Archive for October, 2011
On Halloween one is likely to find the internet crowded with lists and themed articles dedicated to the scary and the macabre. One does not have to look too hard at our current tax code to see that we are daily surrounded by the horrifying overreach of government. These are examples of a structure too complex to be monitored by the American public, and it is in this complexity the true horror of our system lies.
One area of our tax system that threatens to flatten us like the Blob is merely the simple cost of compliance. Many estimates show the cost of compliance for all Americans at over $350 billion a year. That is a raise from the approximate $265 billion in the early 2000’s. The Tax Foundation estimates that by 2015 the cost will jump even higher to $483 billion. That is hundreds of billions of dollars a year ripped from individuals and corporations that easily could stimulate the economy without the direction of Congress. Compare that with the cost of the new jobs plan coming from the White House at $447 billion. Just by repealing the current code we could stimulate the economy by more than the current asked for stimulus without adding a penny to the national debt. The FairTax removes this oppressive burden instantly and allows individual and corporations to focus their concerns on building and growing not compiling and complying.
Another alarming aspect of our current system is the way that corporate taxes send jobs fleeing overseas. The idea currently inhabiting our political discussion is that our corporations and wealthiest investors are not paying their fair share. Those interested in continuing this notion of class warfare insist that those at the top should pay more. We currently have the highest corporate tax rate in the industrialized world. This has only served to send 406,000 jobs overseas in the last year alone; which is up from 204,000 three years ago. All of these facts can be found in, The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the U.S., China and Around the Globe, a government commission studying job movement over the past four years. This also leaves an untold amount of money offshore, not touching U.S. soil strictly because of a penalizing tax on profits. This is another example of money stripped out of our economy based solely on the punitive nature of our tax structure. The only way to remedy this particular problem is to repeal the corporate tax entirely. The FairTax does this right off the bat.
A third fearsome feature of our current arrangement is the IRS itself. With over 1,120 different forms alone this altar to complexity and opacity proves to be far too difficult to understand for even the savviest taxpayer. Sitting like a spider at the center of this web of complication the IRS has its own court system dealing specifically with tax issues. This has led to a number of odd rulings
and little known deductions like the following: pet food, free beer, clarinet lessons and costs associated with quitting smoking. In a system this bizarre it is more than difficult to see where the line is and especially what the point of a tax collection system is when there are a plethora of ridiculous deductions and exceptions. Our court system uses a basis in English Common Law. It ensures that justice can be predictable and constant no matter what jurisdiction you are in or judge you stand in front of. Our laws are uniform and apply equally to all. Why is it that our tax code is the direct opposite of this? Far from being predictable or equal we must wade into the code at least once a year and find the many changes and exceptions that may or may not apply to us. The only predictable feature of the tax code is that you will be surprised at what you find. And most of the time not pleasantly surprised. Again the FairTax lives up to its name by instituting a flat sales tax on all new goods and services treating everyone equally under the law be they legal citizen, illegal alien or tourist. And most importantly the FairTax sees the elimination of the IRS and no longer treats April 15 as if it were Friday the
Lastly and most horrifically is the negative effect of the tax code on our freedom of speech and religion. At first that may sound like a stretch however consider that the IRS has a direct say in what may be allowed from our pulpits on Sundays or any other day of the week. First to underline the egregious display of governmental control we must understand the role of the church in America
before the IRS. The Protestant churches of the day intertwined the ideas of liberty and salvation. Sermons written by John Witherspoon linked the American Revolution directly to teachings in the Bible. This served to fan the embers of discontent into the fires of rebellion that freed this country. It is no secretas to why religious language permeates not only our founding documents but also much of the writing of the Founding Fathers. Religious teaching at that time was directly influential on the political matter of revolution; in fact many of the sermons given were responsible for swelling the ranks of a new Continental Army. Now let us flash forward to today. A church had the audacity in 2004 to have a guest speaker that spoke critically of the Iraq war. In 2007 another church did not allow a civil union of a homosexual couple on the ground it owned because it disagreed with the practice. Both of these institutions had their tax exempt status revoked. Neither supported or detracted from a specific candidate or party. As both of the above examples show, this is not a conservative/liberal issue. It is a power issue, where the government has placed itself above the church and in the position of allowing or disallowing speech. While it is true that these instances are not common, it is troubling to think that our government has the power to dictate what passes as appropriate discussion in our churches. It does not really matter how many churches have been affected by this rule. If a man is holding a hammer over your head and he changes your attitude or behavior he does not need to swing the hammer, he has already won. This oversight is exactly the same. The government stands poised to swing down the hammer of punishment on any church that is deems as practicing inappropriately politically active speech. By removing the church from the political debate one also removes a moral footing from the debate. I believe the rise of moral relativism can be directly tied to the silence of the church. The devious side of the tax code is not widely discussed or acknowledged and seems like something straight out of The Omen. The FairTax frees us of these restrictions and gets the government out from behind the pulpit allowing our clergy the liberty they deserve.
