbers
Okay, I hope this displays a little better.
Nominal $’s_______Real $’s
$100,000_______$100,000___Purchase Price
$200,000_______$100,000___Sales Price
$100,000____________$0____Pre-tax cash gain
-$15,000_________-$7,500___Taxes
$185,000________$92,500____After-Tax Cash
_$85,000________-$7,500____After-Tax Return
____85%__________-7.5%___After-Tax Return (%)
Phelbers,
Well said. It’s amazing how wise and insightful the Founding Fathers were.
To: Phelbers et al re: post # 27
I really do respect old Al, but I do not agree with his well written point.
Suppose you condo started to use that system. It just is not appropriate. I would have offered AL our cost sharing (rather than tax) concept. I wonder what he would have thought?
To John Bailey re post # 28
brief comments:
1) Why should we be focusing on the ECONOMIC IMPACT of allocating each one’s fair share of our common costs, when the only relevant consideration is determing each one’s fair share, as properly determined by that person’s relative impact on the total cost, and nothing else?
2) Education – Have we not yet learned that the federal govt getting deeply involved in mamaging ANYTHING is a DISASTER?
3) Labor – Why do we permit unions of government workers? Why do we not demaqnd that such unions stay out of politics (as we do with churches, which can be denied their tax-exemption if ANY substantial part of their activities involve affecting elections.
To: Phelbers re post # 29
I think the Annual (per donee) Exclusion is now $12,000 or $12,500 – but don’t hold me to it.
Such Congresssional weapons have devolved to the devils in Congress who care not for what is right or fair, but simplyh what are weapons available to use against the enemy.
That’s one good reason to eliminate the currenet Internal Revenue Code for a fixed simple law that Congress can not manipulate at will.
To: John Bailey re post # 30
If you read my simplified Flat Income Tax proposal, inflation adjudstement such as you illustrate would be corrected.
Stephen:
Alexander Hamilton was expressing the agreed position and philosophy on taxation of all the Framers in FP 21, not just tis own whims.
They were all students, of world history and contemporary governments, taxation, and the failures of direct taxation, and having learned well, were very knowing it would result in what we now have. There was no question at all of the undesirability of direct taxation, and it was only allowed with apportionment as a last resort to fund wars.
They similarly rejected direct head, or capitation taxes, and TWICE – the only item so doubly emphasized in the entire Constitution – without apportionment.
Alexander Hamilton and all the Framers would have rejected your plan, no question about it.
But on the other hand, I guess we should reject those old geezers and the constitutional safeguards against ultraliberalism our criminal government now disregards – what did they know? We know better!
Thanks, Phelbers
Stephen re post #36
1) Why should we be focusing on the ECONOMIC IMPACT of allocating each one’s fair share of our common costs? I don’t think it’s an either or situation. The goverment, like everyone else, should have to live withing certain financial constraints (with the possible exception of war – especially when that war is directly related to the security of the homeland). To live within those constaints one of the decisions should be ECONOMIC IMPACT of their decisions.
2) Education – some of us may have learned….but not enough of us.
3) Labor – I can’t answer the why……all I can say is that I don’t think unions of goverment workers is a good idea. As far as unions staying out of politics…well if I’m not mistaken churchs stay out to maintain tax-exempt status, as you mentioned…..but I don’t think unions have tax-exempt status, do they? In my opinion, I think we (USA as a whole) have taken ‘free speech’ too far. I don’t see why corporations or unions ought to be protected by freedom of speech. They are not allowed to vote, so none should be allowed to contribute financially to politicians in anyway. Only individuals ought to be allowed to participate in the political process. If unions and corporations want something from politicians then they can send a letter and/or request a meeting…that’s it!!!!! Those organizations can work within themselves to convince their members or employees to vote for a particular candidate that supports their efforts. But that’s just my opinion.
Stephen #38
Cool.
To: phelbers re: post # 39
While overall, I have great respect for the FF, I reserve the right to examine and challenge any single thought.
I guess I will have to read further through the material you claim so as to not only verify what you say are the facts but also to try to u8nderstand their reasoning.
I rer-read your post on AH’s FP # 21 and find some opinion, but not rationale.
He says that the tax burden will be fluid and will find a level at which people can afford them. What I have great trouble with is, what is the relevant relationship of one’s beinbg able to “afford” an expense with the fact that our society provids that critical service and everyone bears a fair share of that cost. If you can not afford to eat at a given restaurant – just don’t go there. You are not entitlted to dine there and force someone else to pay your bill. Again, look to the example of your condo.
Freedom means that everyone pays his fair share OF THE COST and then works as hard as he choses to be able to earn what he desires to enjoy.
There is no underlying rationale expressed in your quote, butmerely a feeling that consumption taxes seem to work. That is not good enough for me.
To: John Bailey re post # 40
1) Yes, in the bigger picture govt must consider the ecdonomic consequences of it spending. I was addredssing the more limited issue. Once Congress establishes a proper an limited budget – let’s say a proper but efficient and effective military, the task of ALLOCATING that cost to individuals should NOT be based upon the economic impact to that individual, but on that citzen’s relative impact on the total cost, determined in the most financially intelligent allocation method. To allocate based upon “affordability” introduces social/political engineering and policymaking that is distinct from the underlying finance/science.
One you do that (and give that power to pandering politicians), you begin the road to Hell.
2) It amazes me that people (Congress) fail to comprehend the disaster that govt involvment brings.
3) Unions- Yes, unios are exempt from paying income tax (but unlike the church, one can not claim a charitable contribution tax deduction for contributions to a union). While I belive in free speech, I feel that union managements abuse their powers and abuse their members’ contributions. Union MEMBERS need protective legislation from their unions – I think some is now beginning.
To; John Bailey re Taxing Inflarion
Just think of how much the tax system’s taxing of inflation penalizes your pension savings – I propose to remedy that as well.
Stephen, 42
The analysis presented about excise taxation is the collective knowledge and wisdom of the Framers after careful study and experience, some directly from them being overseas.
You are free to reject their wisdom in what they knew to be a liberty-based free system of competition and free enterprise. A direct unapportioned head tax is the antithesis of what this country is (or was) all about.
What Hamilton is saying in the quote is that people will buy what they can, and pay tax at the level they are able – not at an arbitrarily established, unpayable, destructive, inescapable rate. Nothing in FP 21 suggests that there is a free lunch.
This is my final entry on the subject. I agree with the wisdom of the Framers on taxation- you do not.
Thanks, Phelbers
To: Phelbers re: post # 45
While I apparently do not agree with the FF, I am sure I will find your representation of their views accurate uponreading more on the subject starting with FP # 21. I appreciate reading the material you presented and will explore the FF’s writings on the subject, as well as some case law.
At this point I still have great difficulty accepting that a person has the right to force someone else to pay for his fair share of our common costs. That share is not arbitrarily established – there is no other fair cost accounting technique to apportion the cost of the military other than pro-rata to every American. If you can’t pay it – don’t incur it. If you find it destructive to you, don’t incur it. If you must escape the un-escapable, don’t incur it. If you can’t handle the co-op maintenence fees, don’t join the co-op.
I will seek out a substantive rationale within the writings I can find this subject (and would like to keep in touch with you in that research). There must be some deeper justification for ensalving one man to pay the bills pof another. If 60% of the US population dedcides it wants to live off the dole – it will merely vote the wealth of the minority to themselves.
Not that this is justification, but other basic concepts of the FF has been changed for, IMHO, lesser reasons than I submit. The vote was given to everyone – very dangerous from the perspective of giving the mob the ability to mug the minority. The Senate was changed to be elected by popular vote – I belive this to be harmful. The military was changed to a standing army – circumstances commpelled this necessary change.
The 16th Amendment, was a class warfare disgrace. A change of philosophy to allow a head tax, i submit would be a beneficial change.
We could, under your plan, do as the French did during the Revolution.
It was outlawed to use ‘argent’ – silver – the French word for money.
To get their head tax, it was required to do all business with official registered French paper money, traceable to the spender, and thus guaranteeing the head tax.
The penalty for using silver money was death under the blade of the guillotine.
The way to not incur the capitation tax was DEcapitation. It worked very well in France – but there were so many beheadings that they could not make enough baskets fast enough to catch all the heads, and the blood coated the streets and clogged the gutters . . . .
That’s the only not to incur the head tax . . . .
Thanks, Phelbers
To: Pelbers re post # 47
That was very hunorous. A simple automatic debit to everyone’s checking account will do – even I woiuld not resort to beheading.
I respect what you have exlained, but I hear your and the FF’s OPINION or JUDGMENT, but not a substantive explanation in justification of why a head tax is inappropriate (in those cases where it would be the most precise, intuitively correct method of cost allocation).
I will do the research.
Any progressive method starts pandering politicians down the road to today’s abomination.
Stephen re post #46,
You state “If you can’t pay it – don’t incur it. If you find it destructive to you, don’t incur it. If you must escape the un-escapable, don’t incur it.”
The problem with that is regarding the military. How does a citizen who can’t pay it say, “Well, don’t bother protecting me this year, I lost my job and can’t afford my fair share”? And just as it’s not fair to the wealthy for the majority to vote themselves a piece of the wealthy’s earned property, it’s equally unfair for the majority above poverty to vote for the government to do more (requiring more funding) than the poor citizens can afford.
To: John Bailey re post 349
You raise good points which are nor answered simply.
Again, let’s start with my premise that the best financially intelligent method of allocating the cost of the military is equally to everyone. Now by affordability, I view that as a long-term issue. Over time, if you can’t afford to pay your fair share, you don’t belong here. And what about the cost of your food. clothing, shelter, medical, and all of life’s other necessities – if you can’t afford those (you find paying the cost of those items oppressive) are you now “entitled” to FORCE someone else pay for you?
I am glad that you accept that it is unfair (and a disastrous design of a form of govt) to allow the poor to vote themselves the wealth of the minority.
It would be unfair for the majority (I submit that the wealth are in the MINORITY) to spend more than the poor can afford. That implies, however, that the majority would vote to spend frivolously or on added govt services. I submit that most of the wealthy (with noted mental defects) would NOT look to the govt as a source of new and expensive programs, but hopefully share the Tea Party view of a very limited federal govt as envisioned by the Constitution. That mentality does not want to add to the govt nor pay one cent in taxes more than is absolutely necessary to get the job (the military) done properly.
To add: I will search for the substantive justification supporting dislike of the head tax, beyond the feelijng that it is ‘oppressive” and welcome any such explanations.
To:John Bailey – add to post # 50
Also, the poor (who would all pay their equal share) would properly vote down any unnecessary spending.
They would be part of the great majority while the wealth will always be the minority.
Stephen #50
I believe you are starting with a false premise, granted it’s a valid premise from your point of view. However, even starting with your premise, you then go on to say that in the long term if you can’t afford to pay your fair share then you don’t belong here. So are those who can’t afford their fair share suppose to relocate to another country? That’s not an inexpensive undertaking unless they happen to live near the border of the US and Mexico. My parents deal in quarters and dollars most of the time. I can’t imagine them purchasing $1000 to $1500 to fly to another country.
I did not say the wealthy would vote for increased government expenditures. I said the majority above poverty which includes the wealthy, but also the middle class. I am not saying the poor have a right to my wealth…but neither do I have the right to say our military needs to be $600B strong when a poor person is expected to have the same financial burden to support it.
It may be that we as a nation may have to say we do not have the means to defend ourselves against a more powerful country given that the military budget is only large enough (due to the financial limitations of the poorest citizen) to use muskets against our enemy’s tanks. If we unduely burden the poor, we then kick them out of the country? I think not. So what’s left? I imagine there are enough patriotic citizens left who will say, to hell with equal financial burden, let’s build some tanks and let the financial burden be heavier on those with more wealth. I submit that it will be the wealthy standing up and saying it as they have more to lose than the poor. Yes I understand your argument that life is more valuable than property and they all can loose their life. But many times in war the soldiers are killed, not so much the general population. In WWII many civilians of Italy, Germany and Japan died, but when the war was over, the Allied forces did not march through the town killing the locals. So non-military citizens of this country may be at risk of loss of life, but it’s more likely they will loose their livelihood and wealth (if they have any).
I haven’t really kept up with this learned discourse, but it seems to me that there is an obvious solution to the issue of the poor being unable to afford our national defense under Stephens concept. If a person can’t pay the tab, put them in the military! Problem solved!
The Framers knew better than any group in history (including even Stephen and the rest us in this discussion) what taxation schemes would work harmoniously within a society for it to flourish, thrive, and survive. They studied them extensively, often observing first hand what failed or succeeded. I’d bet dollars to doughnuts that few or none in the FairTax or ant-FairTax, Pro-HR 25 or anti-HR 25, pro income tax or anti-income tax factions have even given a single thought to their careful discourses.
True, they are written in an older, long-sentence style, and with vocabulary not taught in our progressive, liberal, union-controlled schools and colleges, and require some reference to the dictionary. But, once so read, they cannot are to this day unequalled as to their depth, completeness, and wise rationale (except maybe for Stephen).
Probably 1/3 – or more – of the Federalist Papers deal directly on taxation. Remember that the Articles of Confederation failed from want of enforceable tax requisition powers.
In Federalist 36, concerning what the Framers knew from experience to be the most oppressive poll tax, (or Stephen head tax by another name) they wrote:
. . . a fixed point of policy in the national administration[of taxation, a Phelbers insert for clarification]
to go as far AS MAY BE PRACTICABLE in making the luxury of the rich tributary to the public treasury, IN ORDER TO DIMINISH the necessity of THOSE IMPOSITIONS [ poll, head, capitation - they used the terms interchangeably] WHICH MIGHT CREATE DISSATISFACTION IN THE POORER AND MOST NUMEROUS CLASSES of the society. Happy it is when the interest which the government has in the preservation of its own power, coincides with a PROPER DISTRIBUTION OF THE PUBLIC BURDEN, and tends to guard the least wealthy part of the community from oppression! [Here they were referring to the beneficial effects of indirect taxes where heavier burdens fall upon the heaviest spenders - the wealthier - without swarms of harassing officers enforcing payment at gunpoint, seizing homes and property and bank accounts or jailing or deporting those unable to pay].
As to poll [poll, capitation, or head - they used these words interchangeably] taxes, I, WITHOUT SCRUPLE, CONFESS MY DISAPPROBATION [strong moral disapproval, Phelbers insert] of them; and though they have prevailed from an early period in those States [the New England States] which have uniformly been the most tenacious of their rights, I SHOULD LAMENT TO SEE THEM INTRODUCED INTO PRACTICE UNDER THE NATIONAL GOVERNMENT. [Capitalization by Phelbers for emphasis]
They then go on to reassert that they are only retained as a power in the Constitution, IF APPORTIONED, as a final desperate resort in time of all out war to, as a last ditch effort, save the US from being overthrown.
Yet, we, or most of the participants in the discussions here, summarily disregard the Framers on taxation who gave us a thriving, debt-free country for 150 years. A country that once won its wars, and increased the standard of living by many orders of magnitude for not just the USA, but for the entire world. Since the introduction of income taxes unlawfully on wages, rather than the gains derived from them (excluding the 1943 ‘Victory withholding tax) we have lost our wars, and become the largest debtor nation.
Thanks, Phelbers
And Merry Christmas to all. . . Phelbers
To John Bailey re post # 52
Whether or noit it is cheap to move to Mexico (BTW, it must be very cheap because so many American retirees are moving there) is not the issue. If you can’t afford to pay your share of the military long-term, you can not afford to live in America (just like the fact that all those Americans are now retiring to Mexico and elsewhere because their total living cots in America are too much for them to afford). We might consider an alternate plan by which people are required to pay their fair share of the costs , but only between the ages of 25 and 65.
It would be expected that the majority would vote to spend as much (little) as was necessary to get the job done. That by definition is the proper total budget. Everyone is obligated to pay their fair share of that.
While our front line soldiers risk their lives, they are defending the lives of those of us back home (they protect us from invasion and death).
To: HVG re p[ost # 53
All non-payers AND all Progressives get sent to the front lines.
TO: Phelbers re post #54
I truly enjoy reading your posts – I admire your research and your ability to express yourself so well.
I will catch up and read first the several FP’s on taxation (I became aware of their existence while looking for the illustration of the limits on govt spending that I found from AL H.), but have not read them, yet.
I view your quote as saying that people seemed less upset with indirect taxes (but the poor would naturally be UNHAPPY at having to pay a higher burden) – but happiness does not address the underlying cost accounting issue of a correct allocaction of the cost.
That word “oppression” is used without explaining how the rich are “oppressing” the poor (I assume he meant that the burden is oppressive, but not the rich people, per se).
The quotes mention “heavy burdens on the poor”. Well, the burden is there in the cost of the military. Everyone has to pay their fare share of that common burden. The rich man is not burdening the poor man – it is the necessary cost of the military that is placing the burden on people who are being EQUALLY protected.
I wish all of you a happy and healthy holiday season and New Year.
TO: ALL
I have posted my “editorial” on the ROADMAP discussion.
Stephen re: #56
I submit that the term cheap is a relative one which is why I chose to relate the affordability to the proximity of the border. My folks live in FL, they have little in the way of assets to sell and put toward a drive to a desirable place in Mexico and certainly are not able to afford to fly there and have enough to live off of. I do not claim that living in Mexico may be more affordable for some individuals, but I think the ones relocating there have looked far enough into the future and have enough future left (as in they expect to be alive more than 5 or 10 more years) and have enough assets that they anticipate it will last them long enough. There are many who are in a position to do so and where it would be financially impossible (or near to it)….just as impossible as paying thousands of dollars a year for their “fair share” as you call it.
I am not against making the poor uncomfortable in their poverty. It irks me to see people pushing for the government to help the poor while so many of the poor are talking on cell phones, watching 52″ screen TVs, driving a car, etc. But I also see your approach as an impossibility to implement regardless of how fair you are anyone else thinks it might be.
The sentence above reminds me of something that happened about 12 years ago. I was single (divorced a year or two) living in a large house with my two dogs and cat. I was working a lot and traveling quite often for my job. I found myself sufficiently well off financially (not wealthy, but finally having some excess cash) and with very little free time that I hired a lawn service to do my lawn and eventually hired a maid to clean my house once every two weeks. She was a nice single lady in her late 20′s with a young daughter. She did a good job and was affordable, though not always on time. She drove an older SUV (maybe a bronco or something) and it was not too reliable. As Christmas time came around, we were talking and she was telling me how her car was acting up and needed some work, but she wouldn’t be able to get it looked at for a few months because of Christmas. I asked why and it boiled down to she was spending $500 on Christmas presents for friends and family. I was shocked!!! If I depended on my car for my income, it would come well before presents. Not that I wouldn’t get presents for my family and maybe even my friends….but they would be small, very small. She was spending $200 on her daughter alone. So she was poor, but taking the money she earned and putting into something that will not help her get out of poverty….but help keep her in poverty. I tried as diplomatically and non-judgmentally as I could to explain that to her…..to no avail.
TO; John Bailey re: post # 60
Your poiunts are very well taken.
That maid was able to make those poor choices BECAUSE
To: John Bailey re post # 61
I hit the wrong button.
She could make those bad choices BECAUSE America’s blessed Progressives ENABLED her to do so. I too see many examples of the poor spending on things that are not necessities and they would be better off if they saved their money (or spent it on getting educated).
I cringe when I have to say “the poor should be made unconfortable in their poverty”, but I must be strong and disciplined because it is ONLY the fact of true need (I personally remember being LITERALLY hungry and terribly embarrassed at my poverty) that will drive/impel the poor out of their poverty and thus fee and benefit them in the end.
Clearly there would be practical problems implementing my ideal circumstance (it would be somewhat easier to install my system from the start of the nation). However, I do believe that in order for this Republic to survive (and it may not survive its current crisis), we must understand the ideal and work efficiently and expeditiously towards that ideal, with the greatest of compassion and seek to ease the anguish and distress of what will be a difficult transition. If we fail to make significant course corrections (hopefully, towards the Constitution), our Republic will come crashing down.
This post is merging into the post on the ROADMAP.
Can compassionate Progressives not see that (when viewed in the most favorable, charitable light), the CRA (for just one example) was intended to help poor people achieve home ownership, but as usual, politics + govt mismangement + the law of unintended consequences combined to bring America to the brink of disaster – from which we may not recover.
It is often not easy to maintain one’s principles, but it surely is critical to America’s survival.
John — Re post # 60.
As one who’s spent years in Mexico and Central America, and has a Thai wife, I can attest that tens of thousands of Americans retire in other countries where the weather is nicer and the cost of living is so much cheaper. If we ever implemented the FairTax (which, after all, would only tax goods and services purchased in the US), I have little doubt that you would see that number multiply by ten-fold, at least.
I agree with your general point that many folks living in poverty in this country are there because of their own bad decision (that they continue to make over and over). I would also agree that private charity, rather than government programs, is far, far more effective in dealing with those folks who truly suffered misfortunes through no fault of their own.
Several years ago I repreented a homeless mother trying to get housing, and the beaurocractic hoops she had to jump through were unbelievable, yet those who knew how to game the system were able to sail right through. This particular woman ended up being saved by a private charity that made her work for her room and board, get training for a job, and made it clear that the help would expire at the end of one year when she’d be on her own again. It was the classic “tough love” approach rather than nameless, faceless government handouts.
Having said that, I’ve seen plenty of hard working folks who did all the “right things” completely wiped out in today’s recession, and I know so many people living paycheck to paycheck who will be completely destitute in the event of an accident or illness. I think people are plenty uncomfortable as it is when they are poor. I’ve been poor (through my own bad decisions), and, like Stephen, that motivated me to start making the right decisions to make sure I’d never be in that situation again. But I also recognize that I had various advantages many other folks didn’t have (as did almost all other successful people I know) and that it is getting harder and harder to pull oneself out of poverty every year. If you’re the parent of a recent graduate, you know it’s a scary world for the children of the middle class these days who are starting out in life. It is absolutely miserable for those at the bottom.
I’m not saying government is the solution for all of their problems, but I definitely believe in a social safety net.
To: Hayden re post # 63
I agree with everything you said up to the very end. I think the private sector should provide that safety net, not the government. There is an overwhelming well of Judeo-Christian charity in this country that should be sufficient to handle the truly neediest Americans. My problem is that once you begin to hand that task over to pandering politicians, we are lost! Just look how far the Progressives have tried to extend that safety net – it is bankrupting the nation.
There is a thriving disability insurance market. Unemployment insurance can be privatized. Many of life’s problems can be aided with private sector insurance/safety net mechanisms and charity.
One interesting (I hope) not on Americans going to live outside the U.S. – I believe that Medicare does not cover services in foreign countries, except some limited emergency services. That alone could save Medicare.
The desire to replace the income tax is, I am convinced, not because it taxes at the wrong end of the money cycle, that is, receipt of money rather than the spending of it, but because it is a direct tax.
Direct taxation is the source of discontent.
A direct tax, regardless of how those who favor it choose to redefine it, is a tax directly upon a person by government. Such a tax CANNOT be avoided without loss of property (your home), or liberty (jail time).
Local county real estate taxes are direct taxes. You can have paid off your mortgage, and paid your real estate taxes for 40 years. But if you miss a tax payment, the county will descend upon you with all its officers and forces to evict you at gunpoint, put all your belongings out in the snow, and sell your house to the highest bidder (usually less than 75% of its value), and give you 24 hours to remove yourself and remaining property from the premises.
Such is the destructive nature of direct taxation. These taxes cannot be avoided.
So too is the destructive nature of the present income tax. Bank accounts are cleaned out by the tens of thousands every day by the IRS. Thousands have their wages garnished every day, or are forced to sell and leave their homes. Hundreds are fined or tried for tax evasion each year for merely making minor mistakes in the calculation of deductions.
We have seen strong support for taxes of this variety here on this discussion page. Stephen would have a capitation tax, where a single missed payment, for whatever cause, would have the person removed from the United States (I assume they would be simply dropped into the Atlantic or Pacific outside the territorial limit. What country would take them? Cuba? North Korea?) Hank van Gleason would have them put into the military (on the front lines, suggests Stephen). Would we want these people defending our country after it treated them that way? Hayden believes in the direct and progressive nature of them, although for the laudable but mistaken belief that it is the government that must enforce equality at any cost or by any means.
As for Stephen’s ‘Your Share tax’, let’s look at a case where the Smith family of 5 could only pay 4 of its 5 member’s 2000°° head taxes because the father got laid off, or there were medical expenses for the baby not covered by his discontinued health insurance. Who would be eliminated, deported, or put on the front lines? The father, who earns the most money for the family? The mother, who earns only enough for two capitations? One of the 6 year old twins? Or, the baby – to be sent to the front lines? Or maybe the IRS would first try to loot their bank accounts, or garnish their wages. Or would the IRS simply seize and sell their house, as do the county officials?
These are the facts and cruel history of direct taxation our Founders well knew. and which we ignore.
Woe be to the soul of the person favoring a direct tax. The evils of them outweigh any fairness, equality, or other benefit-at-first-glance that appeal to their proponents without knowledge of the destruction they wreak upon the people and societies that inflict them upon themselves.
So, too, would HR 25 be a DIRECT tax upon the buyer. A simple reading of the text of the bill shows that liability remains forever with the buyer – unless they can prove their innocence with a receipt.
A NRST, along the lines I have suggested, imposed as an excise, with the seller liable, would move the tax from the destructive direct class to the far less oppressive and infinitely less odious indirect class.
All, except the very poorest, would contribute to the general treasury under this plan for any expenditure other that the most basic survival needs which would be tax-free with a good for tax only prebate. NO armed tax officers – and not even the threat of such officers that instill such great fear as we now have at tax time – would haunt us.
