…from Richard Epstein:
Unfortunately, Seidman has the causation reversed. The reason why the situation today is so perilous is that Congress is not strictly bound by the Constitution, just as Seidman advocates. There are currently no constitutional constraints limiting the discretion of Congress to decide what tax burden will be placed on what groups for what reasons. In fact, the only restraint on taxation is a broken-down system of public deliberation, which results in a fruitless question to find, as Seidman puts it, “a common vocabulary to express aspirations that, at the broadest level, everyone can embrace.” Otherwise, Congress is free to dispense tax favors and impose tax burdens as though there were no tomorrow.
…The older conception of public goods has been entirely rejected by all justices on the Supreme Court regardless of their political persuasion, so we have a current legal regime that is just the one Professor Seidman craves. On taxing and spending, we have a constitutional structure that is not informed by a single action or statement of James Madison or any other founder. Instead, our structure allows Congress to debate the many vexing problems of current times unhindered by constitutional principle, passing statutes whose “wisdom or fairness” is beyond the power and the competence of the courts to judge.
We need more, not less, adherence to the Madison’s Constitution. And as he notes, strictly followed, Madison’s principles would require a flat tax. A progressive one is unconstitutional.
“Madison’s principles would require a flat tax. A progressive one is unconstitutional.”
That’s what I always thought because people have to be treated equally. Equality before the law.
Amazing that the soccie/libs do not see the inherent inequality given that the gas on about equality all day long.
To them, equality means everyone makes a hundred a year regardless of output, I suppose.
The “Fair Tax” approach (even when applied as an income tax) would IMNSHO pass muster though.
That is: Tax everyone 15%. Then give everyone $100. (Or whatever numbers work for you.)
This ends up being -effectively- progressive, with the advantages of requiring far less regulation/bureaucracy for determining eligibility (All citizens), and far less investigation of both scofflaws and people scamming the system.
(So long as “citizenship” means something.)
I’d prefer it as a sales tax to an income tax though. This has the added feature of penalizing the spendthrift high-society types (Paris Hilton) types for their excesses, while allowing high-income people who are -not- spendthrifts to have a lessor level of penalty. While both will obviously -always- pay a higher total yearly tax -and- a higher tax -rate- than their flunkies.
Al,
the other thing a Consumption Tax does is tax EVERYONE as they buy whatever they buy. A consumption tax would tax both my groceries and the $40K worth of custom car parts on the dude mobiles driven by drug dealers, pimps, hip-hop moguls and movie stars.
It would tax, equally, anyone who did business within the country. It would eliminate any ‘underground’ cash going untaxed. It would tax any and ALL illegal Aliens regardless of their home(s) of record who are working inside the country.
I’ve read that a 12% to 17% sales tax, replacing the current goofiness, would increase the intake to the IRS by as much as 40%, at the higher level. I would expect a 40% increase in tax revenue to be eaten up by at least a 50% increase in spending, given the way they do things in D.C.
The simps!
I would like to see some smaller community adopt that approach first – it would seem mighty amenable to anywhere that’s a tourist destination.
“Hi, our sales tax is just a -smidge- higher … and the citizens of our city get $50 a year.”
That assumes they buy stuff at stores. Raise the taxes on goods (e.g. cigarettes in many locations) and a black market usually arises. Criminals, by definition, don’t obey the law.
Al wrote:
“This has the added feature of penalizing the spendthrift high-society types (Paris Hilton) types for their excesses, while allowing high-income people who are -not- spendthrifts to have a lessor level of penalty.”
Who the hell are you to say Paris Hilton (or anyone) should be penalized for how she spends her money?
Who appointed you Emperor such that you can declare which expenditures are good and which are bad?
She’s the one that made the decision to -spend- it.
I did no such thing.
I’m fond of the fair tax myself as well, but I do see issues. First is probably the issue that all of people’s existing (non-retirement-account) savings has been taxed at income time, and now it’s going to be taxed at consumption time as well. Huge extra tax on people who have been saving. Second is big items like houses–taxed when buying a new house, but not a used one? Third is consistency and enforcement–are all small person-to-person goods and services (e.g. a house cleaning lady) subject to the tax, and how does that get enforced (the black market problem mentioned previously)? Fourth is passage–opponents will simply demonize the fair tax as a giant very high national sales tax and there is little chance the populace could be educated enough to overcome the demonization. Fifth is the bait and switch likelihood that it would be sold on the basis of eliminating the IRS and the income tax, but the end result would be both a national sales tax and income taxes.
A general observation I read somewhere: if the fair tax is supposed to be revenue-neutral (i.e. replacing income tax, social security and medicare withholding, etc.), then pretty much by definition the tax burden will be distributed differently than it is now–you will have winners and losers compared to the current system. That’s not to say whether this is good or bad, just to point out that there will be no way it ‘starts out’ the ‘same’ as it is now. And there will be heavy resistance from potential ‘losers’ and possibly lots of people who unexpectedly end up as ‘losers.’ Also, there is the whole unintentional consequences issue.
I am not optimistic that we can make such a big change. But big changes have happened before, so maybe I’m overly pessimistic.
