Archive for February, 2012

FAIR VS FLAT AND WHERE WE’RE AT

Over the past two weeks I have done my best to explain the dire need in repealing our current tax code in its entirety. It violates the Constitution as it stood before the passage of the 16th Amendment and the amendment itself, and the unlimited power it grants, violates the spirit of the document it inhabits. Understanding that no mere tweaking of the current code will suffice it would now be necessary to discuss what method of taxation should replace it when we hopefully move on. There are two main alternatives to the current tax code discussed on a national level. One is the FairTax and the other is a flat tax. For the purposes of this particular article we will examine the flat tax plan released by Heritage Foundation this past December called the New Flat Tax.

As the FairTax has enjoyed quite a bit of discussion and examination on this website it is only fair to examine the New Flat Tax first. It is a flat tax rate of 28% on income. It repeals the death tax, payroll taxes, and all excises not dedicated to a trust fund. It is designed to be revenue neutral, it has one flat rate, two credits and three deductions. It caps the rate of taxation to 18.5% of GDP in an attempt to alleviate the stress of additional taxes down the line.

The New Flat Tax, as stated, does have two credits and three deductions within it. One credit is a $3,000 credit for purchases of health care insurance and the other is the existing Earned Income Credit. The three deductions are for higher education costs, charitable contributions, and an optional home mortgage interest deduction. Reading further through the description of the plan there exists an additional credit for research and experimentation. It is merely the continuation of the Alternative Simplified Credit that we have today and not counted with the credits above because it is not available to everyone.

After a thorough examination of the idea it becomes increasingly clear that it does nothing to solve the underlying problems of an income tax. Not only does the Earned Income Tax Credit feed directly into the class warfare debates that continue to mar Washington D.C. it violates the purpose of a flat tax itself. This New Flat Tax also makes the mistake of taxing corporations that will only lead to those same costs being passed down to the consumer in a variety of ways. All it amounts to is a reduction of 7% of the current corporate tax rate. While a 7% reduction is nothing to ignore it loses its luster when realized that we currently operate at a crippling 35% rate which is the highest in the industrialized world. The New Flat Tax plan would still leave us 3% above China and the UK but at the exact same level as Mexico. Most interestingly about the corporate tax level in this New Flat Tax plan is that it does not seem confident that it truly is good for business. For instance it gives business ten years to continue under our current system. In fact, the year after the New Flat Tax is passed the corporate tax rate will still remain at the punitive 35% level. In order not to grant certain companies “tax windfalls” by removing the burdens that they currently strive under the New Flat Tax will decrease the corporate income tax by 1% per year until it coincides with the 28% level that individuals pay. Yes, the last thing we want is the removal of an incredibly burdensome tax code to lead to windfalls in a paining economy….

One might ask how keeping the earned income tax credit could work to equalize a tax code that has removed any and all payroll taxes. The final sentence is the key to understanding this and many other questions surrounding the New Flat Tax. It reads as thus,

“Finally, saving out of either capital income or labor income is tax exempt under the New Flat Tax—but tax is levied on all capital income used for consumption. Thus, upper-income citizens who spend much of their income generated from their past saving will pay a large amount of tax.”

There in black and white is the problem with any tax code that is interested primarily with income. Even a supposed flat tax, new and improved or otherwise, will devolve into class warfare. The same rules espoused above apply to any gift or estate (read death) tax. The passing of such money from one hand into another is not taxed, but the use of that money during consumption is taxed. All savings are deducted from income but are taxed as spent.

The inherent problems should be easily identifiable. Any tax concerned with income will never be flat and if truly flattened will not stay that way for long. The cap of 18.5% is a politically astute tool to keep politicians from easily tinkering with the system away from prying eyes until the cap is removed. One congress cannot constrain another and if the cap becomes a roadblock to congressional authority then it will be removed. Our constitution has only and specifically eighteen enumerated powers given to congress. It does not take an expert political scientist to see that congress has taken upon itself far more than its eighteen appointed tasks to the detriment of the states and people whose control was taken from them. As long as the 16th Amendment remains our government has the legal authority to tax with unlimited access.

