The Fair Tax Lie


E

eglamkowski

The Fair Tax advocates are either ignorant of their own bill, or they
are deceitful. Most of them are likely just ignorant, but clearly
their leaders (including Neal Boortz) necessarily must be deceitful.

They tell us it will eliminate the income tax.

Section 905(a) of H.R. 25, however, says:
http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

"All persons, in whatever capacity acting (including lessees or
mortgagors or real or personal property, fiduciaries, employers, and
all officers and employees of the United States) having control,
receipt, custody, disposal, or payment of any income to the extent such
income constitutes gross income from sources within the United States
of any nonresident alien individual, foreign partnership, or foreign
corporation shall deduct and withhold from that income a tax equal to
23 percent thereof."

This is an income tax. You may say that because it only affects
nonresident aliens you don't care, but whether or not you care about an
income tax on NRA's, it is STILL an INCOME TAX.

CLEARLY, H.R. 25, the "Fair Tax" bill does NOT eliminate income tax in
all cases. It is still there in at least one case.

Compound this with the claim of Boortz and others that the Fair Tax
will be followed-up by a repeal of the 16th amendment (which is not
actually part of the bill, it only "recommends" its repeal). I'm all
in favor of repealing the 16th, but in order for section 905 of the
Fair Tax to be operative, it NEEDS the 16th amendment.

Article 1, Section 9 of the constitution, upon which would we would
have to look askance in the absence of the 16th amendment, does not
distinguish upon WHO taxes may be levied, it only stipulates that taxes
be levied in propotion to the Census. NRA's being subjected to an
income tax would, absent the 16th amendment, represent a violation of
the constitution. Yet this is exactly what the Fair Tax crowd
advocates.

They lie when they say the Fair Tax eliminates income tax, and they
advocate unconstitutional taxation when they seek to repeal the 16th
while retaining this income tax.

Nice.

H.R. 25 needs a LOT of changes before it even approaches acceptability.
Not the least of which to remove the lies and deceit from it.

Instead of H.R. 25, consider supporting H.J.RES 14:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.J.RES.14:

It's by Ron Paul - one of the few congress critters, if not the only
one, who seems to actually give a damn about the constitution any more.

His bill is short, clear, concise, and has no hidden lies or
deceptions.

H.R. 25 is 133 pages long and has some Bad Things buried deep inside
it, hoping nobody would notice. But we have noticed! Shame on Linder!
 
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P

Paul Thomas, CPA

The Fair Tax advocates are either ignorant of their own bill, or they
are deceitful. Most of them are likely just ignorant, but clearly
their leaders (including Neal Boortz) necessarily must be deceitful.

They tell us it will eliminate the income tax.

Section 905(a) of H.R. 25, however, says:
http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

"All persons, in whatever capacity acting (including lessees or
mortgagors or real or personal property, fiduciaries, employers, and
all officers and employees of the United States) having control,
receipt, custody, disposal, or payment of any income to the extent such
income constitutes gross income from sources within the United States
of any nonresident alien individual, foreign partnership, or foreign
corporation shall deduct and withhold from that income a tax equal to
23 percent thereof."

This is an income tax. You may say that because it only affects
nonresident aliens you don't care, but whether or not you care about an
income tax on NRA's, it is STILL an INCOME TAX.

CLEARLY, H.R. 25, the "Fair Tax" bill does NOT eliminate income tax in
all cases. It is still there in at least one case.

Compound this with the claim of Boortz and others that the Fair Tax
will be followed-up by a repeal of the 16th amendment (which is not
actually part of the bill, it only "recommends" its repeal). I'm all
in favor of repealing the 16th, but in order for section 905 of the
Fair Tax to be operative, it NEEDS the 16th amendment.

Repeal of the 16th amendment does not eliminate the ability of Congress to
impose an income tax.


Article 1, Section 9 of the constitution, upon which would we would
have to look askance in the absence of the 16th amendment, does not
distinguish upon WHO taxes may be levied, it only stipulates that taxes
be levied in propotion to the Census.

Glad you see that.



NRA's being subjected to an income tax would, absent the 16th
amendment, represent a violation of the constitution.

Not if the tax is subject to apportionment.


Yet this is exactly what the Fair Tax crowd advocates.

They lie when they say the Fair Tax eliminates income tax, and they
advocate unconstitutional taxation when they seek to repeal the 16th
while retaining this income tax.

Nice.

H.R. 25 needs a LOT of changes before it even approaches acceptability.
Not the least of which to remove the lies and deceit from it.

Now, now. You do exxpect a lot from a politician.
 
E

eglamkowski

Out of curiosity, what would an apportioned income tax look like?
 
P

Paul Thomas, CPA

Out of curiosity, what would an apportioned income tax look like?

Who knows, exactly, what Congress would come up with. But I suspect that
the tax laws would look curiously similar to what we have today because most
likely the current US Supreme Court would decide that a tax on income is an
indirect tax or excise tax that can be uniform accross the country and can
be imposed without apportionment.

If not, if a tax on income can't be imposed without apportionment, you'd
have to do a census more often (every year or two) and the tax laws could
easily be the same, but with varying tax rates according to what state you
lived in (and possibly by Congressional districts) and the types of income
(rents, wages, interest, gains, etc).

You see, the sixteenth contains these simple words "without apportionment".
Congress already had the power to levy taxes of any kind.
Section 8 of the Constitution says:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and
Excises, to pay the Debts and provide for the common Defence and general
Welfare of the United States; but all Duties, Imposts and Excises shall be
uniform throughout the United States;"
Section 9 of the Constitution says:
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to
the Census of Enumeration herein before directed to be taken."
And Section 2 says:
"Representatives and direct Taxes shall be apportioned among the several
States which may be included within this Union, according to their
respective Numbers, which shall be determined by adding to the whole Number
of free Persons, including those bound to Service for a Term of Years, and
excluding Indians not taxed, three fifths of all other Persons."

