"Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes." —Ben Franklin
As our nation's Founders understood, the federal government would be constitutionally limited both in the means of collection and expenditure of the tax payer's money. The Constitution afforded citizens this protection in Article I, Section 9, which reads, in part, "No Capitation, or other direct Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken."
This constitutional protection was undermined, however, when the 16th Amendment was passed by Congress on July 2, 1909, and ratified on February 3, 1913: "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 enumeration."
Prior to the 16th Amendment, taxation in America was levied based on consumption, not income. Tax based on consumption (a sales tax) entails limitations to that tax, because an excessive tax rate will itself stifle consumption and give rise to smuggling, black markets and other means of tax evasion. Speaking of taxation on consumption, in the Federalist Papers, the definitive explication of our nation's Constitution, Alexander Hamilton wrote, "It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess. ... If duties are too high, they lessen the consumption; the collection is eluded; and the product to the Treasury is not so great as when they are confined within proper and moderate bounds." Another author of The Federalist Papers, James Madison, wrote, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents...."
Anti-Federalists also understood the need to constitutionally restrict taxation to support only those things constitutionally reserved for the central government: "To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors is sinful and tyrannical," wrote Thomas Jefferson. "A wise and frugal government ... shall not take from the mouth of labor the bread it has earned. ... Congress has not unlimited powers to provide for the general welfare but only those specifically enumerated. ... Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many new hands?"
At odds with these strict constructionist intentions was Franklin Delano Roosevelt, who did more damage to Federalism than any president in our nation's history. Indeed, he firmly believed in the funding of unconstitutional government growth by way of unconstitutional taxation. "Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle." Of course, Roosevelt's "American principle" was little more than a paraphrase of Karl Marx's maxim, "From each according to his abilities, to each according to his needs."
And through invasive taxation and regulation, the central government has intruded into every aspect of American life. As Nikita Khrushchev observed, "We can't expect the American people to jump from Capitalism to Communism, but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism."
Contrary to the closet socialism articulated by FDR, national sales tax would be a welcome and constitutionally permissible alternative to the socialist vision and statist implications of the current system. Our present-day progressive income tax not only punishes hard work and free-market success, it also restricts economic growth by stifling consumers and the private sector.
One effort to abolish the income tax comes from Rep. Ron Paul of Texas, who recently proposed H.J. Resolution 15, "an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the United States Government from engaging in business in competition with its citizens." If passed into law, this measure would eliminate the central government's prerogative to levy inequitable taxes, and would have the added effect of conforming the government's role more closely to its constitutionally defined strictures.
At the same time, economists recognize that legitimate tax reform and tax reductions can be disastrous if not accompanied by comparable reductions in government spending. Spiraling deficits, including those being run up by the current administration, will have dire consequences for long-term economic health. Therefore, it is essential that any meaningful tax reform legislation, including but not limited to the repeal of the 16th Amendment and replacing the income tax with an alternative like a national sales tax, be accompanied by reductions in government expenditures under the guidance of the Constitution's own parameters for central government activity.
Given the limited influence of constitutional constructionists and fiscal conservatives in both chambers of Congress, H.J. Resolution 15 stands little chance of passage on Capitol Hill, or ratification by the states. This hard reality must serve only to bolster the resolve of citizens committed to the Founders' notion of a constitutionally limited government -- a limitation largely enforced by restraints in the collection and expenditure of tax revenue. As the central government continues to encroach upon every sphere of our lives, the time is ripe to bring the issue of fair and just taxation before the public eye.
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