This New Flat Tax participates in the same class warfare sphere that has consumed our current code and it is also politically disingenuous. To say that it encourages investment without removing the Capital Gains Tax or to claim that it repeals the death tax without allowing you to spend any money received is tantamount to a lie. Shifting the burden is not removing it, renaming an unpopular political practice does not make it likeable. This New Flat Tax also does nothing to the egregious affront to religious liberty found in the tax code. By classifying the church to a tax exempt charitable status gives the government the right to regulate its speech nullifying in part the free exercise clause of the First Amendment.

The FairTax on the other hand solves many of the problems highlighted by the New Flat Tax. It is a 23% sales tax that repeals any and all federal taxes and the authority behind them, the 16th Amendment. It restores us to constitutional first principles and treats all American citizens equally under the law. It shares the same exemption of higher education costs because it views a higher education as an investment in human capital; for the same reason there is no Capital Gains tax. It ensures the viability of the Social Security system by placing all of the collected money in a general fund allowing the government to fund priorities first including promises already kept. It increases the transparency of government by setting all Americans in a single class, set against any increase in taxes by the government. It does not use an arbitrary designation of GDP as a cap in tax revenue, but only the watchful eyes of 311 million Americans who would notice a single change to the tax code. It removes the class war inhabiting the tax debate allowing congress to more efficiently do its business. It allows American businesses the freedom that comes with a 0% tax rate that will serve as an open invitation to any international competitor ready to reduce the cost of doing business and to access one of the most highly trained workforces this world has seen. The FairTax does not slowly implement itself over the course of a decade; it removes the antiquated framework we currently deal with and replaces it with a simple, transparent, and fair system.

In the 1912 presidential election, the American voter did not have a choice. All of the major candidates supported an income tax. Today we are given an opportunity; tax reform has become an increasingly popular term and shows that people are ready to see a change up to the current system. We can choose to reset ourselves to the system of 1913, or we can carve out a new path. One that takes the government out from behind the pulpit, one that frees businesses to create the jobs we need, one that treats all Americans equally, and one that does not pander to those interested in dictating to us how our money is spent. It seems that the New Flat Tax has gone the way of New Coke. The only problem is that “Classic Tax” is not popular either. In a free market people vote with their wallets, in the free market of ideas people vote with their voice. Support the FairTax, there really is no other option.

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SPECIFIC AND ENUMERATED EVILS

If our goal is truly to repeal the current tax code and completely replace it then I believe it would be best to explain why. Of course there are many who do not like it and I would expect if a poll were taken, a heavy majority of Americans would express their distaste for the current system. Last week discussed that if not for the 16th Amendment, the current tax code could only be found unconstitutional. This week will focus on why repealing the entirety of the current code is the only way to restore our constitutionally limited government.

It should be no surprise that the American society we live in today was not foreseen or desired by our founders. Our tax code has created a class system that pits us against each other in a perpetual class war that creeps into every tax debate on Capitol Hill. This division only serves to hamper our efforts to succeed. Every tax discussion then serves to separate the American people leading to great difficulty in taking dramatic steps to right the ship. All of the vitriol that surrounds a class warfare debate has led our fearful politicians to lay dormant as the federal debt climbed $10 trillion in as many years. In addition now to roughly half of Americans not paying into the income tax system, just as many receive government benefits that an increasingly few pay for. Our government has become one chiefly interested in the redistribution of wealth. The tax code is the chief cause. At this rate the many recipients will quickly outvote the diminishing providers, unless action is taken to correct the course. Repeal this system to regain the balance.

Our tax code is not merely content with defining people by class but would like to dictate as to how to live our lives. This involves particularly the “marriage penalty”. The tax structure, and its many exemptions, provides a benefit for single parents and those that remain single without marrying. A few laws have been passed to correct this penalty to marriage, but the Alternative Minimum Tax automatically puts married couples in a higher tax bracket. This burden becomes heavier the further down the income ladder you go. Marriage becomes increasingly costly and therefore less feasible. In addition to providing barriers to marriage the higher the taxes are raised the more they inhibit children. It is bad enough that this recession has brought the United States to its lowest birth rates in our history. Raising taxes will only provide another burden on young families. Any economic downturn hurts young families and the poor disproportionately; our tax structure highlights these problems and serves to increase the burden on those who wish to raise a family in America.

