Monday, March 23, 2009


Weekly Opinion/Editorial
THERE IS NO PERFECT TAX!
by Steve Fair

Last week in response to the AIG bonus payouts, the U.S. House passed a bill that would tax the bonuses at a 90% rate. No one in their right mind supports giving taxpayer monies to a floundering company to pay “performance” bonuses to employees, but Congress does not have the authority to use the tax code to “hammer” a particular group of people.

Most Constitutional experts believe the ‘bonus” law would not pass muster with the provision in the Constitution that reads, “No capitation, or other direct tax shall be laid, unless in portion to the Census or Enumeration herein before directed to be taken.” In other words, Congress has the power to tax, but not to single out particular individuals or groups for taxation. Taxes are to be leveled fairly and equitably among the population of the republic according to the Constitution, but when has Congress allowed the countries’ founding document to stand in its way?

Charles Adams, who delivered a speech on taxation at the National Archives on April 12, 1994, said direct taxation was of serious concern to the framers. “The founders great mentor, Montesquieu, copying from Greek and Roman thinkers, wrote that direct taxes were likely to lead to slavery,” Adams said. Montequieu called taxation, “an extraordinary means of oppression.” The U.S. did not access a federal income tax until after the Civil War and it was temporary. The authorization for Congress to access a federal income tax officially became a part of the U.S. Constitution in February 1913 as part of the sixteenth amendment. The amendment reads: “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.”

When first enacted, the progressive income tax rates were from one percent to seven percent. Most people were exempt, but many paid the one percent, believing all citizens have a duty to pay something toward the expenses of maintaining their government. The federal tax system was initially supported by the duty and honor of all citizens. Citizens were on an “honor system” to pay their “fair” share. In the past forty years, our tax system has evolved to nothing short of “government espionage” according to Charles Adam. ”Forty years ago nothing was reported to the tax man except the W-2 which allowed a worker to claim a refund.” “Today, everything of any possible tax nature is reported,” Adams claims.

The real power in government is the ability to tax its citizens. Adams says famous founding father, John Hancock, was probably the leading tax evader in Boston. “He was apparently wanted for evading what today would be hundreds of thousands of dollars in taxes.” “Hancock was a very successful merchant and importer, with ships arriving daily from abroad and he had not paid the full customs tax in decades,” said Adams. Adams says the issue with the colonies over taxation was not based on whether Britain had the right to tax the colonies, but because the taxation was being accessed without the colonies having a say in the matter. Fast forward two hundred and forty years and like Yogi Berra said, "It's deja vu all over again."

In 1775, Edmund Burke, a member of the British House of Commons, tried to help the Brits understand the American point of view on taxation. “The fierce spirit of liberty is stronger in the English Colonies than any place on earth, and that liberty, like in England is centered in taxes more than anything else,” Burke said to the non-receptive legislative body. Taxes are what fires up citizens. That’s why America needs a Fair tax system. The progressive income tax system is unfair and taxes the more ambitious and hard working citizens in our country at a higher rate than the rest of the population.

Instead of worrying about the bonuses of a few overpaid, under performing corporate executives, Congress should be working to radically reform America’s tax system by passing a national sales tax or FAIR tax. They should abolish the IRS and let Americans pay their “fair share” when purchasing goods and services. A national consumption tax would eliminate exemptions, credits, forms, returns, and audits and equally distribute the tax burden to all citizens.

Fellow Duncan Banner Columnist George Porter’s column will not appear in Friday’s edition because the retired accountant is completing his income tax return. In an email Porter wrote, “I’ve been preparing my own tax returns for sixty two years, and have witnessed the constant increase in complexity,” “It’s time for a change to a simple one page flat tax that the public will see as fair and progressive.” “Our current system is seen as neither,” Porter concluded. Right on George!

Poet Alexander Pope said it best when he wrote, “Whoever hopes a faultless tax to see, hope what never was, is not and never will be.”


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