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Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

Tom Hansen's 0-0-0 Plan Wipes Out Herman Cain's 9-9-9 Plan

World Net Daily published an interesting article today on Tom Hansen's 0-0-0 plan. Here is how it works:

 
Replace the current federal tax code with a 0 percent personal income tax, a 0 percent national sales tax and a 0 percent corporate income tax.

 
If the government needs money, they can confiscate ten percent of the budget of each state. This will eliminate the personal and business income tax tyranny, slash collection costs to almost zero, and restore privacy to the public.

Each state will determine it’s own budget so there will be no need for expensive legislation, unnecessary jailer expenses, and costly measures of income. The states will fight the feds for the collection details and amounts so it will cause more voters to carefully select their state legislators. 

 
I have added an intermediate step for those who believe that the 0-0-0 plan is politically impossible.  


It is called the “Fair Tax”.


Fair Tax is the best way to set the economy on a 0-0-0 trajectory.  It will eliminate the income tax just like 0-0-0.  It will restore privacy to the public just like 0-0-0.  And it will make 0-0-0 politically possible.  


0-0-0 Article on World Net Daily

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Like that is ever going to happen? Please!! Lets get the FairTax passed first, then we can go for the pie in the sky solutions.

Frank,

 

That is exactly the thrust of the blog post.  The 0-0-0 fantasy can only be within reach if Fair Tax passes first.  It is a counter to Herman Cain who wants to pass 9-9-9 first, then shoot another massive tax change afterwards with Fair Tax.  Herman Cain assumes that a massive tax change can occur twice, which is politically impossible.   

Gene, I have to admit I don't like the 999 plan, but it does get us part way to the FairTax. My concern is that legislators will be happy with it and just forget about the FairTax. Also, it ends up being a 27% tax on Americans vs. the 23% proposed by the FairTax because as we all know, the cost is built into the cost of the item or service. Does it (his 999 plan) do away with the tax lobbyists like the FairTax does? I honestly don't know. But I remain firmly in Mr. Cain's corner at this point as I still believe he is the man to beat Obama. 

Frank

We are already are at The FairTax with its 74 cosponsors and hearing before the House, Ways and Means Committee. We don't need Cain's hybrid tax plan to bolster the FairTax. If anything, Cain needs The Fair Tax to bolster his scam tax plan.

I was considering Cain prior to him changing his position on The FairTax. I will never be in Cain's corner since he abandon The FairTax as the only alternative tax plan to the federal income tax code. His reversal on The FairTax reveals he is willing to do what he thinks is political expedient for himself at the expense of not holding true to his original convictions. Someone with that mindset cannot be trusted.

Oooooor, States don't like 10% taken, and raise taxes to cover the extra expense.
More practically, the 9-9-9 plan demostrates the success of the FairTax, making it easier to pass.
If you want the 16th Amendment repealed, I believe that will send us back to be bound under Article 1, Section 2 of the Constitution which requires a charge against the States for needed funds.  Of course we want to go to 0-0-0 ASAP but no one has come up with a reasonable plan to go from a multi-trillion dollar budget to a Colonial nation overnight.  I agree with you that 9-9-9 demonstrates the success of Fair Tax.  But many potential Fair Tax supporters want to go directly to 0-0-0.  So we need to talk about Fair Tax in terms of 0-0-0, not 9-9-9. In any case, I agree with you that Fair Tax is the next step.

There is a major flaw in Tom Hansen's plan. He doesn't understand a fundamental concept about a national sales tax.  Article 1 Section 8  enables Congress to collect excise taxes. There are two types of excise taxes. A specific excise tax is one that imposes a specific monetary amount to be collected  on the sale of a good or service, such as so many cents collected per gallon of gasoline. Another type of excise tax is an ad valorem tax, which  imposes a fixed percentage tax to be collected on the sale of a good or service. A sales tax is an ad valorem tax. The FairTax will be a sales tax and therefore by definition will be an excise tax.

Consequently Tom Hansen contradicts himself by having 0 percent collected on a national sales tax given the fact a sales tax is an excise tax. Passing legislation prohibiting any rate to be collected on a sales tax would be essentially repealing Article 1 Section 8 as all excise taxes are Constitutional. It would therefore be Unconstitutional without invoking the processes detailed in Article V to repeal Article 1 Section 8  to prohibit collecting taxes via a national sales tax.

Dan,

 

That is the beauty of 0-0-0.  There is no prohibition in the Constitution to set the excise at zero. Currently, there is a zero percent fed sales tax. If the zero rate cannot be codified due to Art 1, Sec 8, then it does not have to be codified.  In any case, 0-0-0 is part of Ron Paul's and Gary Johnson's campaign, although not by that name.  There are many potential Fair Tax supporters who can be easily convinced to support Fair Tax if they knew that the real goal was 0-0-0. In fact, that is how I've been promoting it.  And the argument is usually successful (although I did not use the 0-0-0 name in the past).  

 

I did not expect to be an apologist for Tom Hanson but now I have adapted his article as my favorite new tax argument of the week. 

GeneLouis

Setting the sales tax to zero would prohibit ever imposing a national sales tax. An excise tax is a sales tax by definition and is Constitutional.  Such a prohibition is repealing a portion of the Constitution.  Congress alone does not have the authority to unilaterally repeal the Constitution. That can only be done with Article V.

 

BTW- The article was written by David Hanson.

The Constitution is not part of this plan and is irrelevant in the 0-0-0 plan.  

 

Step 1. Pass the Fair Tax - will create a 23% sales tax, eventually set the income tax and corporate taxes to 0.  Just needs H.R 25 passage  - no Constitutional Amendments needed except for the part about reversing the 16th Amendment. 

 

Step 2. Ratchet down the sales tax to 0 - a number which can be raised or lowered at any time by Congress without any conflict with the Constitution. 

 

We now have 0-0-0.

 

Hanson's plan would have to become legislation to be enacted. The Constitution is always relevant to any legislation. Setting the rate to zero will effectively eliminate the Constitutional sales tax(excise). An amendment would need to be passed for repealing Article 1 Section 8 to eliminate the sales tax just as and Amendment is required to repeal the 16th Amendment to eliminate the federal income tax.

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