Our income tax has also led to the rapid increase in the size of government. As per the 16th Amendment our government has the unlimited power to tax. An unlimited power that is only restrained by the attentiveness of the American populace. In 1913, the year the government was given this unlimited power, our federal budget stood at 8.21% of the GDP. In 1903 it was 6.80%. It took ten years to move 1.4%. In 1914 it rose to 9.55%. In one year it grew more than it had in the previous ten. Over time the government has bloated to consume roughly 40%. As we know the federal debt has risen to such levels as to downgrade our credit rating. There are many ideas as to how to respond to this growing crisis and creative methods on raising taxes are also on the table. One idea floated recently by the President himself was a Global Minimum Tax. Meaning that corporations are punished for being American even if they hide their wealth offshore. There now also exists the idea of a  Reasonable Profits Board that will regulate the profits of oil and gas companies. Six congressmen have created this bill put before congress in an attempt to gain more government revenue. As you can see this unlimited power given to congress creates a mindset that if more can be taken then take it. Serious cuts to spending have to vie for time in discussions revolving around increases to revenue. If you find the idea of an unlimited power to tax unsettling or even vaguely socialist then repeal the current system because as history proves, it shows no sign of slowing its own power grab.

As the past few examples show the current tax code has a depressing effect on commerce. Investors have been repeatedly attacked this campaign season by both parties, proving that the class warfare aspect to the tax code provides an easy grab bag of attacks in any political season. The Global Minimum Tax and Reasonable Profits Board are nothing but attacks on businesses. Not only does this country punish success as one moves up the income ladder into increasingly punitive tax brackets, it also houses the single highest corporate tax in the industrialized world. It is a testament to our ingenuity and workmanship that this is still the best place for business in the world. It is also proof that America is the last best hope for liberty on this earth. But we are watching as this precious right is slowly being stripped away. Each attack on a business is an assault on every person with a job. A job created by a business started by an entrepreneur. Creating regulations for every American businessman is not a way to keep the jobs connected with that investment here at home. Our current tax code is not friendly to anyone but the politician but it is certainly an enemy of American businesses.

It should only make sense then that corporations spend heavily in election years. They are, rightly, concerned with easing this considerable burden placed on them by the tax code. This creates an incredible incentive for focused lobbying efforts to change the tax code. The 70,000 plus page code is riddled with exemptions and exclusions favoring one party over many or all others. As one can imagine this only serves to create even further complexity in the code. A code far beyond the reasonable American’s grasp of understanding. These lobbying efforts exclude the voice of the constituent and continue to make the tax code something indecipherable to even the trained eye. Our government’s most basic connection with its citizens is an incomprehensible boondoggle that must be viewed through the lens of a third party, that being an accountant or accounting software. While we wait to see if we paid enough and if the government wants even more of our money than it forcibly removed from our paychecks over the year, companies, GM for example, pay nothing thanks to a dedicated team of tax lawyers using every loophole paid for over the many years of lobbying. The idea of a representative government is lost in a discussion of the tax code and it is beyond repair. It is in need of repeal.

The tax code, along with the lack of ethics of elected officials, is a reason for the rising trust gap between representatives and the governed. The realization of the truth of corporate taxes also adds to this ever widening gap. The fact that we consumers pay the price for every penny of increased corporate taxes in the form of higher prices, lower quality goods, or lower wages is a chafing one when Washington seems intent on raising these taxes. The additional “hidden tax” of compliance is another costly one on our economy as a whole. But most egregiously are the rights stripped away and privacies lost in complying with the tax code. It has been covered here before about the infringement of the 1st Amendment phrase in regards to churches ability to preach without government punishment. If the church crosses over certain government boundaries, then they are punished with the same tax code that we have to deal with on a daily basis. At least the government can acknowledge as we can that the code is punitive.