Taxes paid on taxes is a big problem and your housing example is a good one. My wife and I just moved into a newly constructed house. There were about 20 subcontractor companies who worked on our house. Each of those companies had to pay taxes and comply with government regulations and that was included in their bill to the primary contractor. The primary contractor also had to pay taxes and that was part of the bill to us. We have to pay property tax on the value of the house, but how much of that value is due to the taxes paid by the subcontractors and contractors and the cost of regulatory compliance?
Taxes are for funding the shared expenses of govt.
They are not for redistribution of wealth in the name of social justice.
They are not for manipulation of personal actions or business as a carrot and stick.
They are not for the prevention of inter-generational wealth transfer.
The ONLY tax which should be considered is a single income tax on ALL income from ALL sources (even welfare and perks) from dollar one to dollar last. No deductions, no credits, no exemptions.
Or a non-hidden (non-VAT) sales tax on all goods and services (no exceptions).
It’s frightening how many people simply don’t (or worse, can’t) understand that, isn’t it?
The other fundamental difference is a belief in equality of outcomes vs equality of opportunity. Everyone gets a trophy regardless of effort.
The supposed distinction between equality of opportunities and equality of outcomes is a red herring, considering how little effort we make towards either one. To be serious about equality of opportunity would require a massive effort to cancel out the enormous vagaries of birth. Kid A is born to a couple of rich Nobel winners. Kid B is born to a schizophrenic homeless addict. No major political party supports the sort of all-encompassing social interventions it would take to make their opportunities equal.
Jim is correct. Don’t say equality of opportunity if you really mean equality of rights/equal protection under the law. You give up easy points and exhibit intellectual imprecision that can be used to undermine any additional argument you contribute in a conversation.
“To be serious about equality of opportunity would require a massive effort to cancel out the enormous vagaries of birth.”
No that is equality of outcome.
Equality of opportunity means no one is kept from ATTEMPTING what they want because of race, gender, creed.
No that is equality of outcome.
Hardly. If you did cancel out all advantages of birth, giving two people equal opportunities to succeed, they still wouldn’t have the same outcomes; their choices would still make a difference.
You are wrong.
All your saying is that if you cancel out advantages of birth one can choose to be a fireman and one can choose to be an billionaire businessman.
And freedom of choice is a problem?
There are plenty of people who have risen from the very bottom of our society to the tippy top and just as many have gone the opposite route.
I am curious as to whether you think people should be allowed to make their own decisions in life and if not, who should make decisions for them? If people are incapable of making their own decisions, are they going to be capable of deciding for others? Who are these “superior” people?
“Equality of opportunity means no one is kept from ATTEMPTING what they want because of race, gender, creed.”
The problem is most people don’t equate that with the definition of opportunity. Also, dont put in a list of “because”s unless it is all inclusive (which i dont think you intend yours to be).
Put another way, you could have said ‘the right of the people to pursue their happinesses shall not be infringed’. Individual Rights covers that already, equality of opportunity is easily construed to be something else.
Madison wasn’t keen on federal direct taxes at all in my understanding. I think the idea that he’d back a Flat income tax is without historical merit.
The Constitution had to be amended (16th) in 1913 to legally allow income taxes at all (some income taxes pre-existed the 16th starting during the civil war, but it seems to me they were found unconstitutional in Pollock v. Farmers’ Loan and Trust Co.). Prior to the Civil War, the USA used tariffs to fund the preponderance of government. Tariffs, like the Fair Tax, are fundamentally voluntary. You can live without trading with foreign entities (tariffs) and without buying retail goods/services (Fair Tax), but you can’t live without production (income tax). A system like the Fair Tax would put peaceful tax revolt power back in the hands of the citizenry (inflation and debt are unsustainable on their own).
I think Madison would be a Fair Tax supporter, and only be a Flat Tax supporter if someone put a gun to his head and made him accept the income tax as an unchangeable premise.
they were found unconstitutional in Pollock v. Farmers’ Loan and Trust
No, that decision was only about taxes on investment income. Income taxes on wages and salaries have always been constitutional.
Then why the 16th? Why stop them after Pollock? Why werent they used any earlier than 100 yrs after the founding? Always constitutional seems quite the stretch.
Jim, you wrote:
Income taxes on wages and salaries have always been constitutional.
No, they weren’t. This is a subtle constitutional point that still blocks various forms of direct taxation, for example, federal asset and property taxes. The two relevant clauses are:
(from Article I, section 2, clause 3) and
(from Article I, section 9)
For the former, this means that income tax must be spent in proportion to the census and must be given to the states. For the latter, the federal government could tax a fixed amount per person, because that would be proportional to the census. But not an income tax because that wouldn’t be, since high income earners pay a different amount than low income earners.
The whole point of the 16th Amendment was to remove the above restrictions for income taxes specifically.
So no. Income taxes haven’t always been constitutional.
I’m wondering where this guy was from 2001-2008. Would it have been okay to suspend the Constitution when his party was out of office, or only when there’s a Democrat to act as Kindly Dictator?