There is a silver bullet and garlic necklace to the draining vampiric fangs of the
current tax code. It is called the FairTax.
Guest speakers: Jordan Williamson and other representatives from FairTax Texas
Wednesday, October 26, 2011
… 6:30 – 8:30 pm – meeting starts at 7:00
Community Room, North Central Police Substation
6969 McCallum Blvd
(meeting room is at west end of building)
The first understanding we must reach in a discussion on taxes is that the money involved is yours. It is your property first and foremost. I know that you are aware of this but this underlying fact is missing from our national discourse. Its absence has the disquieting effect of removing you from the equation. At the end of the day when a deal is struck by politicians, they can spend or take your money with little to no regard for you, the taxpayer.
Enter the FairTax. In addition to shifting paradigms this plan shifts the power from Washington D.C. directly to you. The FairTax in its simplest terms is a consumption tax, more commonly referred to as a sales tax. 45 states currently have a general sales tax; it is not a new idea. Most importantly however, the FairTax repeals every other Federal form of taxation currently on the books. This is not in addition to the current Federal taxes we pay; it is in the place of. This aspect is probably the largest difference between Herman Cain’s 9-9-9 plan.
This plan creates several immediate benefits, such as, 100% take home pay for every American; money is no longer deducted from your paycheck for Federal taxes. It also decreases the cost of business. The FairTax immediately repeals the incredibly burdensome 35% corporate tax. There are also several long-term benefits; it ends the flow of jobs sent overseas, and creates an investor haven in America. Major complaints from businesses that move out of the country are the costs of labor, included in this cost are the highly regressive payroll withholding taxes. Not to mention one of the highest corporate tax rates in the world. By removing these and the not inconsiderable $265 billion in compliance costs with our current convoluted code it would stand to reason that businesses would cease fleeing the country and many are expected to return. By removing these impediments to success including the capital gains tax and the inheritance tax it frees up the true engine of the enviable American economy, the American people.
The most disheartening aspect of our current tax code is that it inhibits the true creators of wealth. You. The government creates regulations it does not create jobs. The government prints money it does not create wealth. The government creates bureaucracies the entrepreneur creates businesses. The driving force of our economy is not the government it is the citizen. However, our current tax code does not favor us; its complexity and size only favor a growing government that encroaches upon the private sector with each expansion.
In that fundamental sense this tax code is counterproductive. The code and the antiquated notion behind it have long since proven that it does not properly function in a free market capitalist system. What we need is a tax code that shares the same values that we have. One that encourages upward mobility without punishing success. One that frees the individual to spend or save or invest while treating all of those activities equally. One that does not divide Americans into classes or treat those arbitrary classes differently.
We are a nation that values freedom over control and it is time that our national policies reflect those values. To free our economy for the future we must repeal 70,000 pages of complicated code in favor of a simplistic plan that evenly shares the burden of government without redistributing the wealth. The outdated model of class division and warfare marked by a redistributive tax and welfare plan has brought us nearly $15 trillion in debt and has not worked. It is time to stop stifling business and allow it to compete unfettered.
The best way to do so is to put everyone on a level playing field, a consumption tax does this. Repealing the current tax code does this. The FairTax does this. Contact your congressman today and ask that they support H.R. 25. And check back every Monday for more information regarding the FairTax and its ability to bring us the prosperous future we deserve.