We must eliminate any resort to direct taxation. Our Founders knew this, and made the extremely difficult apportionment requirement as a barrier to strongly discourage an evil armed tax police force form freely inflicting their destructive power upon a free people. Only an evil or ignorant Congress, state legislatures, and an ignorant public, allowed the removal of apportionment from the income tax.
Neither the direct HR 25, nor the direct Eldridge Head Tax will do good, but only greater harm. Only an indirect tax can improve the prospect for a return to a fiscally sound, free United States.
Thanks, Phelbers
To: phelbers re post # 65
I must tell you what a joy it is to read your writings (even though I do not agree with everything you say and even though you disgaree with my Head Tax).
What would your condo do if you failed to pay your maintenence?
BTW, I would send off the child with the lowest grades in school (just kidding).
TO: PHELBERS RE POST # 65
Ultimately, the burden of any tax comes down on all of us. We pay it either involuntarily (Income Tax Withholding) or voluntarily (sales taxes), but it is a tax on us.
One could say that people are compelled to pay a NRST because they must feed, clothe, house and “medicate” themselves (unless one is a Progressive who would exempt every purchase made by a poor person, or provide a Prebate Credit Card at least sufficient to cover poverty level purchases).
The NRST disturbs me (besides the fact that it would need to be very high to replace all the current taxes) because people would be paying unequal amounts for exactly the same govt “services” (and that is assuming that we got rid of all of the govt’s wealth redistribution schemes and we got back to the Constitutionally limited federal govt).
In my Head Tax, I could envision some mechanism for permitting temporary non-payment or perhaps, alternatively, a loss of voting rights for any extended period of non-payment.
Stephen re: #66
Your condo analogy is not accurate. It’s far easier to find another place to live (one where you don’t have to pay maintenance fees) than to relocate to another country. To paraphrase Milton Freedman it’s easier to move from one city to another than to another state, it’s easier to move to a different state than a different country.
I do not have a condo. I would personally never sign a condo form without the ability to perform my own services (mow a share of the lawn, or paint the walls that enclose my inside spaces in case of the inability to pay).
In an increasing number of instances, even in the mortgage crisis, the banks see the advantage of foreclosure moratoria over eviction and short sales. those banks that do not lose money, and gain only the disrespect of the communities they pretend to serve. The IRS has no such desire to deal (despite the lawyers who claim to be able to get ‘offers in compromise’ – no one EVER gets res jurisdicta with the IRS.
Any comparison of condo fees to a direct tax is false and specious. Your tax applies simply by remaining alive. A person or family can relocate from their condo and survive. No one can survive the poll tax you favor as good, decent, fair, true, and beneficial – it is certain death, imprisonment, or expulsion form the US with loss of citizenship.
The IRS believes in the same brutal approach: destroy the business or person TO PREVENT FURTHER TAX DEFICIENCIES. Any hopes that the person or business can recover and again become a productive entity and even pay taxes later is forever destroyed to clear the docket of present shortfall. Kill the goose that lays their golden egg!
Your head tax is the most oppressive, least American tax possible, far worse that the income tax as unlawfully and unconstitutionally now implemented. Nothing, no rational explanation, not history, nor the total failure of head taxes wherever or whenever tried, will convince you to even consider any alternative. The matter to you is forever decided, ordained, sealed, and closed to any discussion.
But, thanks anyway, Phelbers
Hank:
In reference to your number 1 post in Part II where you include a 15% avoidance/evasion rate, the present income tax has a 17% evasion rate (I earlier on Part I referenced the late Senator Roth’s book citing official IRS data to that amount).
Since the FirTax and HR 25, as well as their opponents, propose or accept that any rate analysis will replace the income tax revenues, that 17% is already included. The government/ IRS now taxes at a rate 17% higher than what it would in a perfect world where everyone paid what the government said they owed, to make up for this evasion.
Also, Ed earlier referenced the ‘zapper’ paper, part of the reference archives of this website, where there are references to sales tax evasion rates of 16%.
So, any decided upon rate and total take (yours is as good as any I have seen) already accounts for the added-in evasion-countering percentage of the present income taxes.
I believe the 15% you added for evasion may be unwarranted based upon current information.
Thanks, Phelbers
To: John Bailey re post # 68
Whether it is easy to move or not is not the point.
The point is, that you have joined a cooperative association to share costs – if you can’t pay your share of the costs, you need to go and find a cooperative that you can afford, whether that is across the street or around the world. Not to be harsh, but it is your problem,. not the coop’s.
To: Phelbers re post # 69
Your analogy to bank forclosure moratoria is improper. The banks simply can not deal with all of the forclosed homes at one time – they can not sell them eadily. They must be assuming that if they forbear from forclosures that they will ultimately collect more than they would by forclosing and conducting fire salers. They are not being charitable or admirable.
My condo analogy is perfectly appropriate to Americans banding together to float an army to protect us.
The Head Tax is exactly comparable to each person’s condo fees. The fact that the person may be able to move to a cheaper condo is the same as that person moving to a cheaper country (Mexico). In any event, if you can’t pay your condo fee you have to get out of that condo!
I am not saying there should be a burn and destroy approach. Like any bankruptcy case, the judge tries to determine if the bankrupt business is viable and whether its debts should be restructured and have the business remain in operartion or whether it should instead be liquidated. I understand there are somewhat similar concepts in Individual bankruptcies. While the bankruptcy analogy may not be perfect, I would envision employiong concepts that would encourage individual recovery prior to expulsion. Let’s not forget charities.
I am somewhat surprised by your last paragraph telling me that my mind is closed. I told you that I will read the material you suggest and will reconsider, along with your further input. Good Sir, one thing you have not yet done is, rather than merely telling us that the Head Tax is “oppressive”, explain WHY it is so (other than the fact that someone can’t afford it – that does not make it oppressive if one can move else and avoid paying it).
To: Phelbers re: post # 70
The fact that there may be a 17% evasion rate iun the current Income Tax bdoes not automatically mean thereis one in the FT. However, I belive that there actually is about a 15% tax avoidance built into the FT (I would have to review the BHI Tables).
All of that being said, economists, etc not employed by AFFT think that tax avoidance rises dramatically as sales tax rates go over 10%, so that another 15% may not even be enough.
The Framers in the Federalist papers, and each of my posts decrying the direct head and direct income taxes, specifically explain the terrors of direct taxation. They are inescapable, and if deportation and loss of citizenship are not oppressive in any way as you suggest, then they are very wonderful and pleasant.
As readily as the American public accepts the income tax suggests that you may be correct after all with your pay-or-be-deported-and-stripped-of-citizenship head tax. We will welcome it with open arms.
After all, it is one of the simplest and easiest things to do now – just become an illegal alien like the 20 to 30 million Mexicans, South and Central Americans, and Islamic terrorist ‘sleepers.’ Lose citizenship? No problemo! Sneak back across the Rio Grande!
An additional advantage would be that before being stripped of citizenship is that we could stash our arsenals of automatic weapons and ammunition, and retrieve them upon re-crossing the border. That would help us fight off the IRS and INS – something the disadvantage Mexicans can’t as readily do (but the Mexican drug cartels may even be changing that).
Once the illegal former-citizen population reaches present illegal alien proportions, Congress will certainly have amnesty programs to re-grant citizenship to these law breakers, just as it intends to now do with those already here.
Of course, the head tax will have had to have escalated to 2000°°, 3000°°, or even 5000°° or more to make up for the loss of citizenship. But the cycle will simply repeat at accelerated levels.
Yes, there is nothing at all negative about the Stephen Head Tax – I must be as out of step as the Framers, history, and common sense. Maybe Morph should re-block me as a spammer.
Head taxes have been often tried, but have NEVER worked. Maybe one will work in the US, though, since US citizenship is not required to get full benefits of it – just ask any illegal alien!
I only said you were of a closed mind on the head tax, because regardless of the facts, quotes, and history I have presented, the more adamantine your support of it has become.
Thanks, Phelbers
To Phelbers re post # 74
I have not become more adamant in my supprt of the Head Tax, but I am merely not moved by any arguments I have yet heard. I seek rational, substantive arguments which might change my position.
You say deportation and loss of citizenship are OPPRESSIVE. Then it is the PUNISHMENT and not the tax itself that disturbs you. By that I mean, we could (but likely don’t) deport and remove citizenship from those who fail to pay their Income Tax (perhaps we should) – we don’t even eliminate their right to vote (unless you go to jail) – again, perhaps we should. From my limited experience in this area of tax practice, the IRS is in fact very lazy about collecting back taxes. Eventually, they might well sieze any property you have, but I do not know of any further prosecution of the govt’s claims – there should be (maybe we should deport them and strip them of their citizenship which can be restated upon payment of all back taxes)..
Thus, while the Head Tax would likely be a financial burden to more people, your issue seems to go to the punishment, rather than the tax. Could you live with loss of vote, only?
If yhou have any reading materials with specific illustrations of societies that tried Head Taxes, I would find those useful (and of course, I will go back and read FP # 21 and anything else you direct me to.
Hayden re #63,
I did not mean to imply that people would not relocate during retirement. The distinction I was trying to make is that those who would be too poor to pay Stephen’s Head tax would be unlikely to do so.
Stephen #71
My point is that there is a huge difference between joining a cooperative (condo association) and being born in a certain country. The logistics of moving down the street (out of your condo into a non-cooperative) are vastly different than relocating to another country….which I have done recently.
We are using terms which are vague and relative in their meaning (i.e. easy, difficult, burdensome, fair, unfair). When I refer to easy or difficult to relocate, it’s not in the same sense that I think you mean. There is a practical matter of being easy enough and affordable enough for someone of a given financial state to be able to accomplish. For instance, if I have zero dollars in my bank account (or don’t even have a bank account) and zero assets (no cell phone, no car, no house, essentially little or no furniture) and every penny of my meager income goes to pay living expenses (if I have an income) how practical or possible is it for me to gather up my family and get to lower mexico? Or Canada? or Thailand?
To: John Bailey re post # 77
I know we are talking theoretically here but I think my point remains valid . That is, if you jhave to move out of your condo (to either a cheaper neighborhood – not merely down the street – or to another city in another part of the country OR to another country, we are only talking about the degree of difficulty FOR YOU). That does not change the fact that you can’t afford to live where you were and the others should not be FORCED to support you. Whether it is easy or difficult for you to move should not CONTROL whether someone else can be FORCED to support you.
This is highly theoretical at this point, but the govt might transport you to Mexico (or to the Bahamas or Cuba in the case of those folks someone noted live in FL: I would be willing to pay for ther govt to ship all Progressives to CUBA) – but these are terminal solutions. Perhaps there are other interim solutions such as loss of voting power, private sector charities, etc.
To: Hayden re: post # 63
I reread that post and find it very much in tune with my political thinking, except of course for you final point about the safety net (which strikes me as incongruous with the rest of the post).
In any event, in addition to the questions raised in my post # 93 on the Ryan ROADMAP, I failed to ask you for the specifics of the extent of the saftey net that you believe that America should provide to all its citizens.
Do you belive in FDR’s 2nd Bill of Rights?
I ahave very Liberal/Progressive family members who belive in safety nets e.g., for children who are having difficulty finding jobs – I say that is what families are for. When you provide a safety net for some, you deny freedon to those who pay for it.
Stephen – My general idea of a social safety net:
1. Up to 6 months unemployment benefits. (99 weeks is waayy too much.)
2. Tuition subsidies for people with serve in the military (and, possibly, people who participate in some recognized charitable program for two years).
3. Disability payments (but with mandatory retraining if someone is mentally and physically able to work; I’ve seen too many abuses of the existing system).
4. Social security. About where it is currently.
5. Food stamps. About where it is currently.
6. Not sure about housing assistance. Too easy to abuse.
7. Welfare for unemployed single parents, about where it is today (which, if I understand correctly, is limited to two years, plus mandatory training.)
8. Universal health insurance paid via tax dollars.
That’s about it. I’d say I’m probably on the moderate/conservative of most social safety net issues, other than universal health insurance.
to: HAYDEN RE POST # 80
I personally belive that in general your program is far too generous with other people’s money, but specifically:
Unemployment: Not that long ago, it was 13 weeks.
Disability – I have personally seen far too many frauds. The definition of “work” should have changed from physical labor to computer labor (I get several offers a week to work at home on my computer – also, think of StephenHawking). There is a private sector insurance market for this – manyone who wants it can buy it.
SS – everyone should provide for his own retirement years. You enable people NOT to do so.
Food Stamps: There are way too many people getting them – we enable them – there are plenty of Church, etc free food banks.
Health Care – again, we should all buy our own insurance – we enable those who refuse to work and allocate their funds to this necessity.
To: Hayden and ALL: further to post # 80
Here is Phyllis Schlaffley’s brief and relevant commentary on Jim DeMint’s book:
Good Books You Might Have Missed
Stopping America’s Slide Into Socialism
U.S. Senator Jim DeMint begins his book on Saving Freedom with the story of the Gingerbread Man, who evaded capture until he came to the river and accepted the offer of a fox to take him across. He tried to stay away from the fox’s mouth, but as the river waters rose, he had to come closer, until finally the fox ate him. This story is a metaphor for America. We began by valuing liberty above all else, but we increasingly have lost confidence in our ability to succeed without major help from the government.
Almost every Act of Congress brings America under more government control. Our society is rapidly exchanging liberty for more and more entitlements, and too many people now rely on the government rather than on themselves to improve their lives. This trend toward socialism can, however, be reversed.
DeMint believes that the rich do have an obligation to share resources with the poor, but that charity works more effectively when managed by churches and private groups. Socialism promises to spread the wealth, but it actually spreads poverty and imposes the costs on future generations.
A particularly interesting section of DeMint’s book explains how Christianity’s respect for reason led to improvements in science and commerce that have made America so successful and prosperous. As individuals and as a country, Senator DeMint believes that we can save our freedom only if we respect the Constitution and take responsibility for our own future rather than expecting government to solve our problems.
Saving Freedom: We Can Stop America’s Slide Into Socialism, by U.S. Senator Jim DeMint (B&H Publishing Group, 2009)
Stephen — You quote Phyllis Schafley as writing:
“A particularly interesting section of DeMint’s book explains how Christianity’s respect for reason led to improvements in science and commerce that have made America so successful and prosperous.”
Christianity’s respect for reason? You’ve got to be kidding me. Wasn’t it Phyllis Schafley leading the charge to “save” Terry Shiavo? The Christian Right and the Republicans were right there with her. Even calling a special session of Congress to saye a brain dead invalid.
A recent survey shows that 40% of Americans (and a majority of Republicans) believe that the Earth was created 6000 years ago. We have “creation museums” with dinasaurs wearing saddles! (But, of course, all good Christians know that global warming is a hoax.)
Sure, there are plenty of Christians who support and promote science, even if it conflicts with the straight doctrine of their religion, but I wouldn’t consider either Phylliss Schafley or Jim DeMint doing much to promote science.
> In no Nation which respects the freedom of it’s citizens, no citizen should be subjected to loss of liberty, or confiscation of money or property, unless he has committed a crime.
To: Hayden re post # 83
I can’t claim to understand the thread of your thought process.
In any event, I am agreeing with and offering DeMint & Schlafley’s comments on the govt/Socialism versus the private sector (incidentally, I have DeMint’s book to read, but wonder why he/she failed to say that it is not Constitutional for the federal govt to distribute charity, rather than merely saying that it is better done in the private sector).
That is, I do not rely on DeMint/Schlafly for my beliefs in religion or science – I merely share our similar political points of view.
Hayden,
Would you take a shot at replying to my post # 93 under the ROADMAP?
The income tax should be replaced, because it allows the social Marxist welfare safety-net state we have now devolved into. Such a state as the present United States cannot be sustained. Half the population either is supported by or employed by the federal government, producing nothing, and consuming what the others produce.
Although a tax on income derived FROM wages is constitutional, the 16th amendment does not allow a tax on wages in and of themselves. Wages are a source, not income in the constitutional sense of the word. The income tax is unconstitutionally implemented when sources, not the income derived from them, is included as gross income. Even the tax code so defines gross income, as has the Supreme Court definitively stated in Blatt.
The income tax is not lawful: There is no statutory language, in the statutes-at-large or the US Code, enacting the ’54/’86 tax code into law (unlike the ’39 code, which was enacted as law, and is still law).
The bill containing the ’54/’86 tax code is unlawfully drafted, with lettered sections, rather than numbered sections as required by 1 USC 104: “All sections shall be numbered . . . .” This law ensures that a rogue government will not dodge its accountability or abuse its authority by presenting such unlawful enactments and then later saying, “We’re not responsible. Anyone can see that that law was never intended to have any effect. Can’t you fools see that the sections are lettered, not numbered? We knew you’d be too lazy, ignorant, and stupid to see the scam, and pay up like the weak dummies you are. Shove it. We’re off the hook”
For decades after the ’39 tax code was “repealed”, Congress amended, added to, modified, corrected, updated, and maintained, in the most minute detail, the ’39 code – legal evidence of law proving that Congress had no intent to enact the ’54/’86 code or repeal the ’39 code.
Aside form the present tax code being unenacted, unlawfully drafted, and unconstitutionally implemented, it’s just fine. If it were to be redrafted lawfully, and actually enacted with language so stating, and then constitutionally enforced as a tax on gains derived from wages, then it would be OK, even with those now opposed to it.
Hayden’s safety-net state, as good-hearted, kind-soled, and well-intentioned as he truly believes it to be, is a evil failure. It is an impossibility. It cannot be maintained – we have over 107 trillion in unfunded liabilities, with more being added at geometrically advancing rates daily. SS and Medicare are the world’s greatest failures. Our grandchildren will be state-slaves.
Already, the US has resorted to the last-ditch death-spiral effort of simply printing money in the multiple trillions of dollars. This is the actual overt admission that the safety-net state, and the United States has failed. It’s only a matter of an ever shortening time. The Weimar Republic did just this – it is beginning of the end.
Congress, and the entire federal government has abrogated its moral authority to do anything. It is constitutionally devoid of lawful behavior. Only the raw power to force compliance remains – and we are too spineless to hold them accountable. The Framers failed in one respect – they thought they were giving us a separation of powers. But, all we have is a mere DISTRIBUTION of power. And distributed power corrupts as absolutely – it just takes a little longer.
Any new tax must be at least constitutionally implemented, first fully repeal the 16th amendment, as well as being lawfully enacted with actual language so stating (HR 25 would not be). It must be indirect (HR 25 or the Stephen Tax will not be), forever disallowing the destructive safety-net tax-officer-at-your-door state, (HR 25 will not), only possible with unlimited direct taxation, and the slavery that inevitably follows.
Thanks, Phelbers – and Happy New Year
Phelbers — The key point in your post is that there is 107 trillion in UNFUNDED liabilities. (I don’t know if that number is completely accurate or not, but I agree the unfunded liabilities are ridiculously high.)
Neither I (nor other progressives I know) are in favor of UNFUNDED liabilities. Those liabilities are just hidden taxes on us all. We (or at least I) believe that we need to pay for our obligations, including future obligations. That’s why the Bush tax cuts, the unfunded wars in Iraq and Afganistan, and the unfunded Medicare Part D infuriated me so. We were simply pushing the obligations to pay for those things on top of our already huge unfunded liabilities.
That’s why I was so infuriated when the Republicans abandonde the PayGo rules in 2003. Previously, under Bush I and Clinton, all increases in spending had to be balanced by equal increases in revenue (i.e., tax hikes), and all tax reductions had to be balanced by a decrease in government spending. That kept Republicans from lowering taxes and Democrats from increasing spending, and the result was a balanced budget (even a surplus). Now, I realize there were still unfunded future liabilities under Clinton, but there was at least a light at the end of the tunnel.
My view is that if the people want Medicare (or universal health care, or wars or whatever) then that’s fine, as long as the people allocate the money to pay for it (including the future liabilites). That will require an increase in taxes, which will require folks to think long and hard as to whether the benefits are really worth it. It’s when politicians obligate the government to spend money (particularly in the future) without providing funding for it that we get the bloated future liabilities that we have.
The irony is that the tea party folks were nowhere to be found when Bush saddled us with huge unfunded liabilities. But when Obama introduces a completely paid-for health insurance reform, the tea partiers have a fit. Go figure.
To: Phelbers re post # 87
I am glad that you agree that Hayden’s safety net is bankrupting us (even if we pay for it by currently overtaxing others = currently funded wealth redistribution).
I will get back to you on Direct Taxes when I have read some more.
o; Hayden re post # 88
I thoroughly agree that the $107T unfunded debt for Medicare & SS are unconscionable (Congress should be drawn & quartered). We MUST put inpl;ace an IMMEDIATE plan to rationalize that debt.
Having said that, it is welfare (nearly $1T of our current budget) that must be cut first, before fixing those 2 big problems that people have paid for all of their lives and on a very Progressive basis!.
As a Conservative & Tea Party person, I was depressed over Bush’s decline into the dementia of Progressivism and added govt spending Programs like Part D (because it was not fully paid for WITH BENEFICIARY CONTRIBUTIONS – on a democratice not Progressive basis – not by taxes on other people:- the same should happen to part B).
Stephen
The punishment and the direct tax are inseparable. To speak of one without the other in not possible. The two can be used interchangeably.
Direct taxes cannot happen without the power to distrain against the deadbeat (seizure and sale by government to recoup unpaid tax). That power, however employed (taking your money, your house, your vote, your citizenship, or your life) is the destructive nature of direct taxation. I abhor direct taxes for this reason alone. They are incongruous and incompatible with liberty. They are no less odious than simple theft or any other taking of property without constitutional consent.
There is little or no respect here for the careful thought and reasoned study for the Framers or their debates and discussions on taxation that led to the Constitution. No one contributing to the discussions on these pages favors constitutional taxation (excepting me, of course). It is as if the Constitution was nothing more than a hindrance, a roadblock, an impedance to the smooth, swift administration of total government – a thing that demands pretend respect, but only so we can say we looked at it before rejecting it.
Hayden prefers increased taxation using the present unlawful and unconstitutional (which I have described just above) income tax to further the total safety-net state; you, an unconstitutional direct head tax; the HR 25 crowd, an unconstitutional direct sales tax.
Only a constitutional indirect tax system can provide a true safety-net, as it did for the first 150 years of this country.
Any discussion of Republican vs. Democrat, illegal wars vs. greater universal socialized medicine, are moot. The Republicans are merely Democrats who must pretend not to be. Under either control, government increases in size – only the upward slope of the rate of increase curve changes slightly with changes in party control.
The safety-net spending dwarfs the illegal war expenditures, with wars only changing the distribution of unfunded liabilities of fiat currency among the various government programs. And always there is an increase in governmental size and control.
It is the utter abandonment of the Constitution, through the blatant and outright falsehood of fallacious sophomoric Clinton-style cheap debater’s trick arguments (“I did not have ‘sex’ with that woman”, and “it depends on what the meaning of ‘is’ is”) where false meanings are given to words to dupe the off-guard, that the demise of a prosperous nation has been managed. Falsehood fails, and when falsehood underpins a nation’s policies, that nation fails.
Thanks, Phelbers
Phelbers, is not the 16th Amendment part of the Constitution? I don’t see how you can call these taxes unconstitutional, unless you’re selectively choosing to dismiss active amendments. Please don’t suggest common tax protester constitutional arguments. Those tax systems are not unconstitutional in the same sense as Congress legislates today. This one actually went through the correct amendment process and is now part of the Constitution. We can repeal it and we’ll have to deal with the restrictions defined in the new Amendment.
Hi Morph
The 16th Amendment is as much a part of the Constitution as any other part. I have never made any suggestion otherwise.
The income tax authorized by the 16th is constitutional, and I dismiss no amendment (as does the federal government of virtually every other part of the Constitution).
In no way do I suggest any of the tax protester arguments – none of them apply to what I have said.
What I said was that the income tax is unlawfully and unconstitutionally applied.
The present ’54/’86 tax code has not been enacted by Congressional language into law either by the statutes-at-large or the US Code. This is not an opinion, but fact that can be readily checked by simply reading the act that includes the code (compare it to the text that DID enact the ’39 title). I have summarized this earlier. Only your personal verification of it can in any way convince you that I am not being misleading, or misinformed. It is legal evidence of statutory law, in plain and unmistakable, straightforward, clear, simple English text (dismissed by government through Clinton-style equivocation, though).
It is the dishonorable, dishonest Clinton-style cheap sophomoric debater’s trick if equivocation – deceitfully holding two meanings of one word or phrase simultaneously – that allows government to disregard the 16th and include wages as income (a source, not income in the statutory or constitutional intent). This trickery occurs in the regulations, where the IRS adds the whole of wages to the income derived from them into the statutory Congressional definition of gross income, where no definition of gross income includes wages – only the gains derived from them (which would only be savings account interest, or similar gains, on a banked portion of saved wages). This too in not a debatable point. It is again simply a matter of statutory law. You should also read M. E. Blatt and Co. vs. US where the Supreme Court held that mere receipt of money or its equivalent is not income, but only the final eventual GAINS derived from that receipt (but no part of the receipt itself) is income to the recipient. They further stated that “Treasury regulations can add nothing to the definition of income”, exactly what the IRS does in direct and bald-face disregard of the Court with respect to wages.
Just as a side point, even as I fully agree that the 16th is a valid part of the Constitution, the 16th did not in any way go through a correct amendment process. Every state ratification used text that varied from that passed by Congress. However, Philander Knox, then Secretary of State, using Clinton-style lies, simply disregarded these errors or deliberate state modifications in the text, and declared the amendment correctly passed. The point is now moot, the 16th is part of the Constitution, but it shows how cheap Clinton-style lying has pervaded the demise of our Constitution for many many decades.
