Replace All Federal Taxes on Income with the Fair Tax Act , HR 25
Tax fundamentals
OK, I'm a newbie here. I have read the main features of the Fair Tax idea, but I have some questions.
Almost nobody knows the first principles of taxation in a free republic. The very first one is that rights may not be taxed. This is an old and well-established principle in common law, but who pays attention to it? It means that the state (in this case the federal state), being a creature of the people and not the source or arbiter of their rights, does not have the legitimate power to interfere with them in the exercise of those rights, either by regulation or taxation.
On top of that, the Constitution empowers the Congress to 'lay and collect' duties, imposts and excises, and it may lay and collect capitation or other direct taxes by apportionment only (which, in effect, turns it into an indirect tax).
How does the Fair Tax, being a sales tax, make it over these two hurdles? Since we have a right to conduct lawful transactions (it is not a privilege which may be granted, denied, revoked or modified by the state), how can the Congress tax it? And since the Constitution does not empower the Congress to 'lay and collect' taxes other than duties, imposts and excises (note the absence of 'sales taxes'), how can such a tax be constitutional?
Just wonderin'.
Almost nobody knows the first principles of taxation in a free republic. The very first one is that rights may not be taxed. This is an old and well-established principle in common law, but who pays attention to it? It means that the state (in this case the federal state), being a creature of the people and not the source or arbiter of their rights, does not have the legitimate power to interfere with them in the exercise of those rights, either by regulation or taxation.
On top of that, the Constitution empowers the Congress to 'lay and collect' duties, imposts and excises, and it may lay and collect capitation or other direct taxes by apportionment only (which, in effect, turns it into an indirect tax).
How does the Fair Tax, being a sales tax, make it over these two hurdles? Since we have a right to conduct lawful transactions (it is not a privilege which may be granted, denied, revoked or modified by the state), how can the Congress tax it? And since the Constitution does not empower the Congress to 'lay and collect' taxes other than duties, imposts and excises (note the absence of 'sales taxes'), how can such a tax be constitutional?
Just wonderin'.
Replies to This Discussion
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Permalink Reply by cary henderson on
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> You answer the question in your third paragraph. Duties, imposts and excises are all taxes on consumption in one form or another. Go to FairTax.org and under beyond the basics, history of taxation, find Federalist Paper #21, by Alexander Hamilton for his explanation and reasoning.
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Sorry, can't find 'beyond the basics' or 'history of taxation', even with a site search. I should be able to find federalist #21 online though. Thanks.
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Permalink Reply by Mark Schaff on -
RIchard, Here is the link you are looking for.
http://www.fairtax.org/site/PageServer?pagename=about_beyond_history
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Thanks. I read Fed 21 online. I am not an enemy of the sales tax, but let me play devil's advocate here for a moment.
Historically, taxes were a form of tribute exacted by a conquering power, usually foreign. Basically, it was just formalized looting. If citizens were taxed it was because they were held to be inferior to the monarch. Even Jesus noted that those who exacted tribute did not take it from their own children, but from others. See Matt 17:25 — "From whom do the kings of the earth collect duty and taxes — from their own sons or from others?"
Until fairly recently, it was taken for granted that only monarchs and their families had rights. Nobles enjoyed privileges, which were granted — and taxed — by the monarch, and common people were little more than chattel. Only in the last four centuries or so has the notion emerged that everyone is endowed with rights.
Our own legal system is based on the notion that the people have all the rights that it is possible to have — just as ancient monarchs had — and that the state was created by them to serve their interests and it exercised only such powers as the people had delegated to it of their own powers. This delegation is conditional, revocable and non-exclusive; that is, the people themselves, either in concert or as individuals, can still exercise those delegated powers.
Consider also that no person — or group of persons — can give what they don't possess. Consequently, in creating the state, the people cannot empower the state to do any thing which they themselves cannot lawfully do ('law' here being natural law, not the product of legislatures, which didn't exist until created by the people). Since two or more people have no more natural rights ('powers') than one person has, the state can have no more powers than one person does.
This sounds strange because from our earliest recollections we have been accustomed to the state exercising powers far beyond those of any citizen. That is how it has always been; but bear in mind that the earliest states were created by those who were powerful enough to compel others to do their bidding. The justification was always some variation of 'might makes right'. All other states have simply been descendants of those, and so we inherited the notions that the state naturally has powers that were not delegated to it by the people.
If you and I do not require the permission of a third person to carry out some transaction, then what is the principle by which one of us must pay a third party to carry it out? This is a knotty problem. If followed to its logical conclusion, it severely restricts — but does not eliminate — the ability of the state to collect revenues. I believe there are ways to fund the state in the performance of its legitimate functions without violating these principles, but few have bothered to explore them.
I do support the Fair Tax even though it does not conform to these fundamental principles, but because it is so much less of an evil than the current tax system. Not one person in a thousand actually understands the true nature and scope of the income tax — and that includes lawyers and judges (which, after all, is just a subset of the set of lawyers), and it is just this which is the source of enormous abuse, injustice and misery.
On a slightly different note, does the Fair Tax propose to exempt certain necessities — food and prescription drugs, for example — from taxation? What about private transactions, as when I sell you my car?
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> You are apparently new to the Fairtax. The Fairtax allows no exemptions deductions etc. That is it's beauty. What is done instead is that a pre-bate is given each month to every legitimate U.S. household to replace what would be paid in taxes up to the Federal poverty level. The amount is calculated by household size. Thus no one pays taxes on necessities.
In the matter of you selling your car, The FairTax only applies to new goods and services. You can buy or sell all the used goods you like and there is no tax liability.
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Thanks for the reply. To be fair to governments, England long ago realized that the hardest thing to enact is a truly fair tax which funds the state adequately.
I certainly support the Fair Tax. As I said, the current system is little more than state larceny. Bastiat called it 'plunder', and he was right on the mark.
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Permalink Reply by Jamie Wheeler WA on
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Note this is at the "federal level". I live in the state of WA where we fund our gov. via a sales tax...it is not as good as the FairTax but I am SOOOOO thankful it is not on my income! When I buy a new product or service here in WA under the FairTax I will pay a state and federal sales tax, when I buy a "used" item I will still pay a state sales tax but NOT a federal one!
Glad to have you here and hope you'll get all the FairTax supporters you know to join us here on FairTaxNation where we can make a consolidated, networking community to get EVERY candidate running to endorse and promote this legislation!! FairTax = JOBS!!! FairTax = Freedom! Shoot after we get this passed we can END THE FED!!!!
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Permalink Reply by Tony on
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How does the Fair Tax, being a sales tax, make it over these two hurdles?
While the details have already been addressed, this is also a reason why they reimburse those collecting the tax.
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OK. It's all clear now, more or less. If set up so that it can effectively circumvent efforts to abuse it, then this is certainly superior to any other system. As we say here in Texas, 'If you always do what you always done, you'll always git what you always got. If you want differnt, do differnt.' The present system is little different from the Gestapo; it depends almost exclusively on the restraint of the IRS agents themselves to avoid rampant violations of citizens' rights. Thank goodness it's populated by Americans, who, for all their faults, are, on average, less disposed to such excesses than the people of other cultures have demonstrated themselves to be. That restraint can't last forever, though.
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