We can see now that our tax code is not interested with collecting revenue. It does too much more for that to be its primary concern. This President’s Day let us remember those that strove to lay the groundwork for this nation, that set forth the guiding light that led us to where we are, and follow in their footsteps toward a nation concerned with personal liberty and the responsibility that is intrinsically connected with it. The repeal of our current tax code, one that has grown over almost 100 years, is not suggested lightly; however these injustices are an intended consequence of a dedicated few over time to transform this country from the independent nation of our founding to the dependent nation of today. This is no longer a point of discussion but an egregious affront to our liberty that demands action. We have suffered long under the crushing weight of a government with unlimited tax powers and are now reaping the fruits of that long labor. We reject them outright. We reject the idea of a government that can centrally plan an economy or can remove from our paychecks the property we worked to earn before we even see it. We reject having to comply with a convoluted mess designed by those that do not pay into it. We reject a system that chooses who will win or lose in what is supposed to be a free market system. We reject our rights trampled on by unaccountable bureaucrats; we reject the social planning that comes in the form of tax rebates or the lack of those rebates. We reject it en masse. There exists no redeeming quality that could justify its continued existence. And we demand action. I do not believe that one should solely criticize without offering up a differing solution. I offer up the FairTax. The problems described above that it does not address it eliminates. There are other tax proposals that are also discussed under the broad umbrella of tax reform. That will be the topic of discussion for next week. But leave on this note. In the words of Cicero, “What is morally wrong can never be advantageous, even when it enables you to make some gain that you believe to be to your advantage. The mere act of believing that some wrongful course of action constitutes an advantage is pernicious.” This tax code is morally wrong; its reach far exceeds its grasp, at its core it is evil. We shall end it.

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ARTICLE VI

Earlier last week saw the inappropriate and rather disgusting attack on our Constitution by two leaders in government. First of all, President Obama decried his inability to force his agenda on an unwilling Congress due to a system of constitutionally created checks and balances. It is disconcerting to hear his comments of this past week and recall how wistfully he pined for China’s top-down leadership structure. But far more egregiously, and telling, was Supreme Court Justice Ruth Bader Ginsburg’s criticism of our founding document on Egyptian television. For those of you who missed the news allow me to quickly recap. Addressing the newly forming Egyptian government, Justice Ginsburg advised them thusly, “I would not look to the U.S. Constitution, if I were drafting a Constitution in the year 2012. I might look at the Constitution of South Africa… It really is, I think, a great piece of work that was done. Much more recent than the U.S. Constitution.” This is not the first time Justice Ginsburg has shared her affinity for foreign laws and decisions over those of the U.S. In fact, one of her complaints about the U.S. Supreme Court is that it is not cited more by courts internationally. The Canadian Supreme Court is “probably cited more widely abroad then the U.S. Supreme Court.” She further reasoned that, “You will not be listened to if you don’t listen to others.” It was neglected to mention that “listening to others” in this context means ignoring American jurisprudence, voters, laws, precedent and history. That is not the purpose of a Justice according to our Constitution.

Article VI of our founding document has something else to say on the matter.

This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.

Unless the previous excerpt contains a clause of exception for wanting to be cited by a court in Belgium I believe the phrase “supreme law of the land” should suffice any and all judges. Our Constitution is the law that governs this country; its changes reflect our own history, like rings on a tree. To ignore it or seek outside help when convenient stands contradictory to who we are as a people and the legal standing of the Constitution itself. In fact, our constitutional history is vital to our understanding of the need to pass the FairTax.

After the wartime income tax, Revenue Act of 1862, expired in 1866 Americans were free again from the income tax. While American citizens were free from this oppressive tax, politicians were obsessed with breathing new life into the recently abolished tax structure. Twenty-one years after its dissolution the Socialist Labor Party began to openly advocate for an income tax, five years later in 1892, the Populist Party demanded a graduated tax become a part of their platform. And in 1894, the Wilson-Gorman Tariff Act passed, instituting a five year 2% tax on “gains, profits, and incomes” in excess of $4,000. Aside from the eventual court ruling on this particular bill it is important to note that the debate in Congress at the time was heated and many voted for the bill that included an income tax because they refused to give up on tariff reform. As this New York Times article from January 30, 1894 shows, “They prefer to bear the odium of the income tax rather than to see the Wilson bill defeated.” How many times in our government’s history have we been faced with a decision between two evils and taken it? Why must we hold our nose and swallow the bad to get what we want? Luckily at this precise moment in history the Supreme Court looked to the supreme law of the land and declared the tax portion of the Tariff Act unconstitutional. We passed a direct income tax on those of certain wealth and it was, rightly, declared unconstitutional. The Pollock v. Farmers’ Loan and Trust Co .decision was handed down in 1895 and eighteen years later fixated politicians pushed a constitutional amendment to override the Supreme Court decision. The Sixteenth Amendment, passed in 1913, allowed the government to directly tax income from any source derived, read your wallet, without regard to apportionment to the States or any census or enumeration. Thus the monstrosity of the current tax code was born, taking great pains in the form of a constitutional amendment to defy a Supreme Court that said it did not belong before.