The income tax authorized in the 16th only permits the monetary (or equivalent in monetary value) GAINS derived FROM sources such as wages, salaries, compensation for personal services. No authority is given to tax the SOURCES themselves, only the derivations, such as interest, perhaps lottery winnings from tickets bought with wages, etc.
The irrefutable proof of this is further shown by simply reading the 16th, or the definitions of gross income. Always, the word ‘source’ or phrase ‘from whatever SOURCE derived’, appears. Why? Why does not the definition of gross income simply say: Gross income includes, but is not limited to, compensation for services . . . .” etc. Why does it ALWAYS say, “Gross income includes gains, form whatever source derived . . . ?” It is because the 16th allows only the GAINS, not the source that generated the gains, to be taxed.
The Clinton-style prevaricators unlawfully and unconstitutionally tax the sources – the receipts – rather than the gains. They fool us into believing that DERIVED FROM is really DERIVED AS or DERIVED IN THE FORM OF. This is the cheap debater’s trick .
It is in this regard only that I assert with certainty that the tax is unconstitutionally administered, and unlawfully expanded to tax the sources, not the gains, as gross income. The usual tax-protester arguments are specious at best, and I do not rely on them in any way.
If the income tax was administered lawfully and constitutionally, it would be an almost de minimus amount, just a minor nuisance, a minimal fraction of its present illegal level. In this regard, I do not oppose it – only the illegal expansion of it infinitely beyond it’s legitimate limits.
We are stuck with the present income tax. It has been my understanding that the idea of these pages is to expose it’s falsehoods and shortcomings to agree upon a constitutional replacement – the ‘FairTax, HR 25 sales tax being the principal idea underlying it.
Hope I clarified my earlier statements.
Thanks, Phelbers
PS: How can we make ‘hot links’ to text, italicize, or embolden text, as you were able to do with the link in 92? It would make for better, less cluttered posts. Thanks.
Phelbers, you should be able to use html code in your post. So just use corresponding tags for href, i, strong to add the markup.
See html text formatting and html links.
Stephen
You may want to read “The Wealth of Nations” by Adam Smith. He describes and discusses the various capitation (head, poll) taxes in use at the time of the founding of the US. The book is in the style of the times, and takes a dictionary to decipher some of it, but is generally very understandable and informative.
These taxes, he says, were never imposed equally, as the populous would not stand for such an unfair, super-regressive implementation. Resort was always to made scale them according to rank of nobility, wealth, etc. There were always arbitrary exemptions, exclusions, exceptions, privileged reductions, and so on – not unlike our present income tax.
They never comprised other than a very very small fraction of the revenue – even where enforced by the unlimited, brutal, ruthless power of the King (or the guillotine in France).
Small as these taxes were, they were universally despised and have been universally rejected by civilized and despotic governments alike.
Thanks, Phelbers
TO: Phelbers re posts 91-95
The penalty for non-payment is coimpletely divorced from the underlying type of tax. I think that you are saying that ANY (Direct) tax that people must pay involuntarily is oppressive because non-payment will require some govt collection effort (that you find oppressive).
How about property taxes. The FF were unfortunately well aware of them. Govt can take your property and sell it if you fail to pay – isn’t that oppressive?
Morph
I successfully tried a couple HTML entries on the sites you linked. They work there OK.
Any way to preview them to see how they will actually appear here before committing them to this site?
Thanks, Phelbers
To: Phelbers re posts 91-95
While you claim that you are not making “tax protestor” arguments about the 16th Amendment, I suggest that it is not on your best interests to not file tax returns and not pay your income taxes. Courts will likely show no patience with such arguments (which they are tired of). Also, I heard there was a book about the fact that the 16th Amendment language was not identical in all of the 38 (?) ratifying states – I had also seen a passing commnet which suggested that the differences were irrelevant and miniscule.
I would have thought your argument would be different as follows. I thought your opinion would be that the 16th Amendment wrongfully overrode the Constitutions ban on Direct Taxes and that we should return to the original ban.
To: Phelbers re post # 95
I will add Adam Snith to my reading list. I feel like I am back in school and way, way behind in my calsswork.
While I will read that and the other materials with an open mind, I make one observation. Yes, a Head Tax falls heaviest on the poorest and would generate the most unhappiness on the part of the poor. That fact does not change the fact the the Head Tax may be the most correct “scientific” allocation of the bill for our common costs. There are a lot of things in this world that we are not happy about, but that’s just too bad , isn’t it?
Stephen 98
I never suggested not paying the income tax. Simply because it is unlawfully and unconstitutionally enforced does not mean that our corrupt government does not enforce it and claim that is actually is lawful and constitutional. Bill Clinton represents the false reasoning styles used by government to claim that true is false, black is white, etc. Harry Reid Clintonizes on this in his Taxes are Voluntary diatribe. This exemplifies the dark age we are in.
There is a book, “The Law That Never Was”, by Bennett, I think, which documents the errors and inconsistencies, and falsifications in the state ratifications of the 16th. The differences are minor at first glance, but significant in meaning and the understanding of the amendment to the states. The point is that there are rules, and that they ought to be obeyed by something as fundamentally important as the Supreme Law of the Land.
The 16th in no way overrode the Direct Tax apportionment rules. Fraudulent, Clinton-style cheap debater trickster law professors, attorneys, legislators, and judges claim erroneously that it did.
Again, simply reading the legislative history proves it. The amendment first proposed was : The Congress shall have power to lay and collect direct taxes upon incomes without apportionment among the several states according to population.” [emphasis by Phelbers] from Volume 44, The Congressional record, 61st Congress, 1st Session, page 3377).
This was summarily rejected, as it destroyed the core principle of the Constitution between direct and indirect taxes. Even those criminal Senators knew they’d be on the hook for trying to do that.
The final wording, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States and without regard to any census or enumeration.” [emphasis again by Phelbers] did two things:
1) It eliminated a direct tax on the whole of receipts, such as wages, and
2) authorized only a tax on the gains (incomes) derived from sources such as wages.
This was only a deception so the corrupt Senate could cover itself, and at least pretend that they were only allowing a tax on the gains derived from receipts. They knew all along that they were providing the pretext for the bureaus and taxing agencies to tax receipts, thereby destroying the country and Constitution.
The 16th did not override the constitutional requirement to apportion direct taxes – a corrupt and deceitful Congress and IRS did.
As to your head tax being the fairest and best tax, consider again a lowest (financially) class family of 5. A 10,000°° tax for a family earning only 20,000°° would utterly destroy it. To deport the roughly 50% of the US poverty level population to another country against that country’s will, although easy enough for the Army to do, would be no different than a declaration of war.
With 1/2 the population stripped of citizenship, the 2000°° head tax would have to double to 4000°°, and the cycle would progressively repeat.
We could easily solve our problems with constitutional taxation, the fairest of the unfair tax systems.
Thanks, Phelbers
Phelbers, not sure how you could test it easily. Just do a short test and I’ll delete it soon after.
To: Phelbers re post # 100
I admire your scholarship. I, who was a practising Tax lawyer/CPAQ never bothered to look into that subject (it would not have done me any good).
My impression was that the 16th Amendment was needed because its proponents felt that there were some questions as to whether it would violate the Direct Tax/Apportionment rules, and thus an Amendment was needed to insure that it did not. I did not mean to say that it overroad the Constitution but that it provided language that would permit the Income Tax without violating the Constitution.
The little history I am aware of is that ther proponents sought to lead a major class war against the wealthy few (who were the only ones expected to pay the tax originally).
Make no mistake, I will lead the battle to repeal the Income Tax and the Estate & Gift Tax (which was originally added to “get” those industrialists who accumulated great wealth prior to the Income Tax).
I think very Flat Income Tax is merely a necesary step on the road to the ultimate right answer – the Head Tax.
You again refer to my characterization of my Head Tax as being the “fairest and the best tax”. Those are not exactly the words I used and those words are incendiary to the poor. What I said is that the Head Tax is the most “scientific” method of allocating the cost of the military to all Americans. If you brought this allocation to an apolotical cost-accountant, he would opine that the Head Tax’s equal allocation of the cost of the military to every American is the most correct method, in view of the fact that no one citizen had a greater impact on the total cost, relative to any other citizen (and the military protected ALL of our lives and freedom, equally). Thus, as a retired CPA, I use the synonym, “CORRECT” method.
Any other method of allocating such a cost, begins to turn on POLITICAL considerations rather than what is the CORRECT method.
If you can’t pay your condo maintenence, you will have to leave.
It will be a very long time in resolving how to deal with those who do not pay. In time, poor people might have fewer children (I will pass for now on that discussion of Sociology, other than to say, what gives any person a right generate costs and then insist that other taxpayers pay for them?).
As a start, I suggest that we go back to the FF and say that anyone who can not pay his taxes over a period of time, does not have the right to vote (at least we will not have politicians pandering to the poor).
My optimism suggests that if we did get the tax down to $2,000 per person, individual industry and temporary charity would combine to keep a whole lot more people current on their taxes than only the half you guess. I would hope that we would see a renewal of individual responsibility and a burst of effort.
You know, hunger is a great personal motivator.
Stephen
I characterized your head tax as the worst, most evil tax possible. It was an indirect sales tax imposed as an excise that I called the fairest. If I made any such characterization about your tax, I was being facetious.
Since you are an attorney, you can readily verify that there is no statutory language enacting the ’54/’86 tax code into law (compare it to the language that does enact the ’39 title into law). I can get you the exact volume and page numbers if you can’t find them. You can also verify that the act containing the ’54/’86 title is unlawfully drafted with lettered sections, not numbered sections are required by 1 USC 104.
I can also get you the amendments to the ’39 code after language in section 7851 specifically repeals them. (I assume Congress amended the “repealed” sections because section 7851 was never enacted, and they were still active law). Congress wastes billions of dollars and thousands of hours enacting harmful and meaningless law, but even Congress at its most corrupt doesn’t amend repealed, dead legislation. Such amendments prove that Congress believed the full ’39 title was still active law, and that there was never even the intent to enact the ’54/’86 code, or repeal the ’39 title.
Don’t get me wrong. Simply because there was is no language or intent to enact the present code in no way matters diddely to the courts, Congress, the IRS or to any law professor or attorney. We have to obey what they say the law says, not what the letter and intent of the law actually is, even when what they say is demonstrably false and unlawful.
Thanks, Phelbers
To: Phelbers re post # 102
I realize that you were being facetious about the Head Tax being “fair” – I was addressing YOUR characterization of MY point that the Head Tax was “fair”.
It is not that I am dismnissive of the scholarship that you exhibit, its just that I think that approaching/attacking the Income Tax from the perspective that it is illegal will be a fruitless undertaking (even if it is illegal). I feel that public sentiment is such that the evil Income Tax has reached a point where most Americans are fed up with it and hopefully it will implode.
Unfortunately, I think my greatly simplefied very flat tax should be enacted as an interim step on the road to the ultimate CORRECT answer, YOUR SHARE (what you call the Head Tax).
You keep calling this “the worst, most evil tax possible”. Other than the fact that you obviously have a deep negative EMOTIONAL reaction to it, and while I must admit that it is the most difficult to a poor person to pay it, you still have not addressed my “scientific” analysis of the correct method of allocating our common costs to each member of our national cooperative. You keep jumping to the difficulty in paying. You do not address the source of the poor person’s “entitlement” to force the wealthier person to pay the poor person’s properly allocable share of the common costs of our national cooperative. Is it “fair’ that you pay only so much of your condo’s maintenence costs as you chose to pay – or do the other condo owners have the right to make you pay your full share just as they do? I read your arguments as always coming back to the fact that the poor person has a very hard time paying his bills (and does not want to pay them) – these are not winning arguments IMHO.
Yes, poverty is oppressive. A poor person’s food, clothing, shelter, medical needs are all OPPRESSIVE – are we to relieve all of those costs because they are OPPRESSIVE. Life itself makes all those things OPPRESSIVE – it is critical that we fellow citizens are not the cause of the oppression of that poor person. If we forcibly remove the incentive of hunger, we rob the poor of a critical tool of motigvation and thus aid in keeping the poor in the oppression of poverty.
Stephen
You are very comfortable with unlawful and unconstitutional taxation – that it makes no difference even if it is unlawful, unconstitutionally enforced, and illegal (this can be readily proven).
It is very difficult for me to accept that an attorney is comfortable with illegal government taxation. IF government is not held to any standard, then we have no government at all. We have a police state.
I’m not attacking it on the basis that it is unlawful and unconstitutional. These facts are as meaningless to the present government as they are to you.
I’m only pointing out that they ARE unlawful and unconstitutional. Until we agree on this point, and that any tax we enact ought to be at least lawful and constitutional, we are only digging a deeper grave by instituting another unlawful, unconstitutional tax system.
If the government can take most or all our property (our money is out property) by unlawful and unconstitutional means, and an attorney is comfortable with this, or at best unconcerned, we are in very serious trouble indeed.
I am very very uncomfortable with such a rule. I prefer the rule of law, not men (or men and women, as the case may be now with Hillary, Nancy, and Barbara, or maybe Sarah).
I point out, with specific statutes at large that prove beyond question that the present tax is not even law, and that it is unconstitutionally enforced, yet you say it makes absolutely no difference.
This is not the rule of law. It is no different that having a king, or a dictatorship, or a bunch of
soviet-style commissars ruling with arbitrary raw power.
There is no entitlement of the poor. It is simply the true scientific nature of life. The destitute cannot physically pay what you allocate and arbitrarily (outside the law and Constitution) deem ‘their share’. They will die of starvation, homelessness, lack of health care, or thirst in the Mexican desert if they are forced to pay such an unpayable tax.
You yourself would have them deported to god knows where, against their will, and the against the will of the receiving country. This is not civilized behavior.
This country was founded on the principle that we are created equal, not forced to behave equally, live equally, or pay taxes equally regardless of the ability to pay – or die.
I have no emotional objection to a capitation tax – only an moral, informed opposition based upon the history and experience given by the founders and framers and other reasonable people.
Why did they all but rule out and essentially forever forbid this tax if it is so scientifically and morally superior to all others?
It is first essential to have a complete picture of just where we are:
The present income tax is unenacted, thus unlawful (but the ’39 title is).
The present income tax enacting act has lettered sections, thus unlawful (but the ’39 title has numbered sections)
HR 25 is an unconstitutional (unapportioned) direct tax (and would be unlawful since it only amends unenacted law)
Your direct head tax is, or would be, unconstitutional from lack of apportionment. Many exclusions, and privileged exemptions would be required and granted – many would freeload with this system as you have already indicated.
Let’s first compare the acts containing the tax codes (not the codes themselves, except section 7851 of the ’54/’86 code), and agree or disagree on their clear text and meaning, and the intent of Congress as stated therein.
Thanks, Phelbers
TO; Phelbers re post # 105
NO, I am NOT comfortable with unlawful and unconstituioonal taxation. It is merely that I believe that the repeal of the Income Tax will arrive more efficiently and effectively by popular protest which pushes Congress to repeal it (eventually, after great simplification – to make a smooth transition to the next world of taxation after that). I think that if YOUR SHARE technically is not constitutional, then we should amend the Constituion to make it so, because I belive it to be the CORRECT answer.
With all due respect to your feelings about the poor, what you are saying is the the rest of us MUST feed, clothe, house, medicate, etc. them. I know of no rule of “scientific nature of life”or rule of religion that FORCES people to do so (except James Wallis, Obama’s new spiritual advisor). Thus, I suggest that it is not a matter of good government or even Judeo-Christian morality that compels you to support the poor, but it is your PERSONAL charitable instincts (which are commendable). Morally, we should all help the poor, but we must not be FORCED to do so. I do not seek to hurt them poor, only to protect myself from being strangeled to death by them and those who would legislate “kindness” – I submit that we all have the right to such protection which right is superior to the right of the poor to FORCE us to support them.
There are solutions other than expelling the poor. I offered at a minimum, a loss of voting power at a minimum in order to protect the taxpayers from having politicians pandering to the non-tapayers. Even at that, we would still have just some group of taxpayers paying for the entire military and some number of freeloaders just getting a free ride (I do not consider that “fair’). While treating everyone with basic human dignity and equal rights to freedom to PERSUE life, liberty and happiness, society might decide that we can make some accomodations with those whoi can not afford to pay.
You still have not addressed the question, “why am I FORCED to pay for you?”
Stephen
Since you are not comfortable with unlawful, unconstitutional taxation, that’s a good first step. Why don’t we start there and show everyone exactly the unlawful and unconstitutional nature of the income tax?
With your credentials as an attorney, some credence would be given to the statutory facts which I have presented that conclusively prove the income tax is unlawfully and unconstitutionally being implemented (as opposed to the claims of an average schmo like me).
This is essential before any meaningful reform can be hoped for.
If we as a nation will not hold Congress and government to function within the Constitution and laws they enact, what is to prevent similar usurpations with any new tax scheme we may create?
Remember that the Constitution’s single purpose was to establish a country where the Marxist-like, nanny safety-net redistributive pie-in-the-sky well meaning but humanly unworkable authoritarian police power state was to be forever forbidden. This was accomplished via strong prohibitions against direct unapportioned taxation – the essential requirement for a vote-buying welfare state.
It is only the unlawful, unconstitutionally implemented income tax that has allowed this Marxist safety-net redistributive state. It is only the abandonment of the Constitution and laws of the US that has allowed you to be “FORCED to pay” for others, as you asked.
The first step is to recognize, analyze, and understand the unlawful and unconstitutional nature of the present income tax and its implementation before jumping to another tax system.
The failure of the United States is rooted in the abandonment of the rule of constitutional law.
Nothing about any other tax system can correct this unless we first return to the principle that an agreed upon Constitution is again supreme to governmental usurpation.
Maybe we can link to the statutes I referenced so others can see the actual statutory text.
Thanks, Phelbers
To: Phelbers re: post # 107
While I suspect that you are probably correctr about the illegality of the Income Tax, I am extremely skeptical that we would ever get the Supreme Court to rule it so. I think the more practical approach is to neuter it and then repeal it altogether. The Neutering process (a very simplefied Flat income Tax as I outlined in SUPPLEMENT # 25 of my Paper) is the LEAST IMPRACTICABLe dramatic change to our tax system. You see, I aqm looking for an approach that will bring us desired RESULTS.
I do not mind at all reviewing the materials you suggest in this regard, but I am falling further and further behind on my reading assignments (including yours – FP # 21 et al re: direct taxes) and feel that this has a low priority for me because I wish to take a chainsaw to the Income Tax and then kill it anyway – and I think that is the most likely succcessful outcome.
Next, I agree with you that we should go back to the founding principles (updated only for relevant limited changes in our society, e.g., the STANDING military and other very limited changes). The 16trh Amendment whether Constitutional or not should be repealed because it has never fit with the SPIRIT of the constitution – it was originally a tool of class warfare and has become worse over time.
Stephen
Let’s just concentrate on showing the readers that indeed the present tax code is unlawfully drafted, unenacted, and unconstitutionally implemented. This is of critical importance.
I agree that statutory legal evidence of law of this will have no effect upon government, nor the Supreme Court, nor anyone who benefits from the fraud.
The only purpose here is to show conclusively – without the specious and silly tax protester ‘arguments’ – how and why we let Congress, the courts, the legal profession (with the possible exception of you), and all the rest of government pull off the usurpation.
Until we settle upon the methodology of the deception, we cannot advance.
They will simply reuse these Clintonizations to repeat the usurpation.
Thanks, Phelbers
TO; Phelbers re post # 109
I am not dis-agreeing with your views, I just think we can spend our time more productively.
I think that even a well reasoned argument that the Income is Illegal, etc. will fall on the deaf ears of the public who will not understand such arguments or will look to the supreme Ct to decide (certainly supporters of the IncomeTax will say ” it ain’t unconstitutional unless the Sup Ct says so” and people will listen to that.
I think that most of the public is fed up with the IT and wants to change it.
I have trouble making the unmasking of the IT as illegal my main point of argument to the public – I have talready aken enough risk in putting YOUR SHARE up for debate.
I think we both feel similarly about the IT – we differ only in our approaches to fixing the problem.
Stephen
The Supreme Court already has
ruled and held in M. E. Blatt vs US that the present implementation of the income tax to be unlawful and unconstitutional. On page 279 of that case, they said, “Treasury regulations can add nothing to income as defined by Congress”.
Current law defines Gross income, in section 22a of the Internal Revenue Code, as “Gains, profits, and income derived from wages, salaries, compensation for personal services. . . . ”
Treasury Regulations, however, define Gross Income, in 26 CFR 1.61-2 as “(a) In general. (1) Wages, salaries, commissions paid salesmen, compensation for services . . . are income to the recipients . . . .
Regulations illegally add the whole of wages to the gains derived from wages.
This is unlawful, and unconstitutional, and in direct disregard of the Supreme Court mandate that specifically and explicitly forbids it.
What can be more productive than holding the government accountable to its own binding rules? What will bind them with any new tax law?
The only way to fix the problem is to accurately and completely demonstrate that the present government disregards the rule of law, and ensure that it cannot continue.
Thanks, Phelbers
Phelbers, #109
“Let’s just concentrate on showing the readers that indeed the present tax code is unlawfully drafted, unenacted, and unconstitutionally implemented. This is of critical importance.”
On the contrary, ratification of the 16th Amendment allowed taxation of income from whatever source to be legal, including payrolls. Your claims are part of the “specious and silly” arguments which have only resulted in jail time for members of the “Patriot” cult.
For those of you that wish to hear from Jeff Dickstein, the leading lawyer for tax protesters, here is a link to a 2007 speech he gave to fellow Patriots.
http://video.google.com/videoplay?docid=8038065740979259195#
Jeff has also defended Benson whom tried to make the case that the 16th wasn’t ratified, and many others who claimed that income from investments could be taxed but not income itself. They are all serving time.
I don’t really care what your personal beliefs may be, but I hate to see this Fairtax blog turned into a forum on the supposed illegal and unconstitutional nature of the income tax. I see no benefit to taking such a course of action. As my grandmother used to say, “there’s no good in looking up a dead horse’s ass!”
I think it is absolutely futile to base our case on replacing the income tax on a showing that it is somehow illegal. It isn’t, and we need to move on!
Hank
I’m not raising any of these points as a replacement basis.
I’ve always agreed with you here and have always asserted that the 16th Amendment is part of the Constitution (see 93 for example), and that it authorized a tax on income derived from sources such as wages, or any source including payrolls (exactly what you state).
But it does NOT allow a tax on the SOURCES themselves. This is the point you have overlooked, which I again make here. The Supreme Court has repeatedly ruled against taxing sources, but these rulings are ignored by the IRS and lower courts, so we are stuck with the present unlawful implementation.
There is a day and night difference between SOURCES, and GAINS DERIVED FROM SOURCES.
others bring up tax protestor ‘arguments – not me. Please see my clearly stated rejection of that in the earlier posts (93, 109). Why bring it up? It is irrelevant to the point of the post above.
The tax protesters are in jail for not paying, not for describing the illegalities or irregularities of the income tax, which I agree are almost always not valid.
No one is suggesting not paying the tax or that it is in fact voluntary – except Harry Reid. Senator Reid apparently means that no armed IRS agent is in your living room with a gun forcing you on the spot to file or be shot or immediately arrested.
“Voluntary” to me, and most taxpayers, means required by statute, with criminal penalties associated with not filing, PERIOD, which is what the statutes say. So, filing is MANDATORY, not ‘voluntary’, despite what Harry and the courts say.
The facts are that the IRS, Justice department, and the lower courts conspire to allow criminal prosecutions of tax protestors, and jail them as you point out. They need the cash, and get it by force regardless of the written letter and intent of the law. They ignore the Supreme Court, which generally reverses the lower courts on the basis of not proving ‘willfulness’) and frees those convicted on the rare instance where they take a case. But the cleared felons still have to pay all the tax and penalties, so it makes no sense to protest by not filing or paying.
You said, “I think it is absolutely futile to base our case on replacing the income tax on a showing that it is somehow illegal. It isn’t, and we need to move on!“.
No attempt is made to base a rejection of the income tax in showing it to be illegal. It is not illegal, only illegally enforced, which IS the critical argument in all this. Even with that, I make no case to reject it on that basis, just to have it understood with specificity how we got into the mess we are in.
I reject is since it is a DIRECT tax (in my next post I’ll deal with this with respect to another Federalist paper, #84, if I’m still permitted access to the blog).
We are in agreement – except you are talking ‘oranges’ to the’ apples’ in question in the above post.
The replacements for the income tax being discussed in this topic page, HR 25 and the Stephen head tax, are both direct, unapportioned and unconstitutional, and would not decrease the IRS (or its replacement STB) involvement in our daily lives, but multiply it since are both direct taxes with the individual still liable directly to the IRS / STB, as with the income tax as now implemented.
It’s that police-state armed IRS presence or threat we want to get rid of. That’s why we are discussing anything here at all.
If we can’t agree on the clear meaning to the plain text on the books now, we should not replace them with similar ambiguities.
Those who ignore the history of past failures are certain to repeat it.
Thanks, Phelbers
If there are any specifics I’ve misrepresented in 110, point them out and I’ll correct or clarify them.
TO: Phelbers re post # 113
What concrete gain do we achieve by discussing the lagality of application of the current Income Tax that evryone is unhappy about and wants to change?
We can talk further about Direct Taxation and Apportionment or even find a new answer that would require a Constitutional amendement if it violated the prohibition against un-apportioned direct taxes – but what is the identifiable benefit to us of discussing the current Income Tax?
