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AMERICAN CONSTITUTIONAL RESEARCH SERVICE

John William Kurowski

Neal Boortz supports fair tax proposal?

It is saddening to learn that radio talk show host Neal Boortz seems to support the so called fair tax proposal. Perhaps Neal simply has not had time to really study the proposal in depth and compare it to our founding father’s method of taxing consumption which is the subject of this writing.

In an article titled ANSWERING A FAIR TAX QUESTION Neal Boortz wrote:

“It doesn't matter that paying taxes will be voluntary under the Fair Tax plan. It doesn't matter that nobody pays the retail sales tax on the basic necessities of life.”

But the truth is, all consumers pay the tax on the basic necessities of life under the so called fair tax, and, the authors of the tax plan concoct what they call a family consumption allowance, which is a monthly check given to each American, and intended to be earmarked by each consumer to offset taxes paid on the basic necessities of life.

In essence, the so called fair tax proposal rations tax-free basic necessities of life, and rations them by the size of the family consumption allowance allotted to each family, and, in addition, puts every American family on the government dole by issuing them a monthly government check. How nice!

Instead of making every American family dependant on a monthly government welfare check [a family consumption allowance], and rationing tax-free basic necessities by the family consumption tax free limit, why don’t the architects of the so called fair tax simply prohibit taxing the necessities of life [food, shelter, clothing, medical expenses, etc]?

Perhaps Hamilton explains why in Federalist Paper 79 : A POWER OVER A MAN’s SUBSISTENCE AMOUNTS TO A POWER OVER HIS WILL.

Could it be that the architects of the so called fair tax intentionally want to make every American Family dependant upon government for part of its subsistence similar to what has been done via social security, which has created a captive voting block for our Congress critters in Washington, D.C. ?

In regard to Neal’s comment that ”It doesn't matter that paying taxes will be voluntary under the Fair Tax plan” , let us explore the validity of this statement.

As a basic rule, there are but two kinds of tax___ direct and indirect. The former could be described as an involuntary tax which is collected when folks in government go directly to the people to raise a revenue; while the latter, or indirect taxation, is a kind of tax which is paid in consequence of a person’s own voluntary actions and is, in general, avoidable and is a distinguishing characteristic from that of direct taxation!

Impost, duties and excise taxes are of the latter kind [indirect] and fall under the category of voluntarily paid taxes, such as an excise tax on a particular article of consumption, or an excise tax on a government created privilege, such as the granting of a corporate charter [see Flint v. Stone Tracy Co.] in which a tax is calculated from the profits and gains derived from the privilege.

So, with the above in mind, and in reference to Neal’s statement, if a revenue is raised by Congress taxing articles of consumption, it would appear at first glance to be a system which fills the treasury by voluntary contributions, just as Neal suggests. But in all fairness to the meaning of the word voluntary, a tax imposed on the essentials of life could not truthfully be said to be a voluntarily paid tax!

This brings us to what Hamilton explained with regard to taxes on articles of consumption, they:

__ 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 by his own option, and can be regulated by an attention to his own 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__ 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 can not be exceeded without defeating the end proposed, that is, an extension of the revenue__ see:No. 21 of the Federalist

So, it is possible to avoid the oppressive nature of taxes laid upon articles of consumption by a judicious selection of articles proper for such impositions and make the tax a more voluntary type of contribution. Obviously, this would indicate certain articles of consumption ought to be excluded from the list of taxable___ the necessities of life, tools of production and supplies necessary to conduct business, making the tax a more voluntary paid type of tax.

As our founding fathers practiced, a consumption tax plan ought to be limited to articles of luxury, and each article ought to be individually selected by the reason and choice of Congress, and then the appropriate amount of tax determined for each specific item chosen, just as was done in the first revenue Act of our country

NOTE: those interested may use the PREV IMAGE and NEXT IMAGE buttons at the above link to study the bill___it is refreshing to study statesmen speaking in Congress as opposed to politicians acting in their own self interest!

In any event, limiting the tax to articles of luxury, and requiring each article to be individually selected and having Congress place a specific amount of tax upon each article chosen, creates a self regulating check and balance upon Congress!

If Congress does its job properly and the nation as a whole is productive and prosperous, the purchase of articles of luxury will undoubtedly increase, and with it, the flow of revenue into the common treasury. But, if the legislative policies of Congress are burdensome and its regulatory requirements upon business, industry and our nation’s labor force impede a flourishing economy, or any particular article is excessively taxed by Congress, the first sign would be is a decline in the flow of revenue into the national treasury, just as Hamilton explains above.

This method of taxing consumption gives us a self regulating check and balance encouraging Congress to adopt sound economic policies favorable for business, industry and labor on American soil.

Another example of our founding father’s intended use of the taxing powers granted by the Constitution is the use of “imposts” and “duties” at our water’s edge to encourage the growth of domestic industries. In addition to imposing a specific amount of tax on specific articles of consumption imported under our nation‘s first revenue raising Act, the Act also imposed an across-the-board tax on imports which was higher for imports arriving in foreign owned foreign built vessels, but discounted the tax for imports arriving in American owned American built ships:

“a discount of ten percent on all duties imposed by this Act shall be allowed on such goods, wares, and merchandise as shall be imported in vessels built in the United States, and wholly the property of a citizen or citizens thereof.”

This patriotic and skillful use of external taxation not only filled our national treasury, but gave American ship builders a hometown advantage, encouraged shipbuilding on American soil and predictably resulted in America's merchant marine becoming the most powerful on the face of the planet. In fact, our nation’s first revenue raising Act did follow Madison’s suggestion, that: ___ “…a national revenue must be obtained; but the system must be such a one, that, while it secures the object of revenue it shall not be oppressive to our constituents.”

