The “FAIR TAX” …WHY BOTHER?!
K.I.S.S.: Just Repeal the 16th Amendment!
If we’re going to bother with effort required to pass the – as yet UNTESTED “Fair Tax” (a tax that is absolutely NOT desireable UNLESS the 16th Amendment is entirely repealed): why not simply return to the TRIED AND TESTED mode of taxation recommended as the least obnoxious form of taxation by the authors of our Constitution? A form of taxation which provided the vast majority of all revenue collected by the federal government for the first 70 years of its existence …a form of taxation that would be ENTIRELY available to Congress – WITHOUT passing much more than a single simple bill establishing the uniform rate(s) – once the 16th Amendment was repealed?
I speak of the UNIFORM EXCISE TAX.
Why would this be better than the so-called “Fair Tax”?
First (and again) it has been tried and tested …and it works BRILLIANTLY!
It only places a tax on IMPORTS …NOT on the goods WE hope to export.
This means that it is, for the most part, a VOLUNTARY TAX: if you don’t want to pay the tax – simply refuse to buy imports.
There are no forms for the average citizen to fill out. In fact, there are no forms for the RETAILERS to fill out. The taxes are collected at the port of entry. That is FAR more simple than the Fair Tax.
EVEN IF we were to allow for a uniform rate of (for example) 23% (the rate recommended by Boortz and Linder in their FAIR TAX BOOK) that rate would ONLY apply to IMPORTS.
To be sure: foreign markets may well tax our exports when they arrive on THEIR shores as “imports”: but many already DO that. Our income tax invariably serves as a hidden or built in tax on the price of our exports BEFORE they ever leave our shores. We cannot prevent other nations from taxing our products when they arrive on their shores: but we can and we SHOULD reduce the cost of the products we export as much as possible (by eliminating taxes that increase the cost of producing them here) so as to render them as competitive as possible on the world market.
A UNIFORM rate means that the same excise tax is levied on any given product REGARDLESS of which port by which it happens to arrive in the United States. This also serves to discourage our representatives and senators from selling their votes to the ambassadors or corporations of this or that country.
The Uniform Excise Tax is also self-regulating to a large degree. Before the American Revolution, history had already shown that there is a glass ceiling to how high a government can effectively raise the rate before such increases prove self-defeating. At some point, people will actually stop buying imports for the explicit purpose of avoiding the expense of the tarriff on them. This forces Congress to REDUCE the rates simply to get the public to start purchasing imports and, hence, paying the tarriff to produce government revenue again.
This can also help to keep even imported goods more affordable for even the poorer citizens.
To the extent that such a tax might render some exports prohibitively expensive …this would, at the same time, reveal an opportunity for resurrecting the domestic manufactures of the product concerned. That means MORE JOBS in the USA!
Some will call this “protectionism.” In truth, what we have NOW is protectionism: OUR INCOME TAX HAS SERVED TO PROTECT THE ABILITY OF FOREIGN PRODUCERS TO MARKET THEIR GOODS AND SERVICES IN THE UNITED STATES TO THE DETRIMENT OF THE VERY DOMESTIC MANUFACTURERS AND BUSINESSES THAT PAY TAXES IN THE UNITED STATES! So long as our government is going to practice “protectionism” it would be nice if the policies of our government actually protected our own citizens, manufacturers and economy rather than those of China and a host of other nations.
In any event: the Uniform Excise Tax also serves as an ideal compromise between “liberals” and “conservatives” as we define ourselves today.
As the costs of paying the excise are built in to the wholesale and, consequently, the retail price of the goods; the higher price of these goods suggests that the majority of those purchasing them and, consequently, paying the tax will be the “wealthier” citizens. Hence, the burden of taxes will be borne disproportionately by the wealthier citizens than the poorer ones. For these reasons, the more “liberal” citizens among us should be satisfied that the Uniform Excise Tax is, in a large degree, “progressive.”
On the other hand: given that such a system is largely voluntary – and certainly far more voluntary (in the means of its enforcement) than our present income tax: the wealthier among us also need not complain. After all: all that is necessary to avoid paying the tax altogether is to refrain from purchasing imports.
The Uniform Excise Tax also avoids that most egregious aspect of the Fair Tax. In order to support the Fair Tax, we must effectively agree that it is reasonable for the federal government to continue to collect and spend 23% of the gross domestic product produced in the USA on an annual basis. Basically, what the proponents of the Fair Tax offer to citizens is a compromise with the Federal Government in which we are offered a much simpler means forfeiting roughly the same amount of money we are presently forced to part with each year IF we will agree that the status quo of around 23% of the GDP is a reasonable amount of money for the government to take from us on an ongoing basis.
Well, it is NOT reasonable for the Federal Government to take that much or to spend that much and we would be FOOLS to concede that it is reasonable to accept such a practice.
In conclusion, though, allow me to re-emphasize the FIRST point of this diatribe of mine: given that even the most fervent advocates of the Fair Tax agree that it would NOT be a good idea to adopt such a form of taxation UNLESS the 16th amendment were to be repealed in the first place: and given that the Fair Tax could not be implemented even then unless another bill were passed to authorize such a system of taxation: why not simply advocate the repeal of the 16th amendment …after which Congress would find that the Constitution itself already grants them all the power they need to levy a uniform excise tax on all goods IMPORTED to the United States.
In Liberty!,
James Hines