The benefit is in understanding exactly by what Clinton-style tricks of language a self-serving unelected and uncontrolled bureaucracy, capable or writing its own rules, and enacting its own laws, can and has to a large extent, destroyed the United States. Destroyed, that is the Constitutional Republic. The US will survive somewhat as an entity, although not necessarily culturally or geographically.
The legal evidence of law I above presented showing how the IRS has added wages to the gains from wages, effectively adding tax law not enacted by Congress, is the rule, rather than the exception.
At this moment, the bureaucracies are enacting, on their own, the “death panels”, specifically removed from ObamaCare. Despite no Congressional enactment authorizing them, HHS is creating them, and on its own allowing payments from the Treasury to doctors.
Also, the FCC has implemented ‘net neutrality’ regulations, five times defeated by Congress, with no lawful authority whatever to do so. Through Clinton-style equivocation, prevarication and the unwarranted pretext of existing authority, the FCC is doing what has never been authorized by law.
The addition of wages to gains from them through regulations, not law, and the other two examples I have just given, shows that we do not have a representative constitutional republic.
With no interest or concern for constitutional or lawful limits over the out of control bureaucracies, backed by rogue courts, especially in taxation, what is the point in simply giving more power to them?
If, as you recommend, we repeal the direct taxing apportionment provisions, Congress will be free to tax income just as it does now after the repeal of the 16th Amendment. Congress will not pass a law taxing income, but ‘receipts’. Or the bureaucracies will enact on their own a ‘receipts’ ‘fee’ for the ‘privilege’ of using Federal Reserve Notes or their so-denominated electronic equivalent. No longer will the dual-deinition, Clinton-style trick of calling receipts income, confusing them with gains and profits derived exclusive of receipts, to circumvent apportionment, be needed.
In FP 84, the Framers warned how taxation can destroy any unalienable right despite no authorization to pass a law against, even with a Bill of Rights prohibition against a law forbidding that right. They add that such excess can only be regulated by public opinion over such usurpations.
A direct unapportioned head tax will deprive the right to life, liberty, the acquiring and keeping of property, and any chance for the pursuit of happiness.
On this blog there is no concern for, or willingness to even acknowledge, unlawful or unconstitutional taxation, or the reasoning of the Framers in taxation.
The restoration of the American Constitutional Republic is the very identifiable benefit of such discussion.
Thanks, Phelbers
TO: Phelbers
I must by-pass the deficiencies of the Income Tax and begin my review of Direct Taxes and Apportionment.
I have only a 600 page paperback version of the FP which has only a few pages on FP # 21.
I will need to look back even further to the Articles of Confederation, because AH writes in criticism of that.
The Articles embodied a quota by which each State was required to contribute to the federal treasury. While he says that “neither the value of the lands nor the numbers of the people…. has any pretension to be a just representative” , HE DOES NOT EXPLAIN WHY IT IS UNJUST.
He talks about establishing the wealth of nations but never explains his (obvious) feeling that taxes should be paid by those who have the wealth to pay it (i.e., he was a closet Marxist).
He does say that these indirect consumption taxes should be a large part of the natoinal revenue “for a long time” (not forever).
He objects to direct taxes as oppressive (without explanation) and that the (poor) States would object (without justification of their objections). Thus, I believe he is addressing political salability, i.e., the poor do not want to pay.
With respect to direct taxes, that he provides examples of taxes on land and buildings,may be acceptable IF APPORTIONED. He continues, “Either the value of land or the number of the people m,ay serrve as the standard”. It is a little confusing how the number of people relates to a tax on land but maybe it relates to taxes on people or to the underlying thing AH was addrtessing here, the State’s share of the national burden. Thus, he is suggesting politically, that it will be less difficult to selll a head tax to pooor people, and so excise taxes seem to avoid the problem, but that it is OK to have some (just a little for a very long time) direct Head Tax.
Stephen
A constitutional direct tax can be assessed only one way:
FIRST, the total amount of the tax must be set.
SECOND, the amount each state is to pay is determined by population.
THIRD, the specific items to be taxed are listed. Land, houses, personal property, wealth, etc. A simple head tax on a person irrespective of any identifiable financial characteristic is impossible. A feature, such as their personal savings, their employment, their wages, their income, or something tangible must be assessed. Simply being alive is not taxable in theory or practice as you assert. Are 3 year old orphans liable? Are prisoners? Are homeless bums? Are the insane? Are the elderly? The ill? The retarded? The blind? The unemployed? The injured? The bankrupt? All these people are counted in the census. All are citizens. This is what the Framers mean as unjust in FP 21.
FOURTH, officers, agents, and assessors are sent out in force to collect the tax directly from the people assessed with brutal, destructive, ruthless disregard to any of life’s unfortunate circumstances (as we now have with the income tax).
Any other process is unconstitutional.
Marxism is not indirect, uniform excise taxation, but the very opposite. Direct taxation is Marxism, which is precisely what we now have. Marxism is compulsory direct taxation from each according his means as determined arbitrarily by a police state. Freedom is voluntary indirect taxation from each according to one’s own personal desire to spend. Indirect taxation equals advancement, prosperity. Direct taxation equals failure, misery.
Indirect taxation is more then sufficient except in times of war to meet the needs of the United States. Only the safety-net state we now have requires destructive total direct taxation.
Until we were destroyed by Marxism, we were the strongest, wealthiest, most prosperous nation ever, able to absorb tens of millions of penniless legal immigrants, where the poor and middle classes could advance their position in life. All this was possible without the so-called ‘safety-net’ welfare state, where half the population, producing nothing, is fully supported by the other half. With the Marxist direct income tax, wealth, by design, has steadily been concentrating from the poor and middle classes to the wealthiest few.
Why go from the terrible, the direct income tax, to the worst, your ill-conceived a capitation tax?
I believe you oppose any sales excise, not because it cannot work, but because you prefer a police state, where you can decide who lives or not, or who is a worthwhile person or not, based only on their ability to pay your tax. Where are there, or have there ever been, any prosperous nations with that as their core principle?
I feel you believe the only thing wrong with America was the Founders and Framers, and the Constitution. You certainly have shown no regard or respect for any of them, and prefer abandonment of apportionment – the heart of the Constitution.
Lets replace the unconstitutionally implemented direct income tax with a Constitutional sales excise tax like the ones that made the nation.
Thanks, Phelbers
To: Phelbers re: post # 117
I am too tired to go through each of your arguments but you start with Steps 1-4. So, I get the population of each State x my (e.g.,$2,000 per head = the total tax for that State. The State then divides that by the number of citizens of that State (the only inaccuracy, is that I will miss State increases/decreases in population since the last federal census, but I can try to adjust for estimates of that).
If that works, why wouldn’t you agree that the federal Head Tax is even more accurate? We would need to be able to do an annual census to do my Head Tax.
TO; Phelbers re post # 117
After a night’s sleep, I can now attempt to re-read your post.
Point 3 – I have not yet done enough research to understand your support for saying you must tax a specific item rather than a person. That is, to verify that the FF said exactly that AND to find rational supporting explanations for that position.
Point 4. ANY tax must be enforceable by tax collectors. You seem to hate tax collectors. Your heart goes out to anyone who can’t afford to pay, but that does not make the tax UNFAIR. You demonize the tax or its collectors because people can’t afford to pay – that has no bearing ojn whether the tax or its collectors are fair.
To: Phelbers re post # 117
Marxism is NOR Direct Taxation – it is wealth redistribution.
I agreee fully that the safety-net mentality requires excessive and destructive “taxation” – this too may be Direct Taxation, but its effect is Wealth Redistribution. Wealth redistribution is wrong (un-constitutional) no matter what mechanics of collecting “taxes”. We must keep to two thought separated.
Do I read you correctly? Are you saying that the Income Tax is responsible for the wealthy getting wealthier (i.e., for the income/wealth gap widening)? If so, I find that to be completely inaccurate.
Wealth is generated by smart/lucky people earning it, IN SPITE of the govt taking some of their successs and redistributing it.
You continue to insult me and my “worst, ill-conceived FAIR SHARE”. You cxall it “ill conceived” because you just hate it. You have never explained your cost accounting “science” of allocating costs – you have merely explained that “some people can’t afford to pay it” – which is a purely socio-political issue not an “ill conceived”, “scientific” method of allocating a common cost.
Phelbers, to suggest that i am intellectually dishonest in my belief that a NRST will not work (when I have painstakingly explained my issues) and that I prefer a police state to control people, is frankly “off the deep end”. You don’t know me or my psychology – if you need to convince yourself hat I want apolice state to control people, then by all means enjoy yourself. Like any other similar issue, we are a nation of lawes and need “police’ to maintain law and order. There must be some “enforcement” of the tax laws (even of “indirect” or sales taxes).
I respect the FF and the Constitution immensely. It appears that I have this one glaring disagreement with their feeling about Direct Taxation (and will continue to search for subtantive non-political justification of their apparent feeling).
I am not willing to support a suicidal NRST. It may have worked for a while with a lot simpler and smaller society, but all the evidence (Teasury, Jt Comm, :independent” economists) suggests that it would not work to replace the target revenues.
Point 3: If there is a tax of 2000°° on a person, against what is the IRS authorized to distrain if it is not paid?
The items to be lawfully seizable must be listed specifically. Can the IRS make entry to private property without warrant, search and seize anything at will without ascertaining that the deadbeat has any legal title to them? Can the IRS take a visiting relative’s clothing, money, or automobile simply because it is at the deadbeat’s house? Adam Smith described how these taxes generally operated.
Yes, my heart goes out to those unable to pay a DIRECT tax, not an indirect tax. I hate only DIRECT tax collectors, not indirect tax collectors. I have never been audited and seized from by the IRS for not having bought a full tank of gas when I could only afford half a tank (which is most of the time nowadays).
I don’t demonize taxes or tax collectors, I demonize a DIRECT tax and DIRECT tax collectors, whether or not people can pay. They are as odious as regular theft and thieves, except that they are supported by government.
That has EVERY bearing on whether the tax or collectors are fair. I have great respect for indirect taxes and indirect tax collectors.
The true nature of ‘fair’ taxes and unfair taxes is inseparable from and identical to DIRECT vs. indirect.
We want a ‘fair’ tax – equal in rate paid for all, for other than survival items, not equal in amount paid. If there is a huge unpayable sales tax on survival items, the ‘fairtax’ would be as harmful as your head tax.
There is a difference in direct and indirect taxation. Until you acknowledge and understand that there is a difference between direct and indirect taxes, we can’t really have a discussion.
Do you oppose the present income tax? Why? All the reasons ‘fairtax’ supporters want to be rid of the income tax are at their core the basic human revulsion for it since it is a Direct tax. What are yours?
Thanks, Phelbers
Stephen
I posted 121 before I saw 120.
Yes, you read me correctly. The Direct income tax, sold by redistributionist liberalism, and bought by an uninformed sympathetic public, was touted to take the wealth form the unworthy rich, and give it to the deserving poor – Marxism.
But all data show the opposite has occurred. Over the past 75 years, total wealth has concentrated away from the lower and middle classes to the richest few, without any increase in real lower class wealth. (You can check this easily, there are numerous resources confirming it – here’s one official Federal Reserve study).
This has been a steady trend since the safety-net ‘redistributive’ income tax Marxist scheme has gathered strength (Social Security, Medicare, other welfare, and now ObamaCare).
Your head tax would accelerate it – you yourself admit you would simply dispose of the poor, leaving any confiscated wealth for the remaining rich to grab up for back-taxes only.
This effect of ‘redistribution’ is by design and intent. Marxism, and Marxism is inseparable from and equal to direct taxation. It destroys the ability for the poor and middle class to acquire and keep property, and thus to advance their lot in the world. Unavoidable direct taxation, with its inevitable result in seizure and confiscation of any accumulated property upon any misfortune, regardless of past prompt and full payment, affords the wealthy to buy at fire sale prices and further accumulate wealth.
This is always the result of Direct taxation.
The very opposite – rising wealth of poorer and middle classes – is the result of constitutional indirect taxation. This country’s first 150 years prove it to be so. Liberty is slower than liberal Marxism, but only at first, for a few, and for an short period. Once Marxism approaches total all-encompasing levels, liberty is destroyed.
Direct taxation destroys liberty. The Constitution had been the world’s only barrier against Marxist direct taxation, and only because our Framers knew that Marxism (or its pre-Marx equivalent) can only prevail with direct taxation, the gave us protection against them.
Thanks, Phelbers
TO: Phelbers re: post # 121
The 1st part appears to talk about what I REFER TO AS “COLLECTION” ISSUES, i.e., what are the legal methods of collection. While I am not expert on these matters, the IRS can levy against any property you own in order to collect unpaid taxes (just like any other creditor can do). I do not think they can levy on property that you do not own (however, drug laws allow authorities to sieze any property used in a drug deal – the rules are thus somewhat looser in these circumstances and more difficult for the owner of the property). Thus, ANY tax coillection process brings some hardship – that is not the fault of a proper tax which seeks to allocate our nation’s common costs.
You say your heart goes out to those unable to pay a DIRECT tax, not an indirect tax. I guess you do not own a condo or timeshare, because you can’t chose to pay or not pay at will. If you don’t want to pay your share of the military, then move to Mexico.
You “hate only DIRECT tax collectors, not indirect tax collectors.” They are only doing a job – and some are not very nice.
You continue to ignore reality. What happens to you if you don’t pay your mortgage, electric bill or any other debt – there are consequences you might be thrown out of your house.I don’t demonize taxes or tax collectors, I demonize a DIRECT tax and DIRECT tax collectors, whether or not people can pay.
To me, if the consequence for failure to pay any tax are fair themselves, then they do not reflect upon the tax itself.
You just hate DIRECT taxes – no one will ever justify them to you. You refuse to grasp the concept of your fair share of our national common costs.
You analyse everything in terms of affordability – you refuse to accept that your share of the cost is due and payable, EVEN IF YOU DON’T LIKE (or can’t afford) to PAY IT!
Yes, I have repeatedly explained my disgust with the current Income Tax – not becuase it is a Direct Tax, but because(in no particular order and i could come up with more reasons I hate it) it 1) un-constitutionally redistributes wealth, 2) is overly complex and expensive to administerand for taxpayers to deal with, and is thus extremely inefficient, 3) it has become a tool of “social justice” rather than a simple tax collection tool, 4) it hurts our economy and employment by retarding the growth of business (especially small business).
To: Phelbers re post # 122
I am confused. You confirmed that you were saying that the IT was responsible for actual wealth disparity (I agree that is was SOLD as wealth redistributing, but you seem to mbe saying it was responsible for making the rich richer????). While some tables suggest that the rich are getting richer vis-a-vis the poor, the IT is not CAUSING that to occur (i.e., it is occurring IN SPITE of the IT i.e., in spite of the redistributiojn that takes place via the safety net).
I do not admit to WANTING to dispose of the poor (although I am not opposed to getting everyone to pay their fair share, or get out). The rich will not swoop down to steal the crumbs from the poor. They will sell valuable goods and services to the poor and thereby properly get richer. Guess what, a lot of poor people will become rich.
You have me confused. You say Direct Taxes are Marxist and wrong (even though steal money FOR the poor – net). YOUR SHARE does the opposit, but it is equally unconstitutional in your view. I guess your common theme is they are so because they are DIRECT.
I am saying that (notwithstanding some FF dislike of Head Taxes or Direct Taxes) it is still the correct “scientific” method of allocati9ng our common costs and the objhections thus far seem to come from people who simpoly don’t want to pay their fair share – they want to FORCE someone else to pay their “mortgage”.
Condos and time shares – I do not nor ever would own any – are voluntarily entered into. We have not yet been forced to buy them – although Democrat Party officials are trying to force us to buy things we do not want (health insurance) against our will, so this too may change.
The condo comparison is simply off base and not relevant.
Local real estate taxation is a very good comparison. These are not optional, but at least we cah remain US citizens by moving to lower direct tax states. Fail to pay even a small part of the tax, after having faithfully paid for a lifetime, results in loss of your home, livelihood, or worse. This is the evil of any and every direct tax.
The wealth concentration since full-scale direct income taxation has, through ‘bracket creep’ accelerated a draining of the lower and middle classes wealth accruing ability. The rich get richer, but the poorer classes decline faster rather than advance – thus, net upward concentration.
Your system is very scientific, accurately calculated, and fine for robots. Butit is inhumane and unworkable with human existence, as it without question simply disposes of large segments of human beings. Just feeling bad about a system that destroys millions of human lives does not exonerate you from being bad.
It is unworkable except at the point of a gun (or the blade of the guillotine as in revolutionary France).
And ALL the FF rejected direct taxation except in times of war, and then allowed them only if apportioned. We want to get rid of the income tax – each reason you list is a rejection because the tax is arbitrarily direct.
We need to get back to discussing replacing the present income tax at its present total income tax level. To do so with your tax, every citizen must come up with 10,000°° every year – 40,000°° for every family every year. (3 Trillion, divided by 300 Million = 10,000 x 4 = 40,000°° for a family of 4). I might make 1 or 2 years, then I’d have to sell my assets, then get thrown out to Mexico.
Serious ‘fairtax’ / sales tax proposals account for the full Income tax take (see Hanks post 1 above). Yours only 20%.
Further, YOUR SHARE is unconstitutional from lack of apportionment. You wrongly assume that people want to force others to pay for them. This is entirely false. Marxism allows the greedy, non-contributors to simply access the direct tax Marxist system to avoid payment of ANY amount – amounts they would pay through indirect taxes.
Marxism / safety-net systems pay people not to be productive at all. YOUR SHARE prohibits people from contributing what they can by producing at levels at which they are capable. Even if one year they could afford only $9,000°° – adios. But with indirect taxation, they may be able to pay that amount, and do so forever, or even more as they improve their position.
At $600 B, an NRST would work – even using your IRS (‘Treasury’) 12%/30% calculation. (60 / 150 ÷ 5 = 12 / 30).
Let’s shelve YOUR SHARE, and figure out how to make the ‘fairtax’ work – talking apples to apples.
Thanks, Phelbers
To: Phelbers re post # 125
If you can’t pay your mortgae or your real estate taxes you will lose your home to a forclosure sale.
If you can not afford to pay your share of the cost of the military in this country, emigrate to Cuba or Mexico.
YOUR SHARE would cost about $13,000 per person with the present US budget. The fact that is a lot tells us Congress must spend less, NOT that $13,000 is not each of our fair share, merely because some people can’t afford to pay it. If we enacted YOUR SHARE today, the people would occupy the halls of Congress until they eliminated un-constitutional spending and bring the budget down to the $2,000 per person (which then pays 100% of the budget – after dealing with unfunded debts).
You just dont want to pay your fair share – you insist that some one else MUST BE FORCED to pay your fair share. I find your comments to be very confusing – poor people don’t want to FORCE anyone to pay their bills but they cajn do just that via Marxism ????????? I don’t think we are getting anywhere and need to ove on.
I was going to suggest that we make YOUR SHARE and Constitutional questions regarding Direct Taxes and Apportionment a separate and dsitinct discussion post. It is getting in the way of destroying H.R. 25. One set of H.R. 25 Jingoists tried to say that because they believed that YOUR SHARE was unconstitutional, that we just HAD to accept H.R. 25 solely because it was the most popular plan out there and was closest to being passable in Congress (in my view the HR 25 lobbyists had spent 10-15 years $23+MM trying to sell this Turkey and had “convinced” a lot of people to “support” it even if they did not understand it and it is nowhere near close enough to get passed).
An 18% tax exclusive NRST (leaving the SS & Medicare taxes in place) is still way too high. You would have to fix all of the other issues raised (double taxation, new home mortgage issue, Prebate??????).
Stephen #126,
What are are continuously ignoring is that in your condo example (or Mortgage), is that the individual enters into that contract voluntarily. I have pointed this out and so has Phelbers. One is not born into a mortgage or condo association. If I don’t want either, I can rent an apartment. Now if I can’t pay, I will be thrown out…but I still have options. I can live on the street, I can attempt to move in with family (if they will have you). In your world, I’d be thrown out of the country….and that assumes other countries would allow me to end up there and that I have the means to get there (or the government sends me anyway). While that may seem fair to you is seems immoral to me.
Phelbers,
Your continued insistence that the income tax is unconstitutional, illegal, immoral and probably fattening, caused me spend a lot of time reading both Pollock (1895) and Brushaber (1916). Pollock threw out a proposed income tax on the grounds that if it was a direct tax, it wasn’t apportioned and if it was an indirect tax, it wasn’t uniform. After passage of the income tax (again) in 1909, the 16th Amendment was circulated and eventually retified in 1913.
The 16th Amendment created no new taxing authority for the federal government which already had unlimited taxing authority (other than taxing State governments). What the 16th Amendment did was rule that the source of any income could not be considered, and also lifted the apportionment restriction on direct taxes.
As long as the 16th Amendment is in place, any and all income, including salaries, is subject to the income tax. There is nothing illegal or unconstitutional about the income tax. Immoral is in the eyes of the beholder, and if it is fattening, I would like to see an effective diet imposed. Getting rid of earmarks might be a good place to start?
Hank
You are exactly correct, except that the present implementation of the income tax taxes the sources of income – precisely what the 16th Amendment does not allow the be considered.
Any and all income is indeed subject to the tax, but income only in the Constitutional sense, and neither constitutionally nor statutorily does this include includes salaries in and of themselves. Salaries is a source, so it cannot be considered. Only the gains derived from salaries are constitutionally taxable.
Just to illustrate, if your salary is 1000°°, and you spend 500°° for rent and insurance, 300°° for food, clothing, transportation, phone, TV and internet utilities, that leaves 200°° for savings. At 1% interest, that’s 2°° of gross income you have derived from your salary. Not one penny of the source, the salary, can be considered as gross income.
The laws are written to include only the gains, not the salaries. So, like the Constitution (16th), only the gains are taxable under the laws as well without apportionment. The laws are constitutionally drafted, and include only the gains derived from sources, and only list salaries and wages, or compensation for services, as sources from which income may be derived, not items of income or wages per se.
The regulations do, however, list the whole of wages and salaries themselves as items of gross income where the laws do not, thus ‘considering’ them in violation of both the Constitution and the law (as well as the Supreme Court).
I pointed out earlier that the Supreme Court has (well after Brushaber and Pollock, both of which still hold) struck down later IRS attempts to extend income to include the source, in Blatt – also ignored by government.
We also agree that Congress can tax income sources, but only if apportioned – the 16th Amendment only allows the gains derived from sources to be taxed without apportionment.
The key to the whole mess is the equivocation – I use ‘Clinton-style’ because he popularized the dual definition deception with “It depends on what the meaning of ‘is’ is” – of income in the Constitutional (gains derived from sources with sources not considered) sense with the ordinary receipts sense of the word.
It’s easy to be distracted by the IRS usage of the two definitions as though they were actually one and the same. Bill Clinton did this again when he lied, “I did not have sex with that woman” using his definition of ‘sex’ knowing full well what the special investigator’s intended meaning was. The ‘blue dress’ exposed this lie, and the Supreme Court disbarred him for 5 years. Even though the Supreme Court has disbarred the IRS from taxing sources, they go ahead and continue to do so.
The real crime is in letting the IRS (or Treasury, as Stephen prefers) do through regulations what Congress and the Constitution forbid.
The addition of sources by the IRS against the law and Constitution is the truly ‘fattening’ aspect. It lets them reach all receipts, not just the gains from them.
We could flail the offal axe about anywhere we want, so bloated is the federal government with fat. Earmarks would be a good start.
Thanks for having a careful look at this, Phelbers
Stephen
Two points:
First, a direct head tax would be assessed upon each state by population. The state has to come up with its share. The state couldn’t get blood from a turnip, and so would have to take much more from those with the wealth to make up for those without. The poorer states with high populations would burden their richer citizens much more per head than a smaller wealthier state to come up with their apportioned share.
Second, no one is trying to evade any tax, or get someone else to pay their share. We have to live as human beings, and be realistic. Those that can’t pay the full amount (I guess now I can’t even make the first year at 56,000°°, and few American families could) should be allowed to pay what they can through an excise based upon consumption rather than be hauled off to , what, a concentration work camp? debtor’s prison? Mexico?
Humanity has evolved past that sort of existence. A head tax will take us back.
Thanks, Phelbers
TO: John Bailey re post # 127
I believe the proper analysis is that you are making the very same decision to remain a citizen of the US. I analogize either to our group first arriving here in the Mayflower or viewed alternatively, that we make the decision to remain in the US.
The fact remains that you have “maintenence” costs to pay and if you don’t pay them you should be thrown out – whether from your home or condo or from the country (maybe we can let you stay, but certainly you should not be able to vote someone else’s money to yourself – you would still be liviung free while someone else pays for your share of the maintenence costs.
While having to leave the country is a little more inconvenient than being thrown out of your home, that is just a matter of degreee, NOT a metter of principle. It might be a whole lot cheaper and more pleasant living on a in sunny beach in Mexico than in Northern Alaska.
Being thrown out of the country is no more immoral, in orinciple, than being thrown out of your home – again its a matter of degreee not principle.
Interesting that you mention getting into other countries. I am aware that in at least some civilized countries (Australia – New Zealand), you would not be allowed to emigrate there unless you could demonstrate that you had sufficient funds to support yourself and that you would not become a burden to the welfare or medical systems. Just try emigrating there and tell them you can’t afford your housing and medical care.They are wise to do so. The US seeems to take the opposite approach (in order to grow more DEM voters) – evryone come here because you are all entitled to FORCE some hard working person to pay your share of our national mainternenece costs.