Enter the FairTax. The FairTax is not the creation of a Washington committee. It is not a cobbled together hodgepodge of political favor and pork tapered around a watered-down central idea. The FairTax is a private sector solution to a public sector problem. Created in the 1994, the FairTax was the idea of some businessmen in Houston who knew there existed a better way to tax the American public that did not involve working 102 days just to earn what the government will take in a given year. The idea of a consumption tax however has been around much longer than eighteen years. In 1783, James Madison voiced his support for a consumption tax, saying, “Taxes on consumption are always least burdensome, because they are least felt, and are borne too by those who are both willing and able to pay them…” That sounds much better than a confiscatory system that punishes success and investment. Another luminary from our American history, Alexander Hamilton, favored a consumption tax and espoused its virtues in the Federalist Paper (No. 21), “It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.” These are the men that formed our government. James Madison, author of the Constitution and Fourth President of the United States, and Alexander Hamilton, First Secretary of the Treasury and the only New Yorker to sign the Constitution. As fellow authors of the Federalist papers these views hold considerable weight on the interpretations of the Constitution at that time, it was viewed as the supreme law of the land and forbade any direct taxes, which are not uniform or apportioned to the States, levied on the people by the Federal government. How does that view stand up to our current code? It doesn’t.

There are three clauses in the Constitution signed at the convention considered with taxes. One states that representatives and direct taxes should be apportioned among the several States. Another states that the Congress shall have power to lay and collect taxes, duties, Imposts and Excises…but all Duties, Imposts and Excises shall be uniform throughout the United States. And finally, no capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken. Omitting the Sixteenth Amendment, that is all the Constitution says about how the government should levy taxes. It seems that the Sixteenth Amendment was passed to violate the first section, and subsequently used to ignore the other two sections. That one Amendment has been used to increase the size of the government’s ability to tax far beyond the intention of our forefathers. That is precisely why it should be repealed. When it is repealed America should be ready with a tax system that meets the requirements and restrictions in the original Constitution. The FairTax meets these strict standards. The FairTax, by removing this overburdening tax code and placing the American citizen in charge of the revenue stream, will be the second positive outcome of taxes in human experience. The first being the capitation tax that led both Mary and Joseph to Bethlehem at the very end of the BC era.

If the Constitution does track with our American history then it is supremely important to use that as the golden standard of national policy. This current system is the product of a change to that original document; I submit to you that it is high time that we return to our founding. The FairTax necessitates a repeal of the Sixteenth Amendment to ensure that it remains the FairTax and not the VAT and income system of Europe. Our laws should not be modeled on a European system that has sunk a region of the world to near economic ruin. Our courts should not use the rulings and laws to subvert or ignore what makes us uniquely American. Our founding is a political miracle in a long history of government oppression. The New York Times ran a story this past week that happens to coincide with Justice Ginsburg’s unfortunate Egyptian interview. It describes the waning international appeal of our United States Constitution. Fewer countries are looking to the leadership of our founding to move forward. It is not because of some listen and be listened to theory. It is because we have abandoned our own principles. If the United States chooses not to follow in the wisdom of our own founders than why would anyone else? The Sixteenth Amendment is such a departure from the carefully crafted government of 1787. Ever since the 1913 election our government has grown exponentially, it is directly tied to the extent of the government’s reach into your pocketbook. As of today that reach is infinite, confined only by the political realities of the time. It relies on foolishly shortsighted elected representatives. It relies on the inattention of the American public. It relies on the complexity of 70,000 pages of tax language. Gone are the days when we could rely on our judges to keep the government in check. As mentioned before, politicians have lost a respect for the checks and balances etched into our government, and judges are more concerned with their international standing than upholding the law. The only defense resides in the American public. Our voice must rise once again. We must assert our rightful role in the political hierarchy. Our leaders must act with our consent. Take control of the discourse, demand the FairTax from your legislators. We have in the United States of America the oldest working constitution on Earth. It “shall be the supreme law of the land”. This year is when to make our ultimatum. Return to the parameters allowed by our founders. Limit our government to its enumerated powers and free the people of the United States to create an economic engine that will engulf any and all competition this world has to offer. China is not standing in our way, neither is the Democratic or Republican party, it is an expansion of government brought on by politicians who tasted a new stream of revenue and forced it into our constitution in 1913. Repeal it. And let’s get back to work.