Our current political culture has become one of ever-changing buzzwords. Currently the phrase “fundamental tax reform” is one that has gained quite a bit of traction on both sides of the political aisle. From Republican Senator Orrin Hatch UT, to the Committee for Economic Development, or even the White House this phrase is permeating our political discourse. Of course, each of the aforementioned parties would take drastically different approaches to the reform and as complicated as our current system is they tend to focus on small portions of a 70,000 plus page tax code. However, the problem that exists within those pages is not merely the corporate tax rate or the rate paid by millionaires and billionaires. It is not just the collection method or income that is taxed more than once. The problem is an overbearing and far-reaching system that has far outgrown its original intent.
In discussing the problem and a probable solution it is best to examine the past. By learning more about the idea that created our current system it can help us to forge a new path and not retread some of the same areas that led to an unwieldy oppressive tax code that punishes success and prosperity.
To gain this historical perspective we need only to venture back to 1861. In an effort to raise funds for the Civil War the congress passed the Revenue Act of 1861. It created a flat tax of 3% on annual income exceeding $800. This was replaced by the Revenue Act of 1862. This act introduced a graduated tax of 3-5% on incomes exceeding $600. An important aspect of this law is that it was written to expire in 1866.
There are two very important historical notes here. First note that it took only one year for a flat tax to turn into a graduated tax. Also note that the definition of who would be taxed also changed within a year’s time. The 1862 Act also required the employer to withhold the tax from the employee, marking one of the first major assaults on private property in our history.
After 1866 these taxes dissipated as promised however any casual student of history knows that once the government develops a means to tax, it is very hesitant to let that revenue stream disappear. Almost 30 years later the Wilson-Gorman Tariff Act in 1894 lowered the tariff rates and attempted to implement a 2% flat tax on income exceeding $4000. (approximately $88,100 in 2010.) It has always been more popular to propose new taxes on the wealthy even when lowering the taxes on the masses. The arguments are heard for similar proposals today.
The most important historical note of the Wilson-Gorman Tariff Act is that the income tax provision was ruled unconstitutional in 1895 by the United States Supreme Court. The case was Pollock v. Farmer’s Loan and Trust Co. 157 U.S. 428 (1895). The direct taxes on properties that were not apportioned in regards to the states violated the powers given to congress by the constitution.
Since the specter of an income tax, flat or graduated, rose in the early 1860’s the idea of an income tax had gained support from a variety of areas. In 1887 the Socialist Labor Party voiced their support for a graduated income tax; in 1892 the Populist Party joined the cause. In 1908 the Democrat Party placed an income tax in their party platform. The movement did not subside and was not dismayed by the Supreme Court decision. In fact in the election of 1912 all three candidates for President supported an income tax. When the dust settled in the three-way race between Woodrow Wilson, Theodore Roosevelt and William Howard Taft it was Wilson and the Democrats who won and were responsible for passing the Revenue Act of 1913. It instituted a 1% flat tax on everyone and a graduated tax up to 7% for those making above $500,000. To answer the Supreme Court’s objections the Sixteenth Amendment to our Constitution was also passed. This amendment gave the congress the power to tax income “from whatever source derived”. A far cry from the limited and specific powers granted in the constitution, this nonspecific broad power has morphed into an ever-expanding right of the government to take income at every level.
All of these decisions served as the genesis for the system that we currently endure. Our country was founded in 1776 on the principles of life, liberty and pursuit of happiness. Some rightly include the addition of property. In 1913 our right to our own property was taken away. Before we are even able to see the product of our efforts the government takes whatever it deems to be necessary from our paychecks before handing us the remainder. Even after this process is completed we must all work for the government at least one day a year to deduce if they have taken the correct amount. If we find that they have not we must dutifully pay the difference. This is not the government envisioned by our forefathers. It is a system that oppresses; we suffer under an overbearing government that only seeks to broaden its reach. It is time for a return to our founding principles and documents. There is a method and a way, it is called the FairTax.
For further reading please check back next week or read H.R. 25 to see the bill that has the ability to turn back the tide.