What gives you the right to avoid paying your share of the costs. Can you walk into a fancy restaurant, enjoy and expensive meal and just tell them to go fiund some rich guy to pay it because you can’t afford it.
That meal is analogous to the cost of our military – someone is paying the bill, but everyone should be required to pay their fairly allocated share.
Phelbers re post # 130
What I am sayiung is that the State would then divide its burden up EQUALLY among all of its citizens (i.e., the “scientifically” fair emthod. If you can’t pay, that’s your problem. Move to Mexico, we can replace you with a hard weorking Mexican.
You refuse to see, that if your fair if share is $56,000 and you can’t pay it (as sad and pity-able as that is) THEN SOMEONE ELSE IS FORCED TO PAY IT FOR YOU – the bill must and will be paid by SOMEONE! Show me a Judeo-Christian religion that FORCES some people to pay for others in need.
To: John Bailey & Phelbers
Take the subject of Medicaid – medical needs including emergencies are even more compelling than MERELY the inability to pay for the national maintenence.
Can you not see tghat we are FORCED to pay for someone else’s bills (no matter how compellling). As one fellow traveler put it ‘I don’t mind giving charity, but I would prefer (and thought I had the right) to decide for myself, just how chariable I can afford to be at any given moment.
Phelbers, #129,
You wrote that: “the present implementation of the income tax taxes the sources of income – precisely what the 16th Amendment does not allow the be considered.” and “Any and all income is indeed subject to the tax, but income only in the Constitutional sense, and neither constitutionally nor statutorily does this include includes salaries in and of themselves. Salaries is a source, so it cannot be considered. Only the gains derived from salaries are constitutionally taxable.”
I don’t have any idea how you come to your conclusion, but it makes no sense. If the source of my paycheck is Boeing, does Boeing pay the income tax as you seem to claim? Of course not! I pay the income tax on that paycheck, not Boeing. Salaries are income, not a source, period.
The 16th Amendment specifically removed all consideration of the source of any income, and therefore, all income, from whatever source, is taxable. The claim that only income from income is taxable is clearly a frivolous argument that has sent many a foolish tax protestor to jail!
Hank
I come to the conclusion that salaries are a source, not income in the constitutional sense, because that’s how Congress precisely defines them. There’s no mistake here, or speculation, or off-the-wall theoretical inference, but legal evidence of law.
They define gross income as “Gains, profits, and income derived from wages, salaries . . .or any source whatever.
The definition lists sources, with wages, salaries, etc., as sources, not items of income.
Wages are a source, not the company that paid wages.
If salaries were intended to be income, the Congress would have never even mentioned “sources” at all. They would have defined Gross Income as,”Wages, salaries, . . . or any receipt whatever.
The regulations, DO list the whole of wages as an item of gross income – ruled unconstitutional by the Supreme Court in Blatt. The regulations drop the term ‘sources’ altogether with respect to wages, blurring, Bill Clinton-style, income in the constitutional sense and the ordinary non-constitutional sense.
Boeing is not the source from which the constitutional income is derived – Boeing is only the source of wages. The comparison is incorrect, and that’s where you are not following. Sources, constitutionally and statutorily, are monetary or equivalent dollar amounts, not physical entities such as Boeing.
The wages are what is listed in the definition as a source. The law does not say, “Gains derived from employers,” but the wages the employer paid. Wages are not 100% gain.
Although there may indeed be some element of gain in the wages themselves, they are not all gain, considering that it takes considerable expense to simply stay alive to be able to go earn wages. And only the gains generated or realized from wages – not merely receipts in the form of salaries, go into gross income by law.
In the Congressional Record, this very point was discussed extensively, and the amendment and laws were written to prevent the whole of wages, or any source, being considered as income itself.
The clear argument is not at all frivolous. I agree it is frivolous to base not paying on this factual statutory and constitutional arguments.
I also agree that tax protestors go to jail. I’m not at all suggesting not paying – but that is irrelevant to what is clearly stated in the law. They are jailed because the regulations add (against Blatt) the whole of wages to the gains derived from them, and the courts – but not the Supreme Court – ignore the unlawful, unconstitutional addition of the whole of wages to the gains derived from them to the definition in the statutes.
There is a night-and-day difference in wages as a source, as defined by Congress, and wages as 100% gain, as claimed in the regulations.
Thanks again, Phelbers
Stephen #131
With all due respect, one does not have to make a conscious effort to remain a citizen. Do you get up every day and say to yourself that you are going to stay a citizen of the US? I disagree that getting thrown out of the country is a matter of degree relative to getting thrown out of a house that one has defaulted on. The decision to enter into a financial agreement with a mortgage lender is a personal choice that the individual alone (or with one’s spouse) decides. So one has a 100% control of the decision at the most and 50% at the least. The debt this country has taken on is arranged and created not by one or two individual’s relating to their own personal financial situation. It has come about by my representative (who may or may not be representing my wishes as he/she has thousands of other constituents) and hundreds of others in doing the same thing. The two scenarios are not analagous.
I have never owned a condo, but have confirmed with a coworker who does that the maintenance fees (at least at his condo) are proportional to the size of your unit. For instance if you owned a 3000 sq ft unit and I owned a 1000 sq ft unit then your fee would be higher than mine. It may not be 3 times as higher, but your condo would put a greater burden on the the facility than might would.
to: p[helbers re post # 130
I have been racking my brain trying to figure out how to get across what is obvious to me but not to you.
You say “Those that can’t pay the full amount … should be allowed to pay what they can…..”
Who will decide what they can pay, Nancy Pelosi?
If you can’t pay your full $52,000 (I assume you meant – using the current budget of $13,000 p/p x 4 people) who would pay the unpaid balance?
Assuming you see that SOMEONE will have to be FORCED pay the unpaid balance of YOUR $52,000 fair share, please explain why it is fair for that person to be FORCED to pay your fair share (and then why it is fair for someone else to be FORC ED to pay for any of your other bills).
TO: John bailey re post # 136
I suggest that you do make a (sub)conscious decion every day that you do or do not wish to remain a US citizen. many citizens have indeeed surrendered their US citizenship. Thus, even if you don’t think about it every day, effectively you do make that decision daily because you have the POWER to leave.
Yes, you do have more control over intereing into a mortgage than you do over the federal budget. However, we theoretically have similar “control” via our joint voices in Congress. While we will never achieve that same degreee of control, Congress is still acting as our “representatives’ and theoretically do our bidding. In any event, we are all responsible to pay the bills that Congress runs up and which is why we should all have been paying cl;oser attention to what those rascals were doing. They are our responsibility.
Please go back and clarify with your friend. Yes, larger sized units are billed more for the maintenence, but not as a wealth tax. From our experience serving on a condo Board and our ownership of timeshares, I can tell you that the allocation of the maintence fees is made by a formula which takes into account the additional maijntence required of e.g., a 2 versus 1 bedroom unit, the number of people usinging the hallways and elevators (maybe values which affect the property tax). Thus, it is a rough way of attempting to estimate EACH OWNER’S RELATIVE IMPACT on TOTAL MAINTENENCE COSTS. Thus, it is NOT intended as a Progressive device to redistribute wealth to the less fortunate.
Phelbers,
The Constitution recognizes two great classes of taxes, direct and indirect, and lays down two rules by which their imposition is governed. Direct taxes must be apportioned and indirect taxes must be uniform. There have been historically only two types of direct taxes–land and capitation. Indirect taxes include duties, excise, and imposts.
Prior to the 16th Amendment, an income tax was unconstitutional no matter whether it was called a direct or indirect tax due to the restrictions. In the Pollock Supreme Court decision of 1895, the proposed income tax was thrown out due to the lack of apportionment and disagreement about the source.
The 16th Amendment specifically was crafted to overcome the objections in the Pollock case, and in 1916, the Brushaber case found that the 16th Amendment met constitutional muster by ruling out any limits on the source of income (land/capitation), and agreed that the income tax didn’t need to be apportioned. The bottom line clearly is that any income from any source is taxable under the constitution and income taxes need not meet the apportionment test.
We have been operating under that tax law for 95 years or so, and I find any continued attempt to restrict what is income to be simply frivolous. If you don’t want to believe my position, at least listen to the Jeff Dickstein video I previously provided. Jeff is the leading tax attorney who represented many losing tax protester cases before the Supreme Court, and he makes it clear that, the argument that only “income from income” is taxable, is a non starter.
I still fail to understand why we are nattering about this issue? We will get rid of the 16th Amendment in due course, but not because of any unconstitutional, illegal or immoral arguments.
Stay tuned!
The 16th Amendment
Sorry, I meant to write that the income tax is constitutional due to the 16th Amendment. Getting old and senile, I guess. Or perhaps reading Pollock and Brushaber several times wore me out. I have never seen so many compound sentences in my life!
Hank
My point will be made clear by M.E. Blatt and Co. vs US.
You looked at Pollack and Brushaber and correctly understood them. Why not look at this case too?
M. E. Blatt gave a 10 year lease for one of its buildings. The renter made it into a movie theater. Blatt still owned the building.
The renter made improvements by adding a marquee, ticket booth, carpet, concession stand, seats, screen, projection booth, and all the things needed to turn the building into a movie theater.
The IRS said that the mere receipt by Blatt of all the movie theater improvements was income to Blatt, and divided the cost of the improvements by 10, and charged Blatt that amount as income for the year in question, with penalties added of course.
The Supreme Court said no way. The mere receipt of something of monetary value is not income in the constitutional sense.
The improvements did nothing for Blatt’s bottom line. Only after the lease was up, and Blatt could convert the improvements into some monetary gain – as scrap at the junkyard, or an auction or other sale, could any income (in the lawful, constitutional sense) be realized.
Then the Court said this: “Treasury regulations can add nothing to income as defined by Congress.”
So is it with wages. Gains derived from wages has to first account for the expenses that went into getting them, subtract those costs, and put the remainder amount as gross income, not net income.
I have already shown that the IRS adds the whole of wages to gains from wages by dropping the words ‘source’ and ‘derived’ from the regulations.
The mere receipt of money or other item of monetary value is not income in the lawful, constitutional sense of the word income. Only after an accounting of the gains or profits arising out of the final disposition of that receipt is income realized in the Constitutional sense.
Treating the whole of wages as a gain is no different than treating the whole of the sale price of a house as gain. Everyone readily sees the fallacy there. But so common is the use of the ordinary receipts meaning of income, that the Clinton-style equivocation over the dual meaning of “income” (‘gains’ versus ‘receipts’) is so successfully achieved by the IRS. The deception is successful even to the well educated (but uninformed). It is easy for the IRS to pull this off, but just as false and unlawful nonetheless.
Thanks, Phelbers
Phelbers,
Sorry, but I can’t see how you take any comfort from the Blatt case as regards your claim that payrolls aren’t income and therefore not taxable. In Blatt, the IRS clearly overreached by trying to call improvements by a lessee income. The Court decided that the improvements were capital improvements and that any income later from the sale of the building would be taxable. Since there was no way to estimate a future sale price, the Court threw out the IRS claim, and rightly so! If you rent a house and have the interior painted, is that income to the owner? Of course not. But, how you get from Blatt to your claim that payroll isn’t taxable is beyond me.
We must simply agree to disagree, you can cling to your minority position, and we should move on to the purpose of this blog, which is to discuss the Fairtax pro’s and con’s.
TO: Phelbers & HVG
I, a retired tax lawyer/CPA, who should thus LOVE to wallow in the slop of tax case law theory, am experiencing my fast age-ing and decaying brain shutting down when having to dwell upon definitions of “income” for tax purposes, AS THEY RELATE TO THIS ISSUE/DISCUSSION. Hank said it best “why are we spending time looking up a dead jackass’ ass?
Let’s move forward on a constructive basis.
Let’s move Direct Taxes & Apportionment to a new Discussion post.
Let’s get back to HR 25 – if we can all agree that HR 25 as written is a non-starter (I am trying to be
diplomatic), we can have a seprate post for proposed REVISED HR 25′s.
Hank
I posted 141 before I saw 139.
You, the IRS, and Jeff, are using inconsistent, non-specific, multiple definitions for ‘source’, ‘income’, or ‘gain’ concurrently and interchangeably.
You use Boeing as a ‘source’, not wages, as does the Congress of the United States.
You use the words ‘income, ‘receipt’, and ‘gain’, as the same term, as does the IRS – against the definitions of Congress, the Supreme Court and the 16th Amendment.
It is simply incorrect to do this without explanation. This is the heart of the matter.
Why bother? The general principle of civilized society living under a rule of law is one good reason.
For example, the general term ‘property’ is not defined in HR 25. That opens the door for the IRS to define it, add to it, modify it, as it will. How long before the IRS defines “new” as the first time the present owner has it? Or, ‘new’ to the present owner since it was first only leased to the original purchaser? Or ‘new’ because there is a typo in the receipt? (there are off-the-cuff examples only, don’t bust my back over them).
Maybe we also need another Constitutional Amendment stating that, for any ambiguity or multiple meaning, only the one giving the least power, or revenue, to government is lawful.
Thanks. Phelbers
And, I have never varied in my agreement with you that the income tax is constitutional due to the 16th Amendment. We are in 100% agreement, and always have been.
But, a reasoned examination of and agreement upon what the term “income” means, and what “source” means is where we have not reached consensus, and so can’t converse apples to apples. This is the key to any disagreement between us.
Here are mine and the Congressional definitions:
Source – a monetary or other money equivalent value receipt – which serves as a basis from which a gain may be realized, (same as the law, and Supreme Court).
Gross income – the gains realized form the source, but not any part of the source itself (same as the statute and 16th Amendment).
Gain – a profit, addition to, accretion to, a source – but no part of the source itself (same as the statute, the 16th Amendment, and the Supreme Court).
What are your definitions?
Your post was clear – I know what you meant. Typos are the name of the game.
Hank
You read Blatt correctly, but again you missed or overlooked the point I made. Blatt is fully applicable.
Just as only the gain ultimately received from the improvements is income in Blatt, only the final amount of wages that is actually gain to the wage recipient is income, not the whole amount of the wage.
You are still defining wage as 100% gain, not allowing for any expenses, something the statutes do not do – only the IRS and the lower courts do this.
There is the same night-and-day difference in receipts and gains, in both wages and theater improvements.
I’m not talking conceptually about these definitions. I’m talking factually from the clear text and intent of the statute itself.
Remember, Congress defines Gross Income as the gains derived from a source, not the source itself. They list wages as a source, not a gain, but regulations change the wage from a source to a gain, just as they tried to do in Blatt.
Regulations add to the definition of gross income by Congress, adding the whole of wage receipts to the profit or gain derived from the wage amount, just as the IRS treated receipts as gains in Blatt.
No clearer rational cogent comparison exists.
Have you actually read the statutes, and compared them to the regulations?
Statutes include as Gross Income only the gains, not the wages. The statutes list wages as a source, not a gain.
Thanks, Phelbers
To: Phelbers
With the greatest of trepidation of getting sucked into a morass, I would offer one thought on your discussion of ‘income”.
IRC Sec. 61 says that “income” from whatever “source” derived shall be included in “Gross Income” (a pure tax term of art.
Importantly, the term “income” is used to distinguish from “gross receipts” (which may not contain a profit element) or from receipts for things that are not “income” in any sense, such as loans.
Sec. 61 lists many examples of such “income”.
The IRC would then go on to define what may be subtracted or excluded from “Gross Income” to arrive first at “Adjusted Gross Income” and then further down to “Taxable Income”.
The “source” is not taxed, but any “income” from whatever “source” derived is included in Gross Income , unless specifically “Excluded” or Subtractable from Gross Income.
There’s no morass, just deviousness between the law and the regulations. Regulations unlawfully treat sources as gains.
Section 61 lists sources, not items of gross income. Only the gains derived form the source items go into gross income. The list is not of items of “income” as you stated.
The part of the sources not gains over any and all costs needed to generate the source must be subtracted before inclusion in gross income.
All the adjusted and taxable definitions are based upon the lawless treatment of sources as gains. These steps must occur before arriving at gross income, by law and the Constitution.
Again, this is the deception foisted upon us. Sources are treated as gains.
It think we agree on what the law states, but have inconclusively settled on the difference between sources and gains. Sources are not gains. Sources cannot be included in gross income, and the law (section 61) specifically, but amphibolously (ambiguity through sentence structure) clouds that with deceptive comma placement. It differentiates between gains and sources, and lists only sources, not gains, in the list.
The first step is to acknowledge the difference between sources and gains.
Look up section 22a of the 1939 tax code, and the legislative history when the new definition was proposed in a good law library. That will convince you that no change in treatment of gross income as gains, not as the listed sources, was intended.
Thanks, Phelbers
To: Phelbers re post # 147
While I am not interested in going further down this road, I believe that Sec. 61 (even though it says “income” from any source) itself becomes the item of GI. That is, your next statement that only PROFITS are included in GI under Sec 61 is NOT the structure that I believe that the tax law uses. I have always considered that Exclusions and subtrcations from GI to arrive at AGI or TI must be provided by Statute.
Although one might consider alternative arguments such as yours, IRC Sec’s 162 and 212 provide general subtractions for expenses incurred in their production (although the latter is limited by a % of AGI).
I see no point in getting any deeper into this morass, because I see no point to it.
Forgive me but I am not going back to the 1939 Code.
Phelbers,
Take the word “sources” out of your arguments and see what you get? The 16th Amendment clearly was structured to say that sources of income could not be considered. That is, it doesn’t matter what the source of your income is, it is taxable. Any other reading of the intent of the 16th is incorrect.
You are tilting with windmills, and after taxing income/payroll for 98 years, your continued insistence that only “income from income” is taxable convinces me that you are just another member of the tax protester cult. And, most of them are currently felons.
The matter is a simple one, and of pivotal central significance to replacing the income tax. What do words mean, and who can reject or replace the intended, defined meaning with one not relevant for his personal gain? This goes to core of whether we are in a dark age, or in an enlightened society.
We agree that sources cannot be considered as income, only gains derived from these sources. You have said this twice – in 134 and 139.
The word ‘sources’ cannot be taken out of the argument, any more than ‘income’ or ‘derived’ can be taken out it of the 16th Amendment, or the statutes. They are there – ignoring them as you do is not an argument.
The statutes defining gross income list wages, salaries, etc., as sources, not gains.
Of this there is no question or argument, period.
Yet, the IRS regulations do remove the word ‘sources’ and then tax the sources themselves as gains, against the law, and against the 16th Amendment. This too cannot be denied.
I’ve never made any statement anything like “only “income from income” “is taxable, Hank. That is simply not true, and very very unfair – an apology and acknowledgment that you are wrong here is called for.
You are being dishonest to yourself – and the rest of us – by using two separate meanings for one term at the same time. This is insincere – a cheap Bill Clinton-style equivocation to try to fool others to make a incorrect point. You have to decide whether income is a gain, or a source – you have dodged this essential point – it can’t be both.
Are wages a source, as stated in the law, or a gain, as stated in the regulations? Be careful, though – calling an apple an orange will not make it so, even if the IRS gets away with it and jails those foolish enough to act based upon the difference in the law and regulations (something I have never advocated).
Words left undefined are the devil’s playground, and we are done for without clear definitions.
Thanks, Phelbers
To: Phelbers re post # 150
I offer you this friendly bit of tax humor to demonstate the silliness one gets into when one takes the tax law too seriously.
YOU SAY: “The statutes defining gross income list wages, salaries, etc., as sources, not gains. Of this there is no question or argument, period.”
I quoted from IRC Sec 61 which taxes “income from whatever source derived” and lists examples. I am not a English major (nor do the courts necessarity demand that Congress be English majors), but one can read that list as illistrations of 1) income, 2) sources, or 3) income from sources – isn’t tax fun?
To: ALL
Was my last post #99 on the Ryan ROADMAP for America’s Future so profoundly correct that you have no more comments?
The ROADMAP covers at least 3 major areas worth discussing, 1) a flat Tax + VAT, 2) SS reform, 3) Medical Care reforms.
There is mucgh there to discuss.
Phelbers,
I am admittedly a very old man and am rapidly losing patience with your continued claims that only income gains derived from that very income is taxable. I shorthanded your position by saying you believed that only “income from income” was taxable. In response you claimed that you never said anything like that and demanded an apology from me for misrepresenting your position.
I went back and reread several of your posts and must conclude that your position really is that you believe that only gains from income should be taxed. In other words, if I am able to invest some of my pay/pension and realize a gain from that investment, then that gain is taxable but not the pay/pension income that led to the gain.
That claim is totally frivolous, has led to prison terms for many tax protesters, and conflicts with the very clear meaning and intent of the 16th Amendment. That is that income from whatever source derived can be taxed without apportionment. You cannot truly believe that your paycheck isn’t income?
I stand by my understanding of your claim and don’t feel any apologies are necessary. Let’s move on to more important issues that come under the purview of this blog, please!
The real question is how can Fairtax move forward as a viable alternative to the current income tax system. The bill has been the same for over a decade. Things have changed and many have reviewed the proposal. To take the position, that the FT bill as written is perfect even maybe true is a non starter.
What we need to do is identify the major areas of the bill, evaluate, discuss and debate them in a honest fashion and develop alternative solutions while maintaining essence of the Fairtax.
How is the Fairtax going to be enforced? Hank and others insist that there will be at least 15% leakage. This is $300B lost revenue per year. To put this in perspective, that is about the same amount as the annual cost of the last tax cut bill passed in December.
Here we are designing a new tax system and we give up 15% off the top. In addition who do we audit? Not the companies responsible for collection and payment about 1.5M entities but the individuals (150M entities) who pays at the cash register. Given that system, I think 15% would not be enough.
However, if you design a tax collection system with 21st century technology, and generally accepted auditing procedures, you should get that rate down close to zero. Even if we fail and only get 10% improvement, we still get $30B per year better compliance.
So where were the system designers and CPA auditors when the FT proposed tax collection system was put together? It is clear, there were none.
To show how foolish the FT proposal is, if I buy a $1M term life insurance policy for $600 and $36 FT, and submit a claim immediately afterwards, the US government would owe me $300K. And the craziest thing about it, the US Government paid $1500 to collect that $300K. Therefore the Government would lose money on every insurance claim in America irregardless of administrative costs. This proposal alone will break the US Government and is not a sustainable model.
In order to replace the current system with a new system, the new system must be better in every way possible. The Fairtax can be better with some work, but today it is not better, it is worse.
So the best question is how can we move the Fairtax forward, improve it and make it a real alternative to the current system. We should embrace criticisms, understand them, and provide solutions. Eventually the criticisms will diminish and then you know you have something.
To: Terry Warns re post # 154
We welcome a new voice.
You say we must becveop alternatives “while maintaining essence of the Fairtax.” You must define what you consider to be its essence – is that the retail sales tax or the Prebate or what??
Sadly, the FT concept is so full of flaws that I belive that it can not be saved.
Somewhere (I can’t find the post) Hank v=Van Giesen wrote a fine post about a NRST that does seeks to replace ONLY the Income Taxes – and I assume the Estate & Gift Tax (i.e., so we would still have P/R Taxes) and I think he wisely eliminated the Prebate.. The rates would be a lot less. Somewhere I countered that the ratye would still be very high and other problems remain.
We must still seek a better answer. Please see my Paper in Part I of this post, SUPPLEMENT # 29, YOUR SHARE.
Terry,
You wrote: “To show how foolish the FT proposal is, if I buy a $1M term life insurance policy for $600 and $36 FT, and submit a claim immediately afterwards, the US government would owe me $300K. And the craziest thing about it, the US Government paid $1500 to collect that $300K. Therefore the Government would lose money on every insurance claim in America irregardless of administrative costs. This proposal alone will break the US Government and is not a sustainable model.”
We may have discussed this on another blog, but would you please go into greater detail, including the section of HR25 that creates this issue?
Thanks, and welcome!
Hank
Let’s back off a little – and look honestly at what I said. I don’t want to let your false statements of what I said pass uncorrected.
You still insist on falsely quoting me. I have never said, and never implied that only gains from ‘income’ can be taxed. Quite the opposite – I said only gains from sources – not income – are defined by Congress as gross income. You erroneously substitute ‘income’ for ‘source’ while agreeing with me that sources cannot be considered income in the legal, constitutional sense of the word.
You insist on using two separate definitions for income simultaneously and interchangeable.
I defined income two ways. One is the legal statutory definition as a gain derived from the sources, including wages, listed in the statute as sources. These are not statutory income as you mistakenly and repeatedly erroneously claim.
The other is the non-legal, non-constitutional, ordinary receipts meaning, held incorrect in Pollack, Brushaber, and Blatt.
Your ‘quotes of my position’ are only true if you use ‘income’ in the ordinary receipts sense, something I have never done in quoting the statutes.
Congress, not me, defined income as gains DERIVED FROM sources such as wages, and dealings in property, not wages and dealings in property in and of themselves.
My only point is that regulations change the law, eliminating the word ‘source’, and changing ‘source’ to ‘income’, as you incorrectly do.
You again completely and egregiously and falsely misrepresent me when you say, “That claim is totally frivolous, has led to prison terms for many tax protesters, and conflicts with the very clear meaning and intent of the 16th Amendment. That is that income from whatever source derived can be taxed without apportionment. You cannot truly believe that your paycheck isn’t income?”.
I have never made ant such claim! We agree that such a claim is frivolous. My paycheck is income but only in the receipts sense of the word, not in the statutory, Constitutional 16th Amendment sense. Do you really believe that income derived FROM a source is one and the same as the source itself? That is absurd, but precisely what you are saying! The IRS has tried to make this claim over and over, and has lost in the Supreme Court, specifically in Blatt.