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THE BEST LAID PLANS OF CANDIDATES AND MEN

As some of you may have noticed, we are in the midst of a Presidential election. Luckily for us, every four years brings about an intense focus on our political life and exactly what is wrong with it. Any national politician worth his or her salt will make a list of immediate solutions for problems that existed long before election season. There are five candidates currently vying for the most powerful office in the world. I am quite sure that you already have a favorite and it is not my intention to dissuade you. However, again in keeping the theme of this particular website I believe it is vitally important to look at the plans for each candidate regarding the tax code. The future of which is of keen interest to myself and other FairTax advocates. A quick note as to my method of research, I neglected to obsessively scribble down notes while re-watching all of the numerous Republican debates because statements are in a constant state of “reclarification”. Any and all statements made by a candidate in an off the cuff manner are easily swiped away by the campaign as “out of context” or opposing the original intent. So I focused on the candidates websites. While easily updated, most are true and accurate reflections of a candidate’s stated wishes and are, most importantly, written down. A written message on an official website meant to inform a questioning voter is something, I believe, closer to the promise of a campaign.

Governor Mitt Romney speaks to the need for simplifying the tax system. He believes it is in need of a fundamental redesign that lowers rates and broadens the base. He also says that it should be used as an instrument for economic growth and should be stable to counter the constantly shifting set of rules for investors and entrepreneurs. That phrasing sounds as if it were taken from the FairTax handbook however, unsurprisingly, the problem is approached in a different manner. Many of you remember that Governor Romney was less than satisfied with the FairTax plan in a debate. His plan maintains the current rate for income, interest, dividends, and capital gains taxes. He plans on eliminating the death tax and also the capital gains, dividends, and interest taxes on Adjusted Gross Incomes under $200,000. His plan also calls for a reduction of the corporate tax rate to 25%. After all of this is done he pledges a rather nebulous sounding “conservative overhaul” of the tax code in the long term without many real specifics on what that would include. In summation, it is much better than our current code but does not meet one of his own key criteria, expanding the tax base. Some rates are certainly lowered which eases the tax burden on virtually every citizen despite keeping the existing income tax rates but the only mention of a broader tax base falls under the conservative overhaul language. It would be nice to have a little clarification of what that would entail. He does cite the Bowles-Simpson Commission as a good discussion starting point but that is all.

Speaker Newt Gingrich has a significantly bolder plan outlined. His first step is to stop the 2013 tax increases hanging over the heads of every tax payer embedded in our current code. He also calls for the elimination of the capital gains and death tax. His corporate tax rate would be cut down to 12.5% and would include the 100% expensing of new equipment. He calls for an optional 15% flat tax preserving the charitable giving and home ownership deductions, along with the addition of a $12,000 personal deduction. The FairTax seems to have an easier audience within this campaign considering the placement of Herman Cain to a co-chair position on his tax reform and economic growth advisory council. Herman Cain has been a longtime friend to the FairTax, even including it as phase two of his economic policy in his presidential campaign. Many of the Speaker’s ideas can be found within the FairTax and are not a large jump from our cause.