But, there is more to what our founding fathers intended with regard to raising a federal revenue. The founder’s original tax plan was intended to first rely upon external taxation___ duties and imposts on imported articles [have foreigners pay for the privilege of doing business on American soil], and then, if insufficient revenue was raised from external taxation, internal taxation was then to be resorted to by imposing an excise on articles of luxury as outlined above. And finally, if Congress spent more than what was brought in from the above sources during a fiscal year to meet its exigencies and Congress created a deficit, then a direct tax upon the states was thought to be a proper requirement to extinguish the said annual deficit. I call this direct tax the founding father’s fair share formula, the rule being: ___Representatives and direct taxes shall be apportioned among the several states___ as set forth in Article I, Section 2, clause 3, of the United Constitution.

Under the direct tax each state was intended to contribute a share of the total figure being raised by Congress, basing each state’s bill upon its number of votes in Congress,___ representation with proportional obligation! No loopholes, no manipulation, and, those state congressional delegations with the biggest mouth in Congress, who would dare use their large voting strength to squander federal revenue, were to bring home to their state’s Governor a bill for the largest share of the direct tax ___ another check and balance of our founding fathers to encourage each state’s legislature and governor to keep a jealous eye on their congressional delegation’s spending habits which is no longer being observed by Congress but would be an immediate cure for today’s left wing socialists in Congress who have enslaved our nation’s younger generation with a national debt which now exceeds $50 trillion! see:Measuring the Federal Government's Unfunded Liability

But such is our founding fathers plan___ a plan to encourage sound fiscal policies which not one in a five thousand people, including Neal Boortz, fully understands, nor realize how it helped to control Congress’ actions and pave the way for America to become the economic marvel of the world.

In regard the our constitution’s internal excise tax upon articles of luxury, a question seems to be repeatedly asked which deserves an answer: who decides what's a luxury and what isn't under our founder’s intended internal consumption tax? Good question!

It seems to be self evident that specific articles ought to be excluded from the list of taxables to encourage a healthy business environment on American soil in order for America to compete with foreign made goods, and to form a strong domestic manufacturing capability which is essential to the survival of our nation. It also seems to be self evident that articles of necessity, such as food, clothing, medical expenses, etc., ought not be taxed to avoid an oppressive burden upon the poor and working class, but all such articles excluded must be excluded upon a truthful assessment of what constitutes luxury as opposed to a necessity.

Tools of production, supplies necessary to conduct business, food, shelter, clothing, and even medical expenses can truthfully be claimed to be both a necessity and luxury in particular instances, and the very reason why a close examination by Congress of each particular article in question is necessary.

Surely there is a clear enough distinction between such foods as caviar and chicken eggs, between wine and milk, between silk and cotton underwear, to truthfully say one is used as a luxury and the other a necessity. And therefore, it is Congress’ rightful duty to select such articles, and in so doing, ought to take into account the people’s overall perception which would help to diminish the outrageous inequalities now experienced under federal taxation.

But in the final analysis, it is far better to have Congress spend its time selecting specific articles of consumption for taxation than legislating our freedoms away and manipulating the definition of “taxable income” to mean whatever the powerful want it to mean and then place the burden of taxation “directly” upon particular economic classes from which they have no escape. It is far easier for the ordinary people, and those with less education, to keep track of and understand the validity of a tax placed on, or not placed upon a specific article of consumption, than to understand the complicated and incompressible tax code created by Congress in which they now manipulate taxation to favor some while burdening others.

In any event, the founder’s plan was based upon principle, with a number of important and self regulating checks and balances built into the system to control the actions of Congress. Neither the fair tax, national sales tax, flat tax, income tax, value added tax, nor any other proposal contains the checks and balances our founding father’s thought necessary to encourage Congress to act fiscally responsible and raise a federal revenue for those things constitutionally authorized.

In closing, as a priority, tax reform should end the allowance of manipulative taxation which is now used to control and manage the private lives of the people. It should also end the ability of folks in government to use taxation to punish political enemies, and, also end taxation to be used as a weapon to harass specific individuals and invade the privacy of their lives.

The raising of a federal revenue ought to also be guided by fundamental principles which disburse the burden of taxation across the nation in a just and equitable fashion, and not directly upon individuals unless in emergency, e.g.., the primary source of revenue ought to be raised by indirect taxation___ external taxes first, [imposts, duties], internal taxes as a second means [excise taxes], and not direct taxation upon individuals which is a tool used by despotic governments, but, if direct taxation is found necessary, it ought to be by a fixed rule such as apportionment among the various states, leaving the various states to raise their share in their own chosen way, which prevents its manipulation and abuse by Congress!

Tax reform ought not be “revenue neutral” allowing Congress to continue in its current path of profligate spending and borrowing, but rather, the power of taxation must allow Congress to raise all necessary revenue. While the system ought to allow Congress to raise all necessary revenue, it should also have a mandatory procedure requiring annual deficits to be immediately extinguished and also have self regulating checks and balances to force fiscal responsibility upon Congress Assembled.

The only plan which meets the above requirements is the Founding Fathers original tax plan, a plan not often discussed, but one we need to start discussing and compare it to the slide of hand plans now being offered.

For additional reading on this subject matter see:

EXPOSING THE FAIR TAX HOAX ___ scroll down and start reading at:

American Constitutional Research Service Before the
Committee on Ways and Means
United States House of Representatives
June 1995

I also suggest those interested in the adverse effects of the fair tax proposal study:

The Fair Tax: A Trojan Horse For America

John William Kurowski, Founder

American Constitutional Research Service

Seminole, FL,

727 391-1187

[Permission is hereby given to reprint this article if credit to its author and the ACRS appears in such reprint. No copyright is claimed for quotes within the article which are public domain materials.]

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