If we permit false and duplicitous definitions, such as you insist upon and repeatedly make, and allow regulations to alter, add to, modify, and extend Congressional intent, and even Constitutional meaning, we are deceiving ourselves, as you deceive yourself here, we will fail.
Terry has it right, saying we must identify, evaluate, and discuss in an honest fashion. We have to define terms and agree on definitions to talk meaningfully. You have been anything but honest, Hank, but I’ll give you the benefit of the doubt by accepting that you are an honest man, but have just not yet defined the terms you use as I have carefully done.
I propose we actually re-write HR 25 in its entirety, and once we all agree, with affirmative vote, then have the most credible one of us submit it to Boortz and Congress. We would define each word and term, and state that for any ambiguity, or multiple interpretation, only the one giving the least revenue to government can be applied, and deny the courts (and maybe even Hank) any jurisdiction to allow the regulations to extend that meaning. We could do this Constitutional Convention style, with subcommittees for each provision, followed by evaluation by the whole.
Thanks
To : Terry
I also had trouble with your example that Hank replied to in post # 156.
First,l it appears that you are buying li9fe insurance from the federal govt — that seems very starnge to me because the govt does nit issue life insurance policies.
Next, youy pay a $600 premium and $36 of FT (that’s 6% of the Premium). If the total $600 Premium is subject to FT, then tThe sales tax (inclusive method) would be $156.
I can not follow how you calculate your $300 profit.
To: Phelbers re post #158
What, if any, is the concrete benefit of that entire blizzard of mind-numbing definition of “income”?
AFFT will brook ABSOLUTELY NO CHANGES TO HR 25. They tell you to lobby for your own bill (and spend $23MM and develop a grass roots organization) – kinda arrogant, don’t you think.
The only intelligent start on fixing HR 25 (which I say is far too flawed to fix) is one set out by Hank Van Giesen. I agree that this , or a new discussion post be devoted to REWRITING HR 25.
I also belive that we should start another new discussion post on Direct Taxation (and effectively transfer and continue that discussion to the new one).
Is there some agreement on one oor both of these 2 suggestions?
Stephen,
Regardless of whether or not I agree with AFFT not adopting any recommendations, since they are the ones who took initiative to support the research and create a bill, they can do what they want. I think the saying is, “He who pays the piper gets to call the tune”. While it may be arrogant, they may just disagree with what others want to change. That is their right. Don’t like what they present, then present your own and lobby to get it on the docket.
Personally, I think AFFT would be wise to seriously consider at least some minor tweaks. But if they take that approach the bill would be forever changing and would never get see the light of day. There will always be something someone will object to.
To: John Bailey re your last post
Certainly AFFT has the right to lobby for what they want. Also, the guy who answered the phone at AFFT does not have any authority to change anything, although I believe that he was refelecting management’s attitude.
What disturbs me is in part their bullying and arrogance. They keep throwing in everyone’s face that they have spent $23+MM (plus all of the follow on grass roots lobbyingf costs) – and they know it is difficult for anyone else to get over that initiual hump with respect to any other specific proposal. Also, IMHO, they are deceptively smug about the fact the most (but certainbly not ALL) of their grass roots support have a superficial, misguided understanding of HR 25 and AFFT wants to keep it that way.
You say “tweaks”: I got the TN Head of the grassroots organization to admit that “maybe the Prebate” has got to go – AFFT would NEVER go for that most vociferous complaint against HR 25./
Stephen
I’ve answered first question in earlier posts.
But here it is again. I answered “What, if any, is the concrete benefit of that entire blizzard of mind-numbing definition of “income”? this way in 150:
The matter is a simple one, and of pivotal central significance to replacing the income tax. What do words mean, and who can reject or replace the intended, defined meaning with one not relevant for his personal gain? This goes to core of whether we are in a dark age, or in an enlightened society.
Again, I’m only pointing out the statutory definition of gross income, and comparing it to the IRS definition which drops the word ‘sources’, unconstitutionally and unlawfully.
Thanks, Phelbers
Phelbers,
maybe I am just thick. Exactly what is it that you would like me to agree to? That The Treasury in its Regulations changes the IRC (enacted by Congress)?
Assuming arguendo that would agree to that – what happens next as a result of that?
I thought we all agree the Income TaX SHOULD ULTIMATELY DISAPPEAR (I THINLK WE NEED AN OVERSIMPLIFIED it FOR A WHILKE AS A TRANSITION). Is the poijnt you are trying to make not really relevant to the IT? Are you making a broader statement that we must be careful of any group changing what Congress enacts? Exactly what is your point in real terms?
An example of the essence of the FT. Under the FT, the government pays business .25% of sales to collect the tax and the states .25% to collect for a total of .5%. OK Now multiply 2.2T by .5% and you get $11B. In essence the current plan is very costly to collect and their plan only covers 90% of the nation.
I say, using 21st century technology, we design a system and I have, that has the business deposit their taxable sales into a special account and the bank forwards the taxes to the government.(Banks already do autoforwarding of money today). The government gets their money daily and saves $11B in the process. Today, businesses are not paid to collect payroll and witholding taxes or their income taxes, and now they do not even have to pay income taxes, why would we pay them to collect FT?
In essence, FT has not changed, but we do not only save $11B per year, but we make auditing 1000 times easier. What do you audit? Well you do not audit the taxable deposits in the special account because taxes are already removed and paid automatically. You audit the non taxable deposits. Guess what, the number of non taxable deposits are smaller, larger in size and usually very well documented. You do not potentially audit 150M people, but audit 1.5M businesses. In fact, the business should pay for an annual FT audit. That way we get 100% audits on our tax collectors. This is where the biggest payoff is. If Hank is correct, there is going to be 15% tax leakage ($300B) per year. If you required every business to have a FT audit, then the leakage should be significantly reduced. Again, we only audit deposits and we only audit B2B deposits as everything else is taxable. By the way, the IRS already audits deposits, internal auditors audits deposits, external auditors audits deposits and Management wants their deposits auditted and correct. They hate it when people take money out of the till for their own personal use. We know how to do this and we do this every day already. Compare this audit to auditing the income tax. The promise of FT is fulfilled.
Given this, then the states could easily piggyback on the solution. They expand their tax base including internet sales and they do not even have to have people to collect the money, it is done for them thus saving them money.
But then again it is a system design that improves the collection(faster, easier, less costly), compliance because you have to deposit your money somewhere, and provides for 100% auditing. This change alone could be worth over $300B annually and reduce the FT rate by 5% and without changing the essence of the Fairtax. It is just how the back office part of the tax works.
However, this proposal was rejected without comment by AFFT. This is why intelligent people would never support HR25 and why even Bill Clinton says it is crazy. AFFT may have spent $23M on fairtax, but fairtax as written will never be passed, it is basically a flawed proposal.
On the other hand, I think there are people who would be willingly to put the FREE effort in to improve the proposal.
Terry,
Your 1st para. – I think the State’s .25% is only gfot those States nthat agree to become SSTAA’s – while most of them likely will there will be several that will not. I don’t understand your 90% figure?
Daily deposits of the tax does not remove the retailer from the process (it add more banl processintg costs), so there $11B is not saved.
The need to audit retailers and buyers does not diminish at all. Your discription of auditing needs is overly simplistic – please read my brief section on auditing in my Paper with the 4 short SUPPLEMENTS that explain why the IRS is alive and well.
I could not agree more that HR 25 is terrible idea and should be dropped. You can try to save this NRST proposal with many changes, but I am afaraid that the broad-purpose major revenue use of a NRST remains a very bad midea and no amount of fixing can save it.
.Stephen
Yes, that is exactly what you should agree to. It is legal evidence of law, and you should take notice of it and be utterly appalled.
Regulations cannot create, add to, amend or modify laws beyond the statutes or the Constitution.
The Constitution gives that power to Congress ONLY, we people elect representatives to carry out that job.
I have shown you the statute that defines gross income as a gain derived from, not a gain in the form of wages. Wages are defined as a source, not a gain.
Regulations drop ‘gain’ and ‘source’ from the law, making the whole of wages income.
That there is not the least curiosity about this – only dismissal – even from a professional tax attorney, shows a disregard for this constitutional republic, and an acceptance that the bureaucracies can rule outside the law and Constitution.
I know that the law itself is never considered by tax attorneys, only IRS publications, Baldwins, Tax Court reports, etc, with the actual law only a distant irrelevant thought – much like the Bible to an atheist.
Violations are accepted, because the IRS is just too powerful to challenge, even on lawful grounds.
The point is relevant to replacing the IT, and to implementing a new tax.
We need to pin down meanings, and hold the IRS and the courts to them.
Thanks, Phelbers
Terry
You have nailed a good point.
The AFFT / HR25 tax was written by businessmen for businessmen.
The 1/4% is a windfall for them – at our expense.
Their keeping the ‘employer’s’ share of payroll tax (against original AFFT principles) is a windfall for them – at their employee’s expense.
The other major windfall they have sneaked in is that the buyer, not the seller, is liable for the tax, unless a receipt is on hand and kept available to show the new IRS to prove your own innocence. Business is off the hook. It is the buyer, you and me, who are forever liable.
With the income tax, we have been compelled to be witnesses against ourselves in any criminal case, with returns that are written testimony. We are compelled against the prohibition on government from doing this by the Fifth Amendment. (We could have been required to testify through returns if there were no CRIMINAL penalties, but where is the fun and the thug power in that for the IRS?).
With HR 25, we will be required to waive any 4th Amendment right against unwarranted search, and any privacy in our persons, houses, papers, and effects – the STB can search, audit, and demand a receipt for any object, including our houses. without restriction, since we are liable forever.
The IRS (actually it will stay under HR 25, and multiply in size, only just change its name to the Sales Tax Bureau, the STB) will have to be given general warrant power to ‘protect the revenue’. They can’t be restricted by having to go to court each time it wants to look for receipts.
Simply making the seller liable, as with all legitimate constitutional excise taxes, would make an NRST what the FairTax pretends to be – a tax that gets the IRS – or the STB – off our backs, and out of our lives.
But then the business cabal would just be shooting itself in the foot. It’ll never happen.
Thanks, Phelbers
Phelbers, I did not yet agree to the fact thatthe Treasury Regulations make the illegal word change you suggest – I said assuming that arguendo.
What I was asking for and have still not heard from you is – asume arguendo that I agree,
1) what concrete next step comes from that?
2) What happens as a result of Treasury being wrong? Are all Treas. Regs. immediately repealed?
Is the IT repealed? What effec t does this have on the FT or YOUR SHARE?
I would like you to agree that the regulations make wages and other sources ‘gains’ against the clear definition of the statute.
To verify this requires actually looking at the law itself – something you said you saw no need to do.
1) The next concrete step is to acknowledge and confirm that the bureaucracy makes law, against the Constitution.
2) The IRS (‘Treasury’) will be called to the carpet for their acting outside the law and Constitution – helping us get rid of the IT and the IRS. Only the unlawful IRS regulations would be affected – not all of them, such as the legitimate and lawful subtitle D excise tax regulations, which would remain under the FT.
The IT would not be repealed. Even the unlawful aspects of it are unlikely to be repealed, given the lower courts subservience and control by the IRS. But, the wider the knowledge, the better the chance and greater ammunition for repeal of the IT.
The effect on the FT, if demanded as an inclusion in it, would be clearly defined terms and phrases, limiting IRS / STB additions to or modifications of the FT as it now does with the IT. ALso, the courts would be denied jurisdiction in similar additions or interpretations extending the FT beyond the clear text of the law or the Constitution.
The effect on YOUR SHARE would be to forever eliminate is as a replacement, since it is an unconstitutional direct tax without apportionment. I know you have worked long and hard on YOUR SHARE, and believe in it, but it would immediately collapse the US economy. It would eliminate all small business, and most large businesses (WalMart, McDonald’s, GM, Ford, etc.) because all their employees, who are also their customers, would be deported out of the country for inability to pay such an unpayable tax.
Hope this answers your questions, Thanks, Phelbers
Phelbers,
While I still have still not delved into such research (I merely asked for your reponse to assuming arguendo that i agreed with your interpretation of the Regs.) even if the Regs. were found to be incorrect (i.e., that they should only tax “income from wages” not “wages” – if that is the argument you are making), I do not see Treas being “called on the carpet”. Off the top of my head, CONGRESS has the right to reign in Treasury at any time they want. People have challenged Regs. as being beyond the scope of the Statute passed by Congress or otherwise invalid. Congress can override a Reg any timer it chooses to.
I just don’t see any CONCRETE benefit of (researching and) agreeing that a Reg holding “wages” to be gross income is some sort of giant tragedy.
With all due respect to your interpretation of the Constituitoin (and even if you are right and we need an Amendment just like we did for the IT), YOUR SHARE is the best “scientific” method of allocating the cost of our common charges (and you have not offered a more “scientific” method) and your dislike for it by definition proceeds from Progressive/Socialist doctrines or Jim Wallis’ forced charity brand of religion.
Stephen
I should have added that YOUR SHARE would be forever eliminated UNLESS there is first a Constitutional Amendment repealing both direct tax apportionment clauses – sorry.
Phelbers
Phelbers
Thank you. On my list of to do’s I still have the project of going back to the history and case law to reasearch Diract Taxes and Apportionment (as I noted, I ecall some verbiage suggesting a head tax is automatically apportioned, but will have to be more authoritative than that). So, until I am able to comp-lete that research, I am not ready to concede that it is infact unconstitutional because it is not Apportioned.
Any citations to case law you have to offer in this regard would be most welcome.
I submit that even if necessary (i.e., if in fact YOUR SHARE is not deemed to be “apportioned”, any necessary amendment to the Constitution would be far more in keeping with America’s founding principles of individual responsibilty and anti-Socialism than was the class-warfare, Progressive/Socialist, 16th Amendment.
To: Terry Warns
By chance, I noted your post # 681 on PartI of this discussion.
The way I read it FT does not prohibit the new “IRS” from auditing buyers (see my paper infcluding the 4 SUPPLENTS on this topic). The IRS would be foolish niot to audit buyers. I agree with you that this is but one factor thay slays FT.
Your audit trail is fine as far as it goes – it just does not go far enough. What if the retailer does not deposit sales receipts in his business bank account? What if the retailer does not charge sales tax and does not make deposits into his regular business banking account. How will you audit the new gigantic black market?
How will ou deal with the giant Mercado Mexicano that will run the entire length of the MEXICAN side of US-Mexico border?
Stephen – 172
A constitutional direct capitation tax cannot start with a per-head amount as YOUR SHARE proposes.
The YOuR SHARE head tax is not apportioned constitutionally because it does not first establish a total tax, then proportionally charge each state with its share of the total.
Each state would have to come up with it’s total share whether or not every single separate member of its population could pony up exactly 13,000°°. If only 10% could come up with the 13.000°°, and, as you would forcibly demand, deport the other 90%, that remaining 10% would still have to come up with the balance so the state could meet its constitutionally required tax. The Feds would come in with guns blazing to take form whomever they could to get the full state share, 13,000°°, 130,000°°, or 1,300,000°° form each if necessary. Such a tax would never be at all fair. Richer states would pay less per head that poorer states where most would be deported.
Such a system would cascade, until Bill Gates or Warren Buffet, or a few more remaining multi-boillionaires ALONE would have to pay the total tax.
This is the check that the Framers built into the Constitution to severely limit any direct tax to rational, scientific limits. It is this wisdom alone that allowed the US to become such a great and powerful nation – one where the individual productivity and genius of the multitudes could contribute in proportion to their need, not their ability. And they could receive according to their ability, not their need (just the opposite of Marxism). This is the system that works to progress a nation.
YOUR SHARE would deport an honest hard working citizen who may only be able to pay 9500°°, or 8,500°°, or 500°°. Their productive effort, and taxes, would be lost to the US.
Instead of a rigidly established exactly equal amount from each, as in YOUR SHARE, constitutional indirect taxation establishes uniform equal RATES of taxation for all. Natural human desire to advance allows each to pay more according to their desire to consume, which is never ending. Tax amounts rise from each as their wealth and positions rise, and all the legitimate federal bills get paid.
Thanks, Phelbers
To: Phelbers
With all due respect to your clear explanation, I reserve the right to later explore the meaning of Direct Tax & Apportionment and may indeed come to the conclusion that YOUR SHARE is NOT apportioned. When I reach that point in my research, I will get back with you.
While you very eloquently state the case for not charging the poor more than they can comfortably afford to pay, and thereby generate a measure of support for your policy, I still believe that pandering politicians should not be permitted to make the deceisions of how much any one person can “afford” to pay. I think that excise taxes worked when we were a smaller nation, but even that what a political compromise rather than a principled approach (i.e., it left some paying more than their fair share deteremined on the best “scientific” basis and others paying less than their fair share.
Your comments about the high dollar SHARE is a result of CONGRESS OVERSPENDING!. Recall, I think the number should be only $2,000. Very few people could not afford to pay that (unless they decide to produce a lot of kids). I wonder how much “productive effort” we get from people who could not afford $2,000.
If an employer felt he could make a profit on that person’s labor, he would pay the $2,000 for him. Infact, employers would hire only those who would be productive.
Thank you for your comments. The 90% solution is only 45 of 50 states have sales tax organizations.
As far as a business not depositing their sales into a bank account, it is unclear where they would deposit their receipts. There are three ways to pay for things in US. Cash, Checks, Credit/Debit Cards. 2 of the three require bank accounts in order to work.
Currently auditors do audit sales to deposits. Recently in Detroit, a restaurant chain owner and wife were found to siphon off over $1M in cash from their chain. He is in the Middle East, She is in jail and their kids are in foster care. Auditors can and do know how to audit for cash.
In saving the $11B, you note there will be bank processing costs. This will be borne by business and the banks, not by the government. The forwarding of the money is already being done. I am not creating new technology but leveraging existing technology. Therefore the .5% will be saved.
It does not matter if the business collects the FT or not in this scenario. All their deposits are auditted. They can deposit into a special FT account and have their taxes removed, thus there is no need to audit or they deposit into a non FT account and have to document the source of revenue(B2B, capitalization, etc). I do not care how the money got to the FT account. By definition its taxes have been paid. Therefore only deposits that have not had the taxes removed need to be audited and they are audited every year in order for you to do business.
So how would a black market exist in this work? Black market ops in a FT world with annual audits would need to be small cash transactions by people working outside the mainstream marketplace. I think in the FT proposal, there are two bigger problems. One is paying for a personal expense by claiming it being a business expense. Second is claiming a good is used not new.
Just as there is today, there are certain transactions that required additional documentation to be supported in order to deduct that expense. I will mention two, restaurants and sporting events. Restaurants and any food catering will always charge FT even in a business setting. The business will need to ask for a refund of the taxes to claim that this is indeed a business expense. Food for final consumption is always subject to FT. the same goes for lodging and most of the hospitality industry. Today there are rules what is deductible and what is not in this area, FT would have the same rules and it is the business responsibility to justify they meet those rules, not the retailers. The same goes for sporting events, suites, etc. In the current tax laws, these have limited deductiblity. The sporting event venue would collect the tax and the business would have to request the refund.
Hey I can buy my personal auto via my company and forego the FT. No, you have special rules in place to day to describe the deductibility, the same would be true in FT. Therefore certain B2B transactions that have a personal nature about them will be taxed and the business wants a refund of those taxes, will request them and that will be auditted annually.
The biggest area FT will have problems with is the new vs used argument. So a builder builds a new house, but does not want to incur the FT on it. The builder rents that house out for a month, deposits the rent into a FT account and pays the FT tax. Now it is used. He sells the house to someone else and since it is used, there is no longer a FT due. a dealership could do the same, how about a furniture store. Used is a real problem, that has to be dealt with in the FT rules of compliance and auditing.
That is why we need work on this area, but it is worth the effort as we can save $300B annually. It is not insurmountable to determine rules and regulations about these things even by industry. However the FT is quiet and instead hey let’s audit 300M citizens rather than regulating and auditing 1.5M businesses.
You might think there will be a large black market. I say, I can collect $300B more annually by focusing on the black market and make it difficult if not impossible to exist. Annual audits and real regulation will reduce the impact of the black market.
But if I want to criticize FT, it would be easy to say black market. This is why FT must address these issues in order to go forward. They must show that there are systems and procedures and regulations that will address collection, compliance and auditing. Otherwise it cannot be taken seriously.
Terry,
You wrote: “The biggest area FT will have problems with is the new vs used argument. So a builder builds a new house, but does not want to incur the FT on it. The builder rents that house out for a month, deposits the rent into a FT account and pays the FT tax. Now it is used. He sells the house to someone else and since it is used, there is no longer a FT due.”
I don’t think that is true. Here is an extract from HR25, Sec 103 (c):
“(c) Conversion of Business or Export Property or Services- Property or services purchased for a business purpose in a trade or business or for export (sold untaxed pursuant to section 102(a)) that is subsequently converted to personal use shall be deemed purchased at the time of conversion and shall be subject to the tax imposed by section 101 at the fair market value of the converted property as of the date of conversion. The tax shall be due as if the property had been sold at the fair market value during the month of conversion. The person using or consuming the converted property is liable for and shall remit the tax.”
My reading of the bill is that building a rental home and paying a tax on the rent for a short period does not qualify the house as “used”. Whenever the house ceases to be a business, the sales tax on the free market value is due. Check it out.
New vs. Used
If HR 25 liability was on the seller, or manufacturer, as in all legitimate, constitutional excise taxes, the full 23/30% could be collected once at the most efficacious point in the sales stream.
It may be no more difficult to rebate the tax at conversion than to charge and pass on the tax at conversion.
This would get the full 23/30% tax on the true original sales price and close the loophole of artificially reduced price through conversion by sham business purchases. Thanks, Phelbers
Stephen
YOUR SHARE is apportioned among the people, but not constitutionally apportioned among the states.
There is as much difference here as there is in the lawful, constitutional defined definitions of gross income and the regulatory definition – apples and oranges difference.
We are in complete agreement that Congress is overspending. And it is their regulatory Bill Clinton / Hank Van Gleason-style equivocation in falsely substituting their own words and meanings in place of the actual words and meanings that has allowed it.
But, we have to be practical, and replace the income taxes (I include all the direct income-style taxes) with a workable alternative.
Once the budget is down to 600B, then we may be able to rationally propose YOUR SHARE, but it is a non-starter at this 3T ++ budget.
Taking the extreme IRS (‘Treasury’) 60/150% rate as gospel, over more reasonable and carefully supported (Hank van Gleason, post 1) rate estimates, and rejecting any NRST on that basis, is not a careful consideration of the numbers.
Similarly, rejecting any NRST under the doubtful assumption that there will be astronomical evasion, when accurate government studies show 16 – 17% (in the research portion of this website), is also not reasonable. Terry has good info supporting a workable deposit / collection system.
A legitimate, constitutional NRST, imposed as an excise, with other than the buyer liable, is very workable.
Thanks, Phelbers
Terry re post # 19
While I have never before put my mind to this subject, I belive that there is a large cash economy in existence today, that will grow in size and scope in the future. Just like drug dealers, etc deal with large sums of cash, perhaps they will become the middlemen in an even larger worldwide cash laundering economy. Besides cash, there are are “unreported checking accounts” – the STAA will have to monitor all checking accounts across the nation and perhaps the world. I can envision a barter market aided today by the internet.
My suspicion about auditing for cash sales (with with I have noi direct familiarity other than my general CPA background) is that it is difficult to uncover. I believe that a famous retailer in my old home state was turnde in by a disgruntled former employee who reported that cash from a couple of the cash registers did not get sent to the bank. There are ways to conduct audits, but clever tax evaders can succeeed if they are suffici9ently motivated and careful.
In old Russia, where they shot you for breaking the law, and where goods were not available, one could still obtain any goods they wanted on the black market. I have no doubt a significant black market/cash economy/barter system would develop in this country.
The responses to the new/used issue and exemptions will all have to be dealth with by developing rules and then auditing to insure compoliance. Have you read the 4 SUPPLEMENTS in my Paper than deal with required auditing (which is why the IRS is NOT “abolished”)?
Hank & Terry re post # 20
I am not 100% certain that the statute you quoted would apply – I would argue that the property ws NOT “converted to private use” – it was sold.
However, I previously considered that tax avoidance scheme, but rejected it because it would not work (the draft6ers were very clever on this point, actually). Although the property is “used” in the real world sense, that it does not qualify as ‘used” under H.R. 25. Subtitle A, Sec. 2a(16) defines “used” property as property upn which FT has already been paid.
To Phelbers re: post 21
That would not catch the FT in this case because the buiders himself rented our the property (rather than selling it).
Further, if the builder tols it to a person whom used it in his rental business, there would be no FT payable.
To: Phelbers re # 22
Again I suggest this subject be moved to a separate discussion (thread?).
I understand your interpretation of apportionment -I appreciate to your educating me this far and look forward to your assistance and guidance as I fully explore the subject for myself to see if I reach the same conclusion as you do.
While I would give zero credibility to any words that come out of the mouth of Bill Clinton (& Obama) I do give much credibilty to Hank Van Giesen, even though he is an economist by training – you have to keep a sharp watch on those people.
I have written, YOUR SHARE is only practical when we have a separate plan in place to take care of the $14T debt, the $107T unrecorded debt, and get the current $3.8T budget down to $600B (I think the shock therapy of going to YOUR SHARE and start a mass protest to get Congress to get serious quickly, would be too traumatic a therapy).
AFFT’s la-la land estimates of tax avoidance, which have been criticised by Treasury, JCT, economists and many others is simply not realistic and in and of itselfdestroys any credibility that AFFT might otherwise have.
