Fair Tax Nation

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


2009 was a pretty bad year for the Constitution, but 1913 was worse: it was the year that the Federal Reserve was created and taxing income was legalized.

I don’t expect “Repeal the 16th Amendment” will replace “O Sucks!” as the student section chant of choice at next year’s Badger games, but it is those students and everyone in their age group who would gain the most if we would return to the principled economics of sound money and proportional taxation. They would not be facing a $225,000 per-job share of the national debt and they would earn orders of magnitude higher incomes when they graduate.

You won’t find the Federal Reserve anywhere in the Constitution; it assigns Congress the sole responsibility for maintaining a sound and stable currency in Article I, section 8. In section 9, it even prohibits states from accepting fiat money (what the Fed issues) as repayment for debts. This was not a careless omission; the framers observed how the central banks of Europe oppressed the common folk and enriched the ruling elites.

The founding fathers knew that a central bank was incompatible with the ideal of limited and subservient government. For the first American century there was no central bank and we prospered as no other nation has before or since. Then, in 1913, the so-called progressives abandoned the Constitution and created the Federal Reserve, giving it complete autonomy over the money supply. Bad move.

In 1913, the first Federal Reserve Notes (the dollar) were coupons redeemable for one ounce of gold. Either one ounce of gold or one U.S. dollar could purchase a decent rifle, as was the case in 1813, a century earlier. Today, a decent rifle can still be purchased with ounce of gold, but it would take over 1,000 of those Federal Reserve notes to buy either one.

Gold and rifles cost the same, but the dollar has lost 99.9% of its value, thanks to the Federal Reserve and its inflationary issuance of fiat money – money not backed by tangible assets. We should abolish the Federal Reserve and return to the Constitutional mandate of sound money.

I personally prefer a currency tied to a BTU – unit of energy – while others prefer a return to the gold standard, and others a basket of commodities. It is not so important how our money is anchored, but that it is. We can not have a strong economy without a strong dollar, and we will never have a strong dollar while we have the Federal Reserve.

And while we are at it, we should also repeal the 16th amendment and abolish all taxes on income. Income is the product of a person’s labor and no one else has a rightful claim to it. A slave is a person who has lost his right to 100% of the product of his labor; a tax-slave is a person who is 2/3 of the way there.

Before the 16th amendment changed it, the Constitution required the government to tax people, not the product of their work. And it required any form of tax to be proportional to the census, just like representation in Congress. The principle is simple: one person, one vote, one unit of tax. That is equality.

That principle held government in check for a century, with government spending below 5% of GDP. And government only spent money on things that benefited everyone, since everyone was taxed equally. During the 1800’s we became the most prosperous people in the history of the world, and not by accident.

In the first American century, Americans flourished because American government was constrained. In the second, it was American government that flourished while Americans were constrained. Our government now spends nearly 50% of GDP, and with unfunded mandates on the private sector added, the total is over 60%.

And our tax system no longer taxes citizens equally; it punishes some to benefit others. Our current tax code punishes work, savings, investment, thrift, and exports. It rewards spending, debt, taxation, and imports. It is not difficult to understand why we have too little of the former and too much of the latter.

Worse yet, our tax system insures corruption of the political process – it is the mechanism by which politicians reward contributors and punish opponents. It is how votes are bought in Congress. It distorts the markets and produces economic inefficiency. It screws the little guy. The current tax system is indefensible.

We can not immediately return to a proportional tax with the size of government that we have today; the cost of citizenship would be approximately $20,000 per person, $80,000 for a family of four. Now, you might be thinking this can’t possibly be right; you may not even make $80,000.

And that is precisely the point; the reason you don’t make more than $80,000 is because the government has taxed it out of the economy where you could have earned it. Granted, some people would earn more of it than other people would, but that still beats Nancy Pelosi taking all of it.

This could never have happened under the original Constitutional requirement for proportional taxation, and it is why the 16th amendment needs to be repealed. It’s why the 16th amendment matters to you, why the students at Camp Randall should be chanting for it to be repealed – but not at the expense of Jump Around, the greatest stadium tradition in the history of spectator sports.

But we can take an intermediate step that can put us on the path to ending confiscatory taxation, and give everyone a vested interest in reducing the size of government. We should scrap the whole system of federal taxes and replace them with one universal tax on retail consumption – the FairTax. In the process, we can dispense with the IRS, freeing up over $400 billion that is currently being spent each year on compliance with its ridiculously complex codes.

You can read all about FairTax at www.fairtax.org and you can learn about the movement to End The Fed at http://endthefedusa.ning.com/.

President Obama insists we need another economic stimulus because his first one didn’t work. I agree with him 100%. End the Fed and abolish the IRS – that is my economic stimulus plan.

Tim Nerenz is the Libertarian Party Candidate for U.S. House of Representatives from Wisconsin's 2nd District. To support Dr. Tim's campaign, please visit the campaign website at www.timnerenz.com.

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