Topping the News
for Fair Taxes
"Where there is an income tax, the just
man will pay more, and the unjust less on the same
amount of income."
Plato, "The Republic"
The current tax system gets a lot of criticism. People rail against it
and deem it too long, complicated and strenuous. Though
I'd agree with all these summaries, the real problem
lies with the very idea of taxation on income.
Constitution says in Article I Section 9: "No capitation, or
other direct, tax shall be laid unless Proportion to the
Census or Enumeration herein before directed to be
taken." Now if this were the Founding Fathers original
intent, why have we strayed so? I guess it is easier to
show how right they were, by giving examples of how
detrimental the income tax and the likes are than it
would be to show how it ended up the way it is today. It
will be, likewise, very easy to give an alternative.
The 16th Amendment to the Constitution: "The Congress shall have
power to lay and collect taxes on incomes, from whatever
source derived, without apportionment among the several
States, and without regard to any census or
From this amendment stems the Social Security tax, the Medicare tax,
corporate income taxes, the death tax, the
self-employment tax, the alternative minimum tax, the
gift tax, the value added tax and the capital gains
tax. What are we not taxed on? The framers thought is
was important enough not to tax the people to death,
that they put in the very charter of our nation, a
mandate strictly prohibiting such exhaustive taxation.
Karl Marx wrote in "The Communist Manifesto" 10 points about a
perfect communistic society; No. 2 on that list was
"a heavy progressive or graduated income tax." I'd love
to go into to the history of the income tax and how by
fallacy it is now a permanent part of our society.
However, I must limit myself to expressing how
uneconomical and draining it is to our country. Let it
suffice the historian to say this, the pre-16th
Amendment income tax policies were only implemented
during times of war, class-hatred and were quickly
disseminated by the people.
Why the income tax, and others, is detrimental:
1. The Tax Foundation has estimated the high costs of complying
with our sophisticated tax code. In 2002, complying with
the code cost Americans $5.8 billion.
2. It is so complicated. According to "The Cost of Compliance" by
Scott Moody, who is a senior economist of the Tax
Foundation, in 1955 there were around 400,000 words in
our tax code. In 2002 that number skyrocketed to just
over 1.5 million.
3. The shadow economy: Economists have deemed this the system of
business that avoids paying taxes. Servers in
restaurants not being honest with tips, paying cash for
home repairs, venders on the side of the rode, etc. All
this adds to around 10 percent of America's GDP.
4. The underground economy: Economists deem this as all the illegal
activity for profit that goes untaxed. Drugs,
prostitution, child pornography and many other illegal activities that skip
our economy. The former commissioner of the IRS, Charles Rossotti, estimated
1.5 trillion tax dollars were avoided in 1998. This does
NOT including undeclared earnings or drug trafficking.
This was estimated by Eric Schlosser in his book "Reefer
Madness" to exceed $1 trillion dollars.
(Interesting fact: the government calls what you are
not taxed, a tax expenditure.) How do you like that?
5. Legally avoiding taxes: In 2000, the Merrill Lynch and Gemini
Consulting study "World Wealth Report" notes a
third of the world's high-net-worth individual's money
is held offshore, safely away from the United States
economy. Know how much this is? 11 TRILLION DOLLARS.
So, why is it that these offshore financial centers, or OFCs, go to
other countries? To avoid the high cost of staying here.
See, there is a myth that taxing big business is
beneficial to the economy and therefore the average Joe.
This is not so.
Let's say that some students from
the University of Arkansas at Monticello
got together and started a college service organization
that became extremely successful. Let's imagine making
$20 million (hey, we think big OK). Out of that $20
million, $17 million is what we owe for material, wages,
shipments and so on. So we are now left with around $3
million. We know that this income is going to be
taxed, so, how do we insure we keep the profit next
year? We either up the prices of our service, cut back
benefits of employees, lay off workers, down the price
of our shares or go to another country to escape this
dreadful taxation. All of these scenarios hurt the
The average citizen will end up paying more
for the service, because we want to keep what we earned.
This also, obviously hurts the economy, which in turn
effects social welfare, Medicare and Medicaid.
These are just a few examples of the drainage the current tax
system has on our economy and society.
So, what can we do? There are many tax plans circulating around
Washington. One that is gaining more and more attention
is the FairTax plan. This would completely replace, not
add to, the federal income tax, along with the many
other mentioned at the beginning of this article. The FairTax
plan, supported by Congressman John Linder and
others, would place a 20-23 percent national sales tax
on retail goods. I've not the space to describe in
detail the benefits of this plan, the purpose of this
article is to inform the readers of how disgusting the
income tax is, and how terrible it is for our nation's
people. I'd love to write on the FairTax Plan and will
at the beckoning of any readers.
By replacing the income tax with the F.T.P., all of the people who
have been escaping payment will be taxed. How, you might
ask? We Americans like to buy things. The rich who avoid
paying will go and buy yachts, the drug dealers will
have to pay for their Gucci and Prada, the pimps still
have to by their suits and feather hats. All these goods
will be taxed. Another main point is this, the FairTax plan is what it says it is, fair. No matter how rich or
poor you are, you will be taxed the same amount. A
person who has made something of themselves, got an
education, and worked hard will not be punished for all
his efforts by being taxed to death.
Other advantages of FairTax plan:
Here is the one of the biggest advantages for some who think this
plan is not fair. Instead of a yearly tax return, every
family will get a monthly "prebate" based on the
national poverty rate. Whatever the cost is of having
the bare necessities provided will be given to every
family, regardless of income. A family of two would
receive somewhere around $400. No one will have
to buy toothpaste, toilet paper, shampoo and whatever
else is needed for living above poverty.
- Savings accounts are not taxed.
- Offshore companies will come back to America, putting trillions of
dollars into the economy.
- Complying to the tax code will be extinct, bringing back
billions of dollars.
- The I.R.S. will no longer be needed.
Summary of benefits
You get 100 percent of your hard earned money. You get to
decide when you want to pay your taxes. The prebate.
Complying costs gone. Savings accounts such as I.R.A.s
will be tax free. Education is not taxed. Illegal
business will finally be forced to pay.
Now, let me end by stating I am a middle American. I am
by no means among the wealthy of this nation. I work, go
to school and pay for my own living. So, in no way should
an argument be made that this is unfair to the low or
middle class families. Who else would I want to help or
inform or look out for? There is so much more
information on this that I would continue on if the
readers see fit. It is something worthy of discussion,
especially during tax season.
Have a comment? Please e-mail us.
ŠThe Voice 2006
02:10:11 PM http://www.uamont.edu/Organizations/TheVoice/3_20/taxes.htm