A NRST might have some limited use (to collect a limited amount bof revenue) especially if coordinated with State sales taxes so as to have a uniform sales tax system across the country. I would seek to limit any political wealth redistribution (no Prebate, no exempions of goods purchased mostly by the poor, etc.). The base would be more like the median state sales tax basze used by Treasury, rather than the extended base used by HR 25.
Stephen
My interpretation of apportionment is the same the Congress used in the Direct Tax of 1799 – when all or nearly all of the Framers were still around and in government, to implement it as they required in the Constitution.
I give Hank credibility when he is credible, as in the rate analysis in post 1, but not when he deliberately uses false words and statements on SS and gross income. Unabashedly and unashamedly Bill Clinton-style, he substitutes words I and the law do not use as mine or those of Congress in my showing him the actual Congressional Constitutional definition of gross income in the statute when I compare it to the actual regulatory (IRS) unlawful changes to them.
I’m not accepting AFFT’s rates or avoidance estimates either – you are again taking extreme and unsupportable positions as gospel, without consideration of the rationally supportable positions in between the extremes.
Thanks, Phelbers
To: Phelbers re post # 27
I will be sure to include the Direct Tax of 1799 on my research list.
I do not believe that Hank DELIBERATELY uses false words. Non-lawyers are generally not as precise in their use of language as lwyers who write & read statutes.
I don’t 8understand what you mean by “extremem & unsupportable positions”. I think AFFT uses no provision for tax avoidance in HR 25 (or a very small one). Every “independent” tax thinker thinks that is way too low a figure to use, particularly as the sales tax rate rises. From my lifetime experience in taxes, this view makes all the sense in the world to me. No-one can accurately predict the exact rate of tax avoidance but common sense tells you that it goes up as sales tax rates rise. AFFT’s la-la land position goes against all of my life’s experience in the field of taxation.
I precisely defined the terms I used – those in the statute – and Hank twice substituted other words where I did not use them or even imply such an application, once AFTER I pointed out exactly where and which words he changed. That is very deliberate indeed – is posts condemn him.
The extreme and unsupportable positions are the AFFT’s near-zero avoidance estimate, and the IRS (Treasury / JTC) rate estimates, each of which you use as final and unchallengeable anti-NRST data. I just think there are other more reasonable data (Hank’s analysis specifically on rates).
Thanks, Phelbers
Phelbers,
Let’s try some more word substitution. But first, here is your position from post #5 that I disagreed with originally: “The amendment (16th) allows the government to tax only the GAINS without apportionment – which would be a relatively de-minimus amount (interest from savings of left-over wages, etc.), not the entirety of all monetary receipts.”
Although you complained bitterly, it is clear from your post that you believe that only the “income from income” (such as interest from savings of left over wages) is taxable. That just is not true, and to make my case, here is the 16th Amendment with two words, “incomes” and “derived” spelled out per the dictionary. Please note that the word “gains” never appears in the 16th.
“The Congress shall have power to lay and collect taxes on “the sum of all wages, salaries, profits, interest payments, and rents” (income) from whatever source “obtained or received” (derived) without apportionment among the several States,and without regard to any census or enumeration.”
Clearly, the Congress can tax incomes of all types, no matter from whom received, without apportionment. Your claim that only income from income is false, and if you continue to espouse your singular false position, you will certainly be judged a tax protester with frivolous claims of no merit.
Personal attacks are not tolerated on this blog, and to compare me to slick Willie and his false words and actions is just unacceptable. I think the meaning of the words in the 16th Amendment are quite clear. I’m sorry you don’t agree!
To: Phelbers re post # 29
I am at a complete loss to understand how you can make the comment that I use non-AFFT rates of tax avoidance as “FINAL AND UNCHALLENGEABLE”. I just got through explaining some QUITE DIFFERENT TO YOU. So, let me repeat what I just said in post # 28 “No-one can accurately predict the exact rate of tax avoidance but common sense tells you that it goes up as sales tax rates rise [i.e., non-AFFT viewpoints] . AFFT’s la-la land position goes against all of my life’s experience in the field of taxation.” Phelbers, it appears that you are projecting your own thoughts and NOT listening to what the other fellow thinks (you don’t have to agree with me, but at least you can get my position right).
All the data that people have assembled is likely useless, because there has never been such a high sales tax rate used anywhere in the world. Anyone who tries to do that may be well meaning and very sicientific and mathematical, but the results they arrive at are nothing more than speculation. If I recall, Treasury did not find that tax avoidance would in fact be 30%, they merely used 30% to illustrate. They and other non-AFFT sources belive it will be high and growing higher as the sales tax rate increases. Your friendly estimates (as well as produced by non-AFFT estimates) are all nothing more than wild-eyed-guesses, no matter how many economic formulae they utilize (my apologies to any economist in the group).
While I thought that AFFT used a 15% tax avoidance rate., others have explained that they assume little or no tax avoidance.
Your evasion position, as I believe you twice sated, is the sentence stating that ““No-one can accurately predict the exact rate of tax avoidance but common sense tells you that it goes up as sales tax rates rise [i.e., non-AFFT viewpoints] . AFFT’s la-la land position goes against all of my life’s experience in the field of taxation.”
I never meant to imply otherwise – do I still have it right?
What I thought I’d said, and again now try to say is is that this you use non-AFFT assertion by AFFT as final absolute proof that no NRST can ever work because evasion is ignored or underestimated by AFFT. And, you assert with certainty that evasion with any NRST will be astronomical, rendering any NRST impossible.
I again reference the IRS data, documented by the late Senator Roth (see part I) that evasion rate for the IT is 17%. Also, research paper on this site reports 16% evasion for sales taxes.
These are much more than wild-eyed guesses. These are hard data real world examples, and a very good starting point for a NRST.
Given the available evidence which points to a 16 to 17% evasion rate, based upon real world experience and data – an undefined astronomical rate you use to reject any NRST is not justified. It is certainly as wild-eyed as a zero evasion rate. I reject both.
The present IT rate is 17% higher that it would be with no evasion, to make up for the evasion shortfall, and make the total take what it is. So the replacement base for the ‘Fair’tax, or any NRST need not account for an additional 15% – that evasion rate is built in.
So, using the present IT total tax take is a good starting point based upon real known evasion rates.
To assume as a final position that no NRST can work because the evasion rate will be much, much higher – astronomically high – is not a reasonable position.
We are forgetting that the vast majority of Americans are honest taxpayers. Give the data, and your fellow Americans a break on this evasion thing.
Present tax rates are in the 36% range, but have a 17% evasion rate. I agree that the rich can buy influence through lobbying, to lawfully evade, but further study of real data is needed before you can blanket-assert some astronomical rate of evasion for any NRST replacement.
I’ll correct my position if I’m still misreading you, Phelbers.
To:Phelbers
Please point me to a study that says sales tax evasion rates are 16%. Next, are these studies based upon current State sales taxes (which I believe are in the 6-7% range mostly)? If they are, then 16% would be an inadequate rate in the case of much higher sales rates (as the Treasury pointed out).
Common sense tells me (and other independent bodies) that tax avoidance rises geometrically as the sales tax rate rises. Yes, this tax avoidance phenomenon is one of the main reasons that I believe that an NRST will never work.
You may need further study – I do not, because no amount of study or theorizing or otherwise educated guessing can ever accurately predict an accurate result. IMHO, one must use common sense and judgment to understand that tax evasion will rise dramatically as the tax rate rises.
Hello Hank
Your word substitutions are not correct in this instance, and are the source of the misunderstanding. Here’s why.
It is proper to substitute the common, ordinary, everyday definitions for words and phrases into the law, as you have done unless Congress has specifically defined the terms otherwise. I checked that with my attorney, and Stephen can attest to it, it’s Law 101. Please follow through with that in mind.
Congress has provided the definitions of both gross income and source in this case, so those are the definitions that must be applied over the ordinary meanings, and any tax resister stuff.
Congress defines Gross Income as “Gains, profits, and income derived from wages, salaries, compensation for personal services . . .dealings in property . . . rents . . . or gains or profits and income derived from any source whatever“. The list of sources is longer, but I left out some of the sources for brevity. (Copied directly from the statutes).
These terms exactly parallel the wording of 16th Amendment.
Congress defines income as a gain or profit, and wages, rents, etc. as sources. It is in this respect to the legal, lawful constitutional definition from which I start in making the point.
You, and the IRS, use the ordinary, non-lawful, non-constitutional definitions of income and source to arrive at your re-worded 16th Amendment, and to alter the statute, which the law (and the Supreme Court in Blatt) does not allow.
A correct rewording of the 16th Amendment, using the legal, statutory definition of gross income and source, is “Congress shall have the power to lay and collect taxes on [gains and profits] from whatever [wages, rents, dealings in property or other source] derived, without apportionment . . . .”
Your substitutions change income to receipts, and sources to employers or other payers of the receipts.
I’ll pause there to see if you understand that I am talking the apples of the lawful, statutory definitions of Congress, not your oranges ordinary everyday dictionary meanings, overridden by those provided by Congress. These are not the same.
And when wrongly you say I said “income from income”, you are using BOTH definitions at the same time.
I have never said, implied, or intended that usage. I do not believe it, either, because it suggests I am using the two definitions simultaneously. I have always meant only “gains derived from sources” – same as Congress.
Thanks, Phelbers
Stephen
Here is the BU paper that found a 16% rate. I thought it was in the research section of this site, but instead Ed Michael linked to it in part 1 – my apologies.
HR 25, (now it’s HR 47, I believe) with the buyer liable, might very well tend to increase evasion, since there would be 200+ million potential evaders.
But keep in mind that we only now have a 17% evasion rate with that same high number of liable taxpayers, and the same high amount of taxation now. A NRST would simply replace the same amount of taxation, just differently collected, so there is some credence to be given the same evasion rate for the same tax level.
But a legitimate NRST, where the retailer is liable, with only 16 million potential evaders, might not have the same evasion rate. The 115,000 or so IRS (STB) agents could concentrate on far fewer potential evaders.
Still, your astronomical evasion rate is as much speculation as the AFFT zero rate.
I can’t rule it out on that point, given the factual data which counters it.
Thanks, Phelbers
To: Phelbers
The 16% tax evasion was beased upon current state sales taxes of about 6-7% wasnt it?
It is much more difficult to avoid current taxes because of all of the tax withtholding and Form 1099 reporting.
What FT dreamers don’t ever consider is that the marketplace will shift away from those fe retailers – the new “IRS” will have to audit 300 million consumers (maybe only 150MM),
The “astronomical” rate of 150% was not mine, but the combined work of the U.S. Treasury and the simple math done by Prof George Yin of UVA Law School (i.e., Treasury’s figure of 89% using a 30% exasion rate and a median state sales tax base, was targeted to generate enough tax to replace the income tax ONLY – Prof Yin simply added on another 2/3 to be able to replace the other taxes that the FT purports to replace).
Again, neither they nor you can guarantee a 16% or 30% evasion rate – in fact they merely use 30% to illustrate a higher rate of evasion without attempting to claim that is the “right” number.
Stephen
And here is where you can get the Senator Roth book citing the official IRS 17% evasion rate for the present income taxes.
Thanks, Phelbers
Phelbers
I am not challenging the fact that there is some tax slippage in the current Inco0me Tax – I have always known that.
Tax fraud has been somewhat dulled because people don’t really understand that their taxes are being withheld weekly. When people get their gross paycheck and are faced with a MINIMUM (fed+State) 40-50% sales tax, they will revolt!
Stephen
I don’t know the effective total rate at the time of the BU referenced study, but probably close to the present effective total sales tax rate of 13.93%, the highest in all of Canada (the regional taxes are taxed again by the 5% national sales tax, compounding the total). It is set to increase by 1% next year.
I’m not at all guaranteeing anything. And neither is anyone else you cite. They just assume, guess. I’m using the actual reported rates as a starting point, and just a starting point, not a guessed at rate.
I also agree with you on the FT as now proposed in HR 47. I’m not a HR 47 supporter, but a NRST supporter, along the lines of the original FT.
We need to have the retailers liable, so the 16 million or so of them can be audited, not the 300+ or 150+ million buyers.
No one has addressed this scenario – except maybe me.
You are throwing the NRST baby out with the HR 47 dirty bathwater. Just keep an open mind about it.
Thanks, Phelbers
Phelbers,
I have taken some time and effort to explain to you what the 16th Amendment says and means. It seems you don’t want to accept the common usage of the words “income” and “derived.”
Now, here is the exact wording of the statute that created the income tax.
(B) That, subject only to such exemptions and deductions as are hereinafter allowed, the net income of a taxable person shall include gains, profits, and income derived from
salaries wages, or compensation for personal service of whatever kind and in whatever form paid.
or from professions, vocations, businesses, trade, commerce, or sales and dealings in property, whether real or personal, growing out of ownership or use of or interest in real or personal property,
also from interest, rent, dividends, securities, or the transaction of any lawful business carried on for gain or profit,
or gains or profits and income derived from any source whatever, including the income from but not the value of property acquired by gift, bequest, devise, or descent:”
Can there be any question that the Constitution and the Statute both allow the taxation of wages and salaries? If you still hold to the frivolous argument that only gains from income should be taxed, then please tell me why? And, by the way, Blatt has nothing to do with the larger issue you have raised. Blatt simply confirmed that any money spent by a leseee on leased property can not be considered income to the leasor. It is a capital improvement which may be taxed when the property is sold. Go find another case where your claim that only gains from income is confirmed. You can’t do it, imho.
Phelbers re post 39
Is the BU study using Canada? Where do you get 13+% sales tax rate. The US average is more like 6-7%.
Canadians arwe much more honest than Americans (prim & proper British versus us rebellious colonists).
You call it H.R. 47. This p[ost says H.R. 25 – Woodall quotes 47 “original” sponsors is his deceptive sales pitch, typical of FT sellers.
I am confused. You say you don’t like the current FT, but favor an NRST “LIKE THE ORIGINAL FT”. It is my understanding that the original FT differs from the current version ONLY by the fact that the current version specifically eliminates the Incopme Tax.
What you are still missing is the fact that no matter what NRST system we use, IRS will still have to audit the 150 million purchasers in order to properly audit the sellers.
My mind is open to NRST, I just can’t see how it couyld possibly ever work.
To: Hank
I dread getting into the morass of this conversation with you and Phelbers, but I want to help both of you.
I thought you earlier quoted the 16th amendment which could not be any clearer that wages, etc were subject to tax (i.e., that source). That should have ended the discussion.
Now you quote “the statute from whence came the income tax” – what Statute is that?
Hank
You didn’t even read my post 191. Please take a look at what I said first.
I do indeed accept the common usage meanings of ‘income’ and ‘derived’. I am not talking about those meanings, but the meanings defined by Congress, which you cite.
These common usage definitions are overridden by the definitions Congress uses, and you correctly cite these definitions from the statutes. By COngress, wages are a source, not income. Gains are income, not the source, because, under Pollack, sources are property and not reachable without apportionment, only the income (gains and profits) derived from them.
Yes, very much indeed there can and is every question that wages and salaries cannot be taxed under the statutes as defined by the statutory definition you cite for income.
You yourself have seen the Supreme Court decisions that disallow taxation of the sources. Income must be separated from its source. Congress lists sources, one of which is wages.
Please read 191, and note that I both accept and acknowledge the common usage, and compare and contrast them to the statutory usage.
Look at this sentence from 191:
“I’ll pause there to see if you understand that I am talking the apples of the lawful, statutory definitions of Congress, not your oranges ordinary everyday dictionary meanings, overridden by those provided by Congress. These are not the same.”
Here I specifically differentiate between the ordinary definitions, and those of Congress. Please read this sentence, and let me know how I can further explain it.
Again, you misstate my posts. You falsely say, for the 5th or 6th time, that I say “only gains from income should be taxed”. I DO NOT SAY THAT. I HAVE NEVER SAID THAT. I DO NOT IMPLY THAT. I DO NOT INFER THAT. I DENY THAT. THAT IS NOT MY POSITION. You falsely substitute the word ‘income’ where I use only ‘sources’. Please don’t continue to repeat it – it’s not true.
Thanks, Phelbers.
Stephen,
The statute that created the income tax was the Underwood Tariff Act signed by Woodrow Wilson on Oct 3, 1913. Section 2 of the Act created the modern income tax.
I have had a copy on my desk for four years, and got a few laughs when Aaron Russo put out his TV documentary where he wandered around DC supposedly looking for “the law”.
If you want a copy, call 1-800-344-3734 and ask for the 1913 income tax law special commemorative. I don’t remember if there was a cost, but imagine it wasn’t free. You could also go on the CCH Inc. website at http://support.cch.com.
Stephen
Here is one source for the Quebec rates. They’re French more than British, they even try regularly to secede from Canada.
I’d say they are 1% more honest, based upon the data I’ve referenced.
And, if the buyer has no legal, lawful liability whatsoever, the STB cannot audit them. Why audit someone that has no requirement to pay the tax? On what basis is the STB to audit if there is no obligation to pay the tax to them? If the retailer is the only one from whom the STB can collect any tax, whether or not the retailer adds it into the price, the buyer CANNOT be audited, levied, fined, seized from, or jailed.
The buyer cannot be a party to evasion or fraud if not liable, any more than the buyer of gasoline can be a party to fraud when buying gas for their car.
Thanks, Phelbers
Stephen
Hank is right on the law’s origin and its establishing the tax.
All the 16th Amendment did was to authorize the Congress to enact a law taxing incomes derived from sources without taxing the sources themselves.
The Amendment did not establish the tax by itself. Congress could have decided not to enact the income tax if it should have so chosen (but we all know they will tax anything and everything that they possibly can).
Thanks, Phelbers
Phelbers,
You still don’t get it, do you? I’m a stubborn Dutchman, but I think you exceed me in stubborness despite the clear facts. Your version of the 16th is that it “allowed taxation of incomes derived from sources without taxing the sources themselves”.
The 16th language is “collect taxes on incomes, from whatever source derived, and without apportionment, etc. etc.” How you get so tangled up about sources is beyond me, but the Constitution clearly states that it does not matter what the source of your income, it is still taxable. Plain English!
Got to agree with Hank here…
Phellbers,
Regarding the use of wording, I agree with your assessement of the 16th amendment based on your definition of the terms. Or rather the definitions as Congress defined them.
You may have stated this already but since this thread is so long, I am not sure I have the stamina to try to find it….but where does Congress define the terms that you and Hank are disagreeing about?
Thanks,
Hank (and Morph)
Since we agree on the statutory definition of gross income, and the wording of the 16th Amendment, there has to be some other aspect of these two points that we interpret differently.
I’m not trying to yank your chain, and I don’t think you are mine.
I think I may have found the key to it. Let me give it a try.
I believe it is the phrase ‘derived from’ in the definition of gross income you correctly state.
I read the list of things, which includes wages and dealings in property, etc to mean sources, not gains and profits, since the list concludes with “or any source whatever.”
I also get the feeling that you read the list of things as gains or profits (and thus income) all by themselves.
Is this correct? If so it would explain the impasse, and I’d like to support my position once we figure out what is going on.
Thanks, Phelbers
Hello John
We’re not sure exactly where we disagree. I’ve asked him in 207 to try to pin it down.
I got the definition from the 1939 tax code at the state library, from the US Statutes at Large. I transcribed it in 191.
Hank got his from the source he posted above in 201. With only minor changes in the list of sources, we agree exactly. He transcribed it in 197.
The definition of gross income was restated the ’54/’86 tax code, in section 61a, but with no change in the constitutional or statutory meaning from the ’39 code or the earlier version Hank stated.
Thanks, Phelbers
Phelbers,
It doesn’t seem to me that we are in close agreement when you insist that only gains from income can be taxed? Derived means “to obtain or receive from a source”, and the tax statute is crystal clear about what income can be taxed as is the wording in the 16th Amendment.
The problem with “sources” stems from the fact that direct taxes had historically been limited to land taxes and capitation taxes. So, the 16th Amendment needed to make it clear that income from any source was taxable, not just land or capitation. The whole purpose of the 16th is believed to be to remove any consideration of the source of the income, and secondarily, to remove the apportionment restriction on direct taxes. As Chief Justice White said, we now have a “direct income tax”.
Bottom line is that all income, including wages and salaries, is taxable and we have been paying those taxes for 97 years. I don’t understand what is so hard to understand about this issue, but I think your claim may be frivolous. We may see the day when the 16th is repealed, but not because it is unconstitutional, illegal or whatever you claim. Let’s move on, sir, and discuss something more useful.
Phelbers re post # 45
You are still apparently talking about Canada and even if you are talking about 13% sales tax rates, HR 25 & NRST both involve much higher rates so that the Canadian experience has virtually no relevance.
Most State sales tax laws that I have encountered put the burden on BOTH buyer and seller, so that the State can audit either one. Congress would be foolish to exclide the buyer from responsibility to pay.
Phelbers & Hank re post # 46
I have had much wine with dinner and my old brain is rebelling. I understand the Statute is different from the 16th Amendment. I thought Hank quoted the 156th amendment as taxing “wages” (i.e., the source).
Hank
Again, I don’t insist EVER – NEVER – that “only gains from income” can be taxed as you again wrongly quote me. That is the 7th time you say i said something I have never said or implied
You adamantly assert and reassert that – why? Give me a break on that, OK? I can’t for the life of me see where you get that. It is baffling. We can’t move on until you explain this falsehood. Would you let stand a false and dishonest statement I made about your posts – time after tome after time?
We again agree that ‘derived’ does mean “to obtain or receive from a source” as you stated, but does not include the source itself, which you seem to be saying. Is that what you are saying?
You still haven’t answered my honest inquiry as to whether you read derived from a source as the same as the source itself. Gains derived form wages is not the same as wages themselves to me. Is it to you?
Thanks, Phelbers
I have not gone back to read the 16th Amend nor the stautue, but feel like the father who tells hic kids “If I have to come up there to deal with you, there will be trouble”.
Wages appear tro be an example of “income”.
What the heck is the difference? Why are we getting all wound up in a pointless conversation?
More important than any of this, is why did the numbers of the posts change after # 157 to start back at # 1, but the total shown at the start is correct?
Phelbers,
My understanding of your claim that only gains from income is taxable comes from your very first post #5 which reads as follows:
“If the 16th amendment was constitutionally applied and lawfully enforced, the tax (gross income) would not extend to wages, but only to the gains derived from them.”
If you aren’t claiming that only “income from income” is taxable, then I have lost all sense of the English language.
As for your question, wages are a gain no matter what the source. I suggested earlier that you drop any discussion about sources because the 16th Amendment makes it clear that it doesn’t matter what the source of income is, all income is taxable. Your emphasis on “sources” is misplaced and has no bearing on this issue.
You clearly believe that wages aren’t taxable, and I certainly believe you are misinformed, or have fallen under the spell of the tax protester movement. You are too well educated to drink that Kool-Aide, in my opinion, and you need to stop tilting with windmills. It accomplishes nothing!
I strongly agree with Hank on this.
Norphh
Not that I want to change the subject, but do I recall yoiu pointing out a BHI table which demonstrated that HR 25 had some modest margin for tax avoidance? I thought you did but my old brain is failing me.
Stephen, evasion (which I lump with avoidance for this context) is discussed in the introduction and heavily in the conclusion.
Morphh,
Forgive me, I am tired, but intro and conclusion of what?
I thought you had once pointed me to a specific table.
You’re talking about the BHI study on the rate correct? “Taxing Sales under the FairTax ‘What Rate Works?’” I can’t recall a specific table for evasion – they did not explicitly include an evasion figure, which is what they discuss in the intro and conclusion, stating that while they did not include an explicit figure, they did not ignore evasion. They go on to outline their offsetting factors.
Hank
Sorry you are unable to grasp the difference that gains derived from wages is not the same as wages. Wages are by statute a source, not gains. Congress says this – you yourself posted it I simply repeat it just as you do. But I do not then make a simultaneous contradictory counter-statement of the opposite position, as do you.
That is deeply dishonorable behavior.
The statue lists wages as a source – not a gain. That’s what I am pointing out. If you disagree with that, all I asked was for you to say so.
You still have not answered that question, Does the definition of gross income define wages, and the other items in the list, as gains and profits, or sources?
You indeed have lost all ability to grasp the meaning of a simple sentence – or a simple question.
When I said, “If the 16th amendment was constitutionally applied and lawfully enforced, the tax (gross income) would not extend to wages, but only to the gains derived from them.”, I based it on the clear definition by Congress that gross income is a gain derived from the source, wages. Never did I say that Congress defined wages as a gain. The definition clearly defines wages as a source, along with all the other sources in the list. That is simple English, which you cannot grasp ,and I am sorry for you.
It is you, and the IRS regulations, that drop the word sources altogether from the gross income definition of sources.
The importance of this is that HR 47, the newly enrolled ‘Fair’ Tax does not define property.
If regulations can add wages to the gains derived from them, regulations can add wages – your wages are your property – to the HR 47′s definition of property, and likely tax wages as property. If wages are gains, not sources, by your interpretation of the definition, then ages will cease to be income, even by your standards, once the IT, and the law section defining gross income is repealed.
Thanks, Phelbers
Morphh re: post # 63
Thank you. If that is the most explicit thing AFFT has ever said, then I was wrong to recall your showing me a specific table of general FT calculations, which incidentally (I thought) indicated a margin for tax avoidance. It now appears that my memory was simply faulty.
However is is valuable for me to review the specific verbiage you refer to now.
Phelbers
Again, this website says the bill was reintroduced in this Congress as H.R. 25 again, NOT as H. R. 47 (47 is the number of original co-signers – a literal truth – that Woodall uses to mislead the public into thinking he now has more co-sponsors than in the prior Congress, which he DOES NOT).