Senator Rick Santorum has a laundry list of tax objectives that seek to reset the focus of our current tax system. Although considered comparably timid by some the Senator has a number of ideas. He would create two tax brackets set at 10% and 28%. He would eliminate the potentially disastrous Alternative Minimum tax, death tax, marriage penalty, and the cap on deductions for losses incurred in the sale of a personal residence. He would seek to reduce the capital gains and dividend tax to 12%. He would also seek to half the current corporate tax rate to 17.5%. He would retain the charitable giving, home mortgage interest, healthcare, retirement savings deductions while tripling the personal deduction for each child. He would increase and make permanent the research and development tax credit from 14% to 20%. He would remove the corporate tax rate on manufacturers and also not tax any money repatriated in that industry. All other corporate repatriated money would be taxed at 5.25%. Along with Speaker Gingrich he would provide for 100% expensing on new business equipment. The only issue seen with the Senator’s plans is that they still view the tax code as a means to engineer a society. Granted, incentivizing manufacturing and larger families is better than disincentivizing them but, it still puts the government in a role that decides who wins and loses that game. That is a key element the FairTax removes from the equation.

Congressman Ron Paul’s plans revolve completely around his massive cuts to spending. If his trillion dollar cuts are not met then his tax plan will have a disastrous impact on the debt and deficit. Most important to his plans is the Liberty Amendment, which abolishes the income and death taxes. He also calls for the immediate repeal and abolishment of the capital gains tax, taxes on tips and social security benefits and an ideal income tax rate of 0%. The issue of a Flat tax or a FairTax should only be decided on the repeal of the 16th Amendment according to Congressman Paul. While all of those goals sound great there are a number of inconsistencies, such as the existence of a flat tax without the power to directly tax incomes or the existence of a flat tax and an income tax rate of 0%. And the priority any of these items are given is not discussed. As stated above any of these plans taken in advance of the required spending cuts would greatly add to the crushing debt problem. These policies are wonderful sounding but are in very strict danger of adding to the problem if not passed in a correct order. That may sound persnickety but I do not want my tax reform to rest upon the shoulders of a congress that needs to cut spending by $1.2 trillion much less pass a budget. If the money cannot be cut over ten years than it is even less believable that it could happen in a single election cycle.

President Obama’s tax proposal is one we have heard before. It is mired in the class warfare rhetoric that has defined the class system structure of the current tax code. In fact our first income tax was a flat tax passed in 1861. It was a flat 3% rate on those making above $800 annually. Our first progressive income tax was passed in 1862. One year was how long the flat tax remained so. The progressive tax was a 3-5% rate on annual income above $600. The definition of “rich” was rapidly changing even back then. We have heard the “Buffett” argument before in this country. That is the essence of the President’s plan moving forward. Continuing the mindless mantra of class warfare the millionaires and billionaires are called to “pay their fair share.” Since the top 10% pay 70% of the taxes and the bottom 49% pay nothing than I agree that the rich should start paying their fair share. The way to do that is not raise their taxes, not to increase the burden that is already disproportionately theirs, it is to start cutting.  The Buffett Rule argument and the targeting of “hedge fund managers, private jet owners, and oil companies” has not led to a robust economy over the past four years and shows no signs of doing so if continued for four more. No matter what deity the President uses to convince Americans to support his confiscatory and redistributive tax model I doubt Jesus would seek to decimate the labor force participation rate.  This tax plan has proven to be disastrous for the economy and the American people. If the President wants the rich to pay a “fair share” than I suggest he take a look at the FairTax.

There are five competing tax theories espoused by the current Presidential candidates. Some share elements of the FairTax, others stand in direct opposition. It is up to us to endeavor over the coming months to elect those to national and state office that share our views and convince them that our way truly is the way to put Americans back to work and ensure their liberty in the future. One plan enshrines liberty at its heart and urges equality in its practice. Those two principles created a nation, and by following the lead given to us by our forefathers we can kick start an economic revival never seen before in the history of this earth. There is no force more powerful than the will of a free people. It is time our tax code and candidates understood that. This election has the potential to truly be historic; it is up to you to see us break from a cycle of government restriction and control to a path of prosperity without end. It is up to you to see an Amendment repealed, and a tax code forsaken. You see, this election is not for us to sit and watch; it is not our duty to be promised to by a speaker on a podium. It is our God given and patriot protected right as American citizens to alter the course of our own destiny. We should not be sated with reduced rates and temporary deduction increases; this country is not accustomed to taking half steps toward liberty. If we are to guarantee our prosperous future, it is up to us to get involved. Get out and support the FairTax. Demand it. We deserve nothing less.

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