Taxation Without Representation

by on July 3rd, 2006

Raise your hand if you feel that you as an individual are adequately represented in Washington when it comes to taxation.

You in the back. The one with your hand up. You can leave now.

Raise your hand if would like to have total control over how much of your hard earned money goes to the federal government.

You on the left. Yeah you with your hand down. Don’t let the door hit you on the way out.

Those of us still here are going to talk about a revolution. We are going to talk about changing the power equation between the federal government and the American people.

There are three basic factors in this power equation. Who decides how much money the government gets, who decides how that money gets spent, and who are the people who make those decisions.

Currently, we the people only have the power to pick the decision makers. Given the way the game is rigged with legislation like McCain/Feingold our power there is very week.

The government holds all the real power. The government decides how much of our money it gets to take. The government decides how that money is spent. And as our current experiment with Republican Party majority shows, who we put in power doesn’t seem to matter.

It is not remotely practical for we citizens to take back the power of spending. There is no way as a population we could ever administer the federal budget.

But what if we could take back the power to decide how much of our money the federal government got to spend? I don’t mean simply electing politicians who promise to cut taxes. We’ve all read those lips before. And even when we do get tax cuts they are only temporary. By design or just until the next batch of politicians decides to raise them again.

I am not talking about a flat tax.

I am not talking about tax reform.

I am talking about a tax revolution.

Yeah. I’m talking about the Fair Tax.

What is the Fair Tax? To get the full answer you’ll have to buy the book. In a nutshell it is scrapping the entire federal tax system and replacing it with a consumption tax. A sales tax.

I am not going to go into the financial workings of the legislation here. Maybe in a future post or you could just buy the book. (There is also a movie that explains how the Fair tax works that runs about 23 minutes.) What I am concerned with today is taking the power of taxation away from the government and returning it to the individual.

The Fair Tax would apply to the purchase of new goods for consumption. You decide when and what you pay in taxes when you decide when and what you purchase.

Need a car? Buy a new car and the Fair Tax is rolled into the purchase price and that portion of your money goes to the federal government. Buy a used car and the federal government gets – say it with me – NOT ONE DIME.

Don’t feel like paying much in taxes at all one year? Just put off any major purchase of anything new.

You decide when and how much tax you want to pay by deciding when and what you buy. It should be theoretically possible to pay almost no taxes in a given year. (Note to self: if this bill looks like it might pass buy shares of eBay.)

Keep in mind, that the Fair Tax is designed to replace all federal taxes on income. That means no more IRS. No more federal tax withheld from your paycheck. That means no more FICA withholding from your paycheck. No more Medicare withholding from your paycheck.

You earn it. You keep it.

There are of course entire industries built around the current tax code. Tax lobbyists, tax lawyers, accountants. All of them would be no longer necessary. But these people would not likely be out of work for long.

Gone also would be corporate income taxes. The kind of taxes that make businesses decide to invest their money outside of the country to avoid paying taxes. Imagine the growth potential if all of that money and billions of dollars more were invested in the US.

And you do understand that companies do not pay income taxes don’t you? You do know that when a company decides what to charge for a product they are trying to maximize their after tax dollars? You do understand that companies are just tax collectors for the government? You do know that you pay the taxes on corporate income, right?

All those tax incentives the government uses to manipulate things it lacks the constitutional authority to regulate – gone.

All those thousands of wasted hours and millions of wasted dollars spent on filling out tax forms and complying with the tax code – we get those back.

The IRS – gone.

The power over citizens contained in the ability to manipulate the tax code – gone.

Watch the movie. Buy the book. Buy copies for your friends. Badger your congressional representation.

Let’s make a revolution.

(Cross posted from Hold The Mayo)

Stephen Macklin