I will have to address this useless conversation about “income” and “sources” when I am rested and finished other relevant work. Hopefully you can resolve it before I get to it. Perhaps I am thick, but I just don’t yet see the meaningful concrete benefit of resolving this esoteric point.
Stephen, Woodall is doing what they have done in past Congress sessions for the bill. Stating that they have a record of original co-sponsors. It’s something they have sought to achieve and increase, as well as increasing the total for the session. As the term progresses, they’ll either get or not get a record number of cosponsors for the Congress. Don’t make this into more than it is… It’s a factual statement identical to past statements by other congressmen. Don’t sweat the small stuff… it sounds petty. Not everything is plot to deceptive and mislead the public. Let the guy have his small victory – we’ll see how it turns out.
Phelbers,
The statute lists wages as income, along with several other types of income such as interest, rent, salaries, etc. The net income of a taxable person includes by statute gains, profits, and income.
“You still have not answered that question, Does the definition of gross income define wages, and the other items in the list, as gains and profits, or sources?”
Gross income includes all income from whatever source, and income includes wages. Income is not a source, and the 16th Amendment clearly stated that all income is taxable no matter what the source. Why do you insist that wages are a source. I may have missed that point?
Hank
Just noticed the statute you quoted above was defining net income, not gross income.
That’s why we are not on the same page. Your assertions, which would not be true with respect to the present definition, are understandable in that light, and although you are still putting quotes around my words incorrectly, I recognize and understand your position.
That statute was replaced with an identically constructed statute, but “net” was replaced with “gross”. Please see my post 191.
I do not know why Congress changed ‘net’ to ‘gross’, but the answer has to be in the legislative history, and probably due to a Supreme Court decision which forced Congress to reword the statute to pass constitutional muster. There is a monumental difference in net and gross, and Congress would not make the change lightly.
I have been talking about current definition of gross income, not the repealed definition of ‘net’ income you show.
The current gross income statute lists wages as a source along with the other sources in the list.
I say this since the list ends with “or any source whatever”, so the word ‘source’ defines the nature of the items in the list.
Thanks, Phelbers
Phelbers,
Nice try, but I think you are using and abusing the word “source”. Here is the WIKI explanation of what gross income means:
“The Internal Revenue Code states that “gross income means all income from whatever source derived,” and gives specific examples.[5] Gross income is not limited to cash received. “It includes income realized in any form, whether money, property, or services.”[6] Gross income includes wages and tips, fees for performing services, gain from sale of inventory or other property, interest, dividends, rents, royalties, pensions, alimony, and many other types of income.[5] Items must be included in income when received or accrued. The amount included is the amount the taxpayer is entitled to receive. Gains on property are the gross proceeds less amounts returned, cost of goods sold, or tax basis of property sold.”
Isn’t it clear that salaries and wages are not a source, but are simply taxable income? You seem to have a copy of the current statute, so how about reproducing the whole paragraph that ends with “or any source whatever” I find it unlikely that Congress would pass a law that removes wages and salaries from the category of income as you claim. And, if they did, why are we still paying taxes on wages and salaries? Just doesn’t pass the sanity check!
Phelbers,
Following up on my previous post, I don’t know what statute you are looking at, but here is an extract from the current tax code:
“TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART I > § 61
§ 61. Gross income defined
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.”
When and how did Congress redefine gross income to mean that wages are a source, and therefore not taxable? I don’t think the IRS is aware of what you are claiming? Should we tell them?
Stephen
HR 25 is still the FT bill number, you are right, not HR 47 as was reported on the local news here.
There are 48 co-sponsors according to thomas.loc.gov. so I’ll accept that as the current actual number.
Who introduced YOUR SHARE, or is it not yet a bill?
Thanks, Phelbers
Phelber re post # 229
The 48th may have been added since Woodalls press release – I will have to check.
YOUR SHARE is not yet a bill. That might have to wait until we pay off the debt and unfunded entitlements AND get the budget down to its Constitutional limits, and THEN with 535 Benjamin Franklins in Congress, can we seriously consider YOUR SHARE as a bill in Congress.
Sadly, that will take a very long time and we both may well not be around. However, in the interim, it is important for us to keep in mind what the ideal result is and also to bear in mind the principles of everyone paying his fair “scientific” share of our common costs without some being FORCED to pay the share of others who simpoly can’t “afford” their share of the maintence costs.
Morphh, re post # 224
I have responded but on the other discussion about Woodall’s press release, because I thought it belonged there.
Hank
To answer your question, Congress redefined gross income to mean that wages are a source in the Constitutional sense in its definition of Gross Income right after the original net income statute you first cited was replaced. I can get the exact statute for you if you believe it is relevant.
As far as the taxability of wages, they are taxable insofar as any portion of them is a true gain or profit, and not simply a receipt. You are incorrectly classifying the whole of a source as gain, when Congress does not.
At the time of the redefinition, the definition of gross – not net – income listed wages as a source, not a gain, profit, or income, the same as the other sources listed.
The regulations did call the whole of wages a gain or profit, not the statute.
I’m not saying a source – in this case wages – is not taxable. The statute and the Constitution (as you have already confirmed for us) say sources are not taxable. Source in the statutes is the same as source in the Constitution.
I think you are still confused about ‘source’. You mistakenly believe the Constitution means employers, such as Boeing are sources, not the wages paid by Boeing as does the statute.
It was that change that I pointed out to you in my last post. The change from net to gross is significant, and explains your misunderstanding of the point I make. Were you able to spot the change? What are your thoughts on it?
Thanks, Phelbers
Phelbers,
Of course it’s relevant. Please obtain and email whatever statute you claim lists wages and salaries as sources.
Hank
Already done, many times. The verbatim transcription of the definition of gross income I posted in 191 lists wages and salaries as sources. That definition describes and defines wages as a source, reflecting the change you asked about. (Some of the sources omitted for brevity.)
By exact statute, I was referring to the specific bill that made that initial change from net to gross. That change listing wages as source remains in effect. There is no question that the change occurred. I’d just like to satisfy a curiosity on the details of the change. There may be an explanation why the change from net to gross for the same text. The main point is that they are a source, not a gain or profit.
If you need a sentence diagram, I’ll work one up.
Let me ask again: Did you notice the change from ‘net’ to ‘gross’ in the 1913 statute and the 1939 statute? Any comment?
Thanks, Phelbers
I wanted to think about the black market under FT for awhile before I respond.
One of my basic premise is that FT will require 100% audits of 1.5M companies. I think this will not be a government function but a function performed by private FT auditors. The business will pay for the audit and will need to be certified annually.
If a manufacturer sells its goods to a retailer, then the retailer must have a FT number and that retailer must also be auditted. The Black Market operates outside the normal retail operation typically in cash. In the FT world it will have to be cash. The first question raised is where will the Black Market get any of its new goods. The manufacturers deposits are all audited and they are accounted for. The BM would have to pay the Manufacturer cash and since cash deposits over $10K is being tracked, it would be difficult to get any type of volume. In order to avoid $300B in the BM, then you would need $1T in sales.
For the manufacturer to do this, they would have to manipulate their cash flow, their inventories and their raw material purchases in order to avoid detection. I think that would be tough. And they know they would be audited. They consequences could be substantial all the way to shutting down their business. In addition, businesses would be encourage to identify BM people. I just think the risk is too great for most manufacturer to support a BM operation.
Used goods are not taxed so there could be no BM in used goods. Finally you must consider a BM in personal services. I think there could be some abuse here. Under ideal circumstances, the teenage babysitter may need to charge FT. Personally there could be an exemption for very small personal services to consumers say transactions under $100 and annual aggregate under $10K. But once you exceed those amounts, then FT should apply.
As someone else said, the only way to find BM may be through personal checking account statistical analysis. If a BM uses a checking account to deposit their money, then that account activity would look different from a regular person’s account. They would have more cash deposits and more deposits in general. Banks would have to determine statistical outliers amoung the personal checking accounts and the individual would have to be investigated.
Can we eliminate the BM? probably not, but I think that annual audits, exemptions for under $10K personal services , used goods being exempt from FT, and statistical analysis of personal checking accounts, would keep the problem in check. I doubt with these measures we would see a $1T black market of new goods and services.
In addition, as we use less cash and more electronic payments, there should be a shrinkage of actual cash in circulation. This alone would limit black market activities.
I cannot say for certain that there will be no black market activities, but I am just as confident that a $1T cash economy would be difficult with the measures that I outlined above. So if I am just 50% correct with the above measures, that would be a $150B savings.
In my plan, with tax collection automatic, and auditing done by private certified auditors, then the government could concentrate its enforcement on the Black Market. It would be worth $150B per year. I think significant resources could be put to bear say around $10B to enforce the FT laws and work primarily on the black market. Under any normal business standards, that would be a good return on our investment.
Therefore, I would submit that intuitively the Black Market would be a problem for the FT. However, I think since the stakes are so high, that we could invest in technology, collection, compliance, and auditing and be able to reduce that amount to be a small problem.
I would like to hear from those who can explain why my thesis is not correct. How they will get around the measures that I described.
Terry,
I’m no black market expert, but why couldn’t a black marketeer simply set up a fake business and purchase tax free from the producer? Surely there are some producers that might be willing to sell at a slight increase in their profit to a BM retail business?
I’d also point out that you are trying to solve only part of the issue. I expect there will be a huge decrease in tax revenue caused by tax avoidance which is legal. What studies are available that compare the level of purchase decisions to higher tax rates? For instance, there is talk about changing the annual COLA calculation to a “chained” method which better reflects changes in family purchase decisions as prices rise with inflation?
Terry & Hank,
While I never focused on methods of committing such tax fraud, I assure you that there are methoda of avoiding the tax.
Yes, having OUTSIDE auditors made responsible rather than govt auditors might help (The “IRS” just goes private), companiies defraud their auditors daily (think ENRON). The sad truth is that an AUDIT is a check of just a few of a company’s millions of transactions. It does not and physically can not audit all of a company’s transactions. Contrary to popular belief, an audit has no hope of catching everything – it catches only a few things.
The govt would have to be in total control of the entire cash/checking wealth of the entire nation – even that does not control commodities and international banking.
Thieves will always find a crack ijn the system.
Phelbers,
Yes, I noticed the change from net to gross income, and it is irrelevant to the fundamental question you raised about whether or not salaries and wages are taxable.
I believe I adequately showed how the Constitution as amended allows taxation of income. I also showed that the 1913 statute specifically allows taxation of salaries and wages. Now, you are claiming that the 1939 tax act describes salaries and wages as sources, and therefore not taxable.
I reviewed the 1939 tax act and could find no such description of salaries and wages. Here is an extract from a TaxHistory.com report which says that the 1939 Tax Act was the first attempt to bring all tax laws into one place, and goes on to discuss net and gross tax definitions. Please note that the 1939 Tax Act made no substantive changes to previous tax laws.
“The purpose for the Internal Revenue Code of 1939 was to consolidate all of the various laws relating to tax revenue into one concise document. These laws were scattered over 34 volumes and 65 years of legislation. Prior to 1939 it was necessary to research through all 34 volumes to establish the exact nature of the law in question, now one volume contained it all. The I.R.C. made no changes to any of the existing laws, except those necessary to consolidate and codify them into one place, in order to facilitate the determination of legal questions.
The Code of Federal Regulation (CFR) Title 26 “Income Tax Regulation”, in effect from 1939 to 1953, under section 39.21-1 and 39.22 (a)-1 defined the then accepted definition of income as it applied to the current tax system. Section 39.21-1 is titled “Meaning of net income” and, in part, says:
“(a) The tax imposed by chapter 1 is upon income. Neither income exempted by statute or fundamental law, nor expenses incurred in connection therewith, other than interest, enter into the computation of net income as defined by section 21. …
1. Income (in the broad sense) meaning all wealth which flows in to the taxpayer other than as a mere return of capital. It includes the forms of income specifically described as gains and profits, including gains derived from the sale or other distribution of capital assets. …”
Section 39.22 (a)-1 is named “What included in gross income” and reads, in part:
1. Gross income includes, in general, compensation for personal and professional services, business income, profits from sales of and dealings in property, interest, rent, dividends, and gains, profits, and income derived from any source whatever, unless exempt by law. See sections 22(b) and 116. In general, income is the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets.”
I’m frankly tired of chasing through tax law trying to find any statute that moves the definition of salaries and wages from “income” to a “source”. You have not made your case, and I hope we don’t have to plow through the 1954 and 1986 revisions to the tax code before you subside. Salaries and wages have been taxable for almost 100 years, and such taxation is supported by the Constitution and the Statutes. Your case is certainly questionable, and we need to move on before everyone rebels against our discussion. I do think there may have been some value in our exchanges in that there may be some readers that were not aware that there even was an income tax law. Aaron Russo had many followers, even if he was misguided in the extreme.
Hank & Phelbers
Even though I made a good and enjoyable living from exactly such wordsmithing the IRC, I find this discussion to be nauseating and unproductive. I am rebelling by trying to avoid it.
Phelbers
Please help me. You quoted the number 48 sponsors from Thomas.gov. When I went there, there was no list, just daily reports of co-sponsors of all bills. Did you see a list of just Hr 25 sponsors at Thomas? If so, pleae showl me how to find it. Thank you.
Stephen,
Thomas now has a list of 51 cosponsors as well as the new text of the HR25 bill.
Go to Thomas, select bill number, type in HR25 and it’s all there.
The added cosponsors are Alexander-La, Fleming-La, Granger-Tx, and Posey-Fl, all of which came on board on Jan 11.
The only text changes I can find are some Sections after 202? But I don’t have a copy of the Fairtax bill from 2009, so it’s hard to audit.
Whoops, forget about any possible changes. The sections that didn’t look familiar after Sec 202 are in fact in the last text. I’m not sure there are any changes, but maybe someone else has the time to check it out?
A copy of the 2009 text is still up on the AFFT site, along with the old list of 66 Cosponsors. AFFT just isn’t too quick!
Hank and Stephen thank you for your comments.
If there was a BM retailer buying wholesale, then that retailer would need a FT id and would be audited. Remember 100% audits. The BM retailer would have to not be part of FT and the manufacturer would therefore charge FT which is outside of the norm. Why would the manufacturer do that? We would have to look at the illegal drug trade to look at how a real BM works. They avoid all commercial space from growing, transportation, distribution and retail.
I agree that there will always be crooks who try to game the system. The income tax rules have an enormous opportunity to defraud with its 1000′s of audit points and the 100′s of millions of tax returns. The beauty of the FT is that its audit points are relatively small and only 1.5M returns. I think that increases compliance, not decreases compliance. In addition, the FT rules audits individuals. My proposal audits only companies and provides companies the opportunity to audit primarily B2B transactions which are larger in size and fewer transactions thus less to audit. We give the company the opportunity to setup retail deposits to be directly taxed automatically. They have to show they can handle cash transactions. Surely WALMART knows how to handle cash transactions otherwise a WALMART cashier would be a great job.
My belief is that honest retailers and honest wholesalers would be able to pass an audit easily and would do so as a competitive advantage. The dishonest retailers, the ones who cannot handle cash properly, would have to work hard in order to hide their deceipt. Look at laundromats a pure cash business. When the IRS audits them, it starts with the water bill. They have to deal with thousands of quarters (banking).
So my conclusion is that yes there will be some tax leakage, but with proper tax collection, compliance and auditing we can reduce that significantly less than 15% ($300B) and thus lower the FT rate.
hank,
I went to Thomas but instead of a current-up-to-date-tota-list, they just have daily lists of all new co-sponsors to a list of ALL Bills (that’s how aI found thoe 3).
You would think they would (or fairtax.org) have a current list.
Hank
I’ve put your statements in italics and quotes for clarity, and will comment.
First, though, we have always been on the same page that wages and salaries are listed as income and are taxable by regulations, and you correctly cite those regs. I’m not making a case that we can not pay these taxes.
Yes, I noticed the change from net to gross income, and it is irrelevant to the fundamental question you raised about whether or not salaries and wages are taxable.
That’s not the fundamental question I’ve raised at all. I’ve never said wages and salaries are not taxable. What I said is that wages and salaried are not taxable by the language of the statute. The English language meaning of the definition of gross income by Congress calls wages and salaries sources, which we agree would not be taxable as sources, if indeed they are sources in the context of the 16th Amendment. Congress lists them as sources along with all the other sources in the list.
I’m only talking about the sentence structure and how the rules of common English language makes that sentence read, not in any other context. The language is the issue.
I think others on this topic have agree on that point, and you should give some careful thought on the list of sources part of the statute. That is the point I’m making, not any tax evasion arguments.
“Section 39.22 (a)-1 is named “What included in gross income” and reads, in part:
1. Gross income includes, in general, compensation for personal and professional services, . . .”
Here, gri=oss income is simply wages and salaries, not gains derived from them. This is the change in language that has significance.
Wages and salaries are taxable gross income under the regulations. The English language meaning of the Regulations differs from the language of the statute in that the words “derived from” and “sources” are not in this quote. In terms of the English language, this language changes wages and salaries from sources to 100% gains and profits (income), rather than an amount arising separately from the wages as a source in the language of the statute.
We are on the same page that wages and salaries are listed as income and are taxable by regulations, and you correctly cite those regs. I’m not making a case that we can not pay these taxes.
I believe I adequately showed how the Constitution as amended allows taxation of income.
We have always been on the same page here too. But, the language of the Amendment only allows taxes on income “from whatever source derived” – not the source itself. The words ‘derived from’ and ‘source’ have significance too.
I also showed that the 1913 statute specifically allows taxation of salaries and wages.
This you have not done, not in English language sentential terms. Here you simply make an unsubstantiated assertion. That’s the whole point. The wording of the statute allows only taxation of the gains, profits, and income derived from wages and salaries. That is the wording chosen by Congress, not me.
The significance of the usage of the word ‘source’ seems lost to you. You make no comment on it, other than to say it might be Boeing. If that were the case, the statute would have been worded, “Gains, profits, and income derived from employers. . . .” It doesn’t. The employer is not the source, only the wages they pay is the source.
To make an analogy, the word ‘source’ is used in this context: “Gross heat includes thermal energy, BTUs, calories, or heat derived from coal, wood, fossil fuels, geothermal vents, nuclear reactions, or any source whatever.” The analogy isn’t perfect, and I make no claim that is it, since income and source ultimately are fungible as cash. But, the point is that “derived from”, and “source” in it are in the same context as the Amendment and the Supreme Court decisions you cited confirming it. The items I list here are sources from which heat can be derived, not heat in and of themselves.
The Amendment is not worded, “Congress shall have the power to lay and collect taxes on income without apportionment . . . .”
And Congress did not word the gross income statute as simply “Gross Income includes Wages, salaries, and compensation for personal services . . . .” ‘Sources’ and ‘derived from’ were chosen carefully.
Now, you are claiming that the 1939 tax act describes salaries and wages as sources, and therefore not taxable.
This is absolutely what Congress states – I only claim that’s what Congress says. With the rules of the English language, the sentence structure does very much indeed list salaries and wages as sources along with the other sources in the list.
I reviewed the 1939 tax act and could find no such description of salaries and wages.
Section 22a specifically does this in the definition of gross income. It not only describes, but defines wages as a source in the list of sources in that definition. I believe you are not giving any significance to the list ending with ‘or any source’, or are making the assertion that the items are not sources as described with the language of the description.
The list of objects in the definition is not just “wages, salaries, . . . or any income [or gain, or profit] whatever”.
This is the difference and is the point of my ever bringing it up.
Ask yourself honestly if there is a difference in ‘source’ and ‘income’, and why Congress chose those same words from the Amendment.
There is nothing to be gained by your reference to how long taxes on wages and salaries have been collected. These are red herrings, straw men, and accusatory. We agree fully that wages are taxed as income. We both reject this as any basis to refuse to pay.
That is irrelevant to the sentence structural differences, and the re-characterization of sources in the statute to gains or profits or income by the regs.
The wordings – and the meaning of the wordings – are different. That’s what I am pointing out.
I believe, in law, that the actual words, phrases, and sentences used have significance. I believe that they must be solidly limited and clearly defined. I believe, along with the Supreme Court, that regulations cannot change or add to the statutes. Any ambiguity will be exploited by the bureaucracies to take mot=re than they are entitled to.
That is a weakness in HR 25, and a replacement tax law ought to have better defined language.
All I have been doing with this is to point out how the regulations change both the meaning and character of terms and meanings against rational analysis, not bring up any evasion theories.
Thanks, Phelbers
Phelbers,
The 1913 statute clearly states that “the net income of a taxable person includes gains, profits, and income derived from: salaries, wages, or compensation of whatever kind,—or gains or profits and income from any source whatever.
Paying attention to where the comma’s appear, this sentence in shorthand says that net income includes income from salaries and wages. And it doesn’t matter what the source is. And, that didn’t change in the 1939 statute. The sentence ending in “or any source” does not mean that other types of income in the same sentence are sources. Had that been the intention, it would have read “any other source”!
I’m through jousting with you. I accept that you are not a member of the tax protester cult. But any rational person should agree that wages and salaries are not a source per your reading of the Constitution and statutes.
If you want to show me a statute that does move wages and salaries from income to a source, have at it. But failing that proof, we are done here!
Stephen,
I don’t know what you are doing, but go here: http://thomas.loc.gov/home/thomas.html -click on bill number and enter HR25 and hit search. All the info on HR25 will appear. Click on cosponsors and you will get the current list.
Hope this helps!
Hank
‘Any other source’ is implied in ‘any source whatever’. Each item in the list has to be a source, because Congress can only tax income derived from sources, not the sources themselves.
No statute ever put wages and salaries as income directly, only as something from which income is derived.
Anything Congress taxes as income MUST be derived from a source, by the Amendment.
The words ‘derived from’ in the statute correspond exactly to ‘from whatever source derived” in the Amendment.
Congress can only tax income that is derived from a source – the sources must be identified in the statute, and they are.
If Congress intended what you assert, the statute would gave stated income is simply wages, not gains derived from wages.
You are still of the opinion that Congress means ‘from’ to be ‘in the form of, or ‘as’, which is incorrect given the other items in the list of sources. It is this difference that you must honestly consider and reconcile. You have not addressed this difference.
It cannot tax wages as income when it defines income as something derived from them (but the regulations do).
The regulations define wages as income, but the statutes define income as a gain or profit derived from wages, which grammatically and linguistically makes wages a source in the statute when compared to the Constitutional limitation.
Wages are only income by regulation, not statute. There is a definite and significant difference in the wording of the two.
Thanks, Phelbers
Phelbers,
Nonsense! Over and out!
Hank
It is not nonsense to ask how gains derived from wages differs from wages, any more than it is nonsense to differentiate between principal and interest, or the monetary gains derived from a sale differs from the sale price.
The parallel of the statute wording and the 16th Amendment is inescapable, and Congress would not define income as something derived from wages if wages were in and of themselves a gain.
We agree that the regulations drop ‘derived from’ with respect to wages, which settles the point for the IRS and for us who pay.
But the difference between gains derived from wages, and wages is still monumental – not nonsense at all.
This is the central question in this debate, and in no way nonsense. Why are you so adamant about dodging it?
I know you are not honestly saying that gains derived from wages, that is, an amount obtained or received from wages, is the same as the whole of wages. That position would be nonsensical (except to the IRS regulations, of course) – not to the text of the statute.
It is pretty clear from other contributors that the difference is a real one (John, 206 is one example).
So far, you have responded with non-sequiturs, all accurate and with which I generally agree, but irrelevant to this central question of grammatical construction.
Why are you so afraid to honestly look at the difference between gains derived from wages versus wages? This is what I asked last time for you to give consideration to.
Thanks, Phelbers.
Phelbers,
Thank you, this time I found the right link on Thomas, as you pointed out to me.
To: ALL
See further comment at the Discussion on The Paul Ryan ROADMAP – it appears to used by all as a continuation of this Discussion.
Hey guys, post #4 CAN YOU ESTIMATE THE TAX COLLECTIONS to insure that your plan meets the targeted revenues?”
And, post #1 goes through several assumptions to arrive at the inclusive and exclusive tax rates to meet current tax revenue figures.
What happened to tax cuts? Why should this tax be revenue neutral? I would think a requirement for a tax would be to leave as little money available for Government deficit spending.
The Government is too large, to burdensome, and the tax load is stifling the country. Steve Forbes has said so. And he is right, in my opinion.
We don’t want a revenue neutral tax, we want a tax to produce maybe 60% or less of tax revenue.
Morphh,
The following post may find a better home, but it sort of fits with #253?
Use this link to see the latest Beacon Hill analysis about how much revenue a 23% inclusive sales tax would raise in the years 2009 and 2010.
http://www.fairtax./PDF/2009and2010FairTaxPlanEstimatedIncrementalRevenue.pdf.
I guess the whole rationale about Fairtax being “revenue neutral” has gone out the window. Now we learn that a 23% sales tax would have raised significantly more revenue than the income tax in the years studied . The other side of that coin is that if the Fairtax was intended to be revenue neutral, then the rate in 2009 could have been 21%, and it could have been 20% in 2010.
According to AFFT, this revelation was sent to the “super committee” in order to make some sort of case that the Fairtax (at 23%) would have reduced the deficit by hundreds of billions of dollars in each of those two years. Well, we can have lower rates or a lower deficit, but we can’t have both!
Sorry, but that link doesn’t work for me. You can also go to this one and click on the analysis button under the Capitol Dome picture.
“http://www.fairtax.org/site/PageServer”
This is a test by a computer Neanderthal!
http://www.fairtax.org/PDF/2009and2010FairTaxPlanEstimatedIncrementalRevenue.pdf