So the ire came up when someone thought, "a tax on income is a "direct"
tax". Congress sealed the deal through the sixteenth amendment. This
allowed them (Congress) to impose a tax on income "from whatever source
derived" that is uniform accross the country without the hassle of comeone
arguing that the tax is "direct".

"The ratification of this Amendment was the direct consequence of the
Court's decision in 1895 in Pollock v. Farmers' Loan & Trust Co., whereby
the attempt of Congress the previous year to tax incomes uniformly
throughout the United States was held by a divided court to be
unconstitutional. A tax on incomes derived from property, the Court
declared, was a ''direct tax'' which Congress under the terms of Article I,
Sec. 2, and Sec. 9, could impose only by the rule of apportionment according
to population,"
http://supreme.lp.findlaw.com/constitution/amendment16/01.html


Without the sixteenth, every couple of years, someone would come banging on
your door to see if the demographics of your area changed and then adjust
the tax rates accordingly. So currently, California, Texas and New York
would get smacked with taxes, while Wyoming, Vermont and Alaska would have
the lowest taxes.

Apportionment is exactly how they decide on how many US Representatives each
state gets. It would seem to follow that the more Representatives a state
has, the higher the taxes will be.

The funny thing is, you can repeal the Sixteenth Amendment and Section 8 and
9 still remain. "Congress shall have the power....." The only question
is, what type of tax is it, and does it need to be uniform or in proportion
to the census.
 
E

eglamkowski

And of course, the people California and Texas and New York would be up
in arms at having to pay a higher rate of income tax than the people of
Alaska or Vermont.

Indeed, after the 2004 election I heard so many democrats living in
California and New York whine about how much of the "their" blue state
money was being funneled, through taxation and federal redistribution
programs, to red states that voted for Bush.

*sigh*

Anyways, the point remains that the advocates of the Fair Tax claim it
abolishes the income tax. As written, it does no such thing, retaining
a very explicit income tax in at least one case. Linder should remove
section 905 from the bill.
 
P

Paul Thomas, CPA

And of course, the people California and Texas and New York would be up
in arms at having to pay a higher rate of income tax than the people of
Alaska or Vermont.

Indeed, after the 2004 election I heard so many democrats living in
California and New York whine about how much of the "their" blue state
money was being funneled, through taxation and federal redistribution
programs, to red states that voted for Bush.

Ah, where (and how) the tax money gets spent are far removed from the
imposition and collections of that tax.



Anyways, the point remains that the advocates of the Fair Tax claim it
abolishes the income tax. As written, it does no such thing, retaining
a very explicit income tax in at least one case. Linder should remove
section 905 from the bill.

Why bother. It's not going to see the light of the House or Senate floor.
IE: It'll never - ever - get voted on.
 
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E

eglamkowski

I'd like to return to the question of what an apportioned income tax
would look like. I'm having trouble wrapping my head around it. If it
isn't possible to have such a system, that while it may be truth to say
an income tax is possible without the 16th amendment, it wouldn't be
veracity.

Let's consider:

According to the census, the estimated 2005 population figures leave
California with 12.19% of the population, Texas with 7.71%, Vermont
with 0.21%, Wyoming with 0.17%.

According to the GPO, the 2005 budget was 2.472 trillion dollars.
However, the amount spent in the budget is based on estimated tax
collections, NOT based on after-the-fact totals of what was ACTUALLY
collected.

So one way it might work: the government decides how much it wants to
spend, then apportions the amounts according to the census.

According to the IRS, their most recent data is for 2004, but their
individual income tax returns were $990 billion dollars and $230
billion in corporate income tax. That's $1.22 trillion.

That would suggest that California would be required to pay in $149
billion, Texas would be required to pay in $94 billion, Vermont's
liability = $2.5 billion and Wyoming = $2 billion.

BUT, this is not just an invoice, if you will, forwarded to each
state's legislature for payment by whatever means they see fit - this
is a direct tax imposed by the federal government directly on citizens.
Thus it is the federal government's responsibility to allocate the
amount of tax liability due from each individual or corporation.

That would suggest that the system would have to wait until year end
and all the W-2 statements have been issued. Then it would know how
much income each state had and could retroactively set tax rates in
such a way as to collect the apportioned amount of tax liability due.

And that doesn't even consider where the fiscal year is different from
the calendar year.

Can such a system truly be made to work?
Is there some other, more feasible, way to implement it?
 
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J

Jim Kingdon

That would suggest that the system would have to wait until year end
and all the W-2 statements have been issued. Then it would know how
much income each state had and could retroactively set tax rates in
such a way as to collect the apportioned amount of tax liability due.
That way would work (and one could probably figure out some way to
administer it, although it might be slightly awkward). The other way
would be to set the tax rates based on the previous year's W-2's.
Would this satisfy the requirement? Hard to say, but the law is often
somewhat flexible, rather than being mechanically literal in all cases.

The other issue that would arise from repealing the 16th amendment,
without other changes, is apparent from the pre-16th amendment supreme
court cases mentioned in
http://supreme.lp.findlaw.com/constitution/amendment16/01.html
That is, is the income tax a "direct tax" which must be apportioned,
or is it an excise tax, which merely must be uniform? (And is the
income tax uniform if it has special treatment for some companies, and
other such "non-uniformities", or is the standard much weaker and just
has to do with not singling out one state).

Just as one example, it is clear that the Court treated income from
real estate differently than income from employment. For example,
footnote 3 of the above page describes one pre-16th-amendment ruling:
The Court conceded that taxes on incomes from ''professions, trades,
employments, or vocations'' levied by this act were excise taxes and
therefore valid.
 

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