FairTax AND an Income Tax? Not Possible!

Both the FairTax and an income tax?? Repeal the 16th amendment first??

Repeal of the 16th Amendment is an extremely big issue. Two of the largest self-proclaimed think tanks, The Heritage Foundation (THF) and CATO list that as one of their biggest, if not THE biggest, issue. Thanks to Dan Mitchell who planted that seed at both the THF and CATO. It has been taken up by Rush Limbaugh, Sean Hannity and Laura Ingraham who broadcasted that comment. In fact, Herman Cain’s recent misstatement—that the 16th Amendment needs to be repealed before we can have the FairTax—may have come as a result of Cain being bombarded by Rush, Hannity, Ingraham, THF, and CATO, with that indoctrination.

The following post is a rebuttal, written by the Texas FairTax State Director to counter the above argument.

Since this argument has the biggest disagreements, it requires the longest answer, so:

Facts to the contrary:

  1. The FairTax bill, HR 25, has a provision which repeals Sections A, B, and C of the IRS code (ie., all federal income taxes, alternative minimum tax, estate, gift, generation skipping tax, federal corporate income tax, and all payroll taxes and unemployment taxes). The voter would not support HR 25/S 13 if repealing Sections A, B, and C was not a part of the FairTax bill.
  2. HJR 16, a resolution proposing an amendment to the constitution to repeal the 16th amendment to the Constitution is awaiting passage at the same time the FairTax bill passes.
  3. Public support to repeal the 16th amendment before a tax replacement is announced, will not happen because the public would not know what to expect.
  4. Repealing the 16th amendment before a replacement is enacted would kill any reform. That wouldn’t sail past Congress.
  5. Repealing the 16th amendment after the FairTax passes (although 2/3 vote is required in the House and Senate with ¾ of the states ratifying) is easily conceivable when taxpayers enjoy a full paycheck, no business taxes, a robust economy, and economic growth.
  6. Difficult to pass any amendment?? Really?? Impossible?? The same was said about women’s suffrage, the Berlin wall. Specific amendments passed: A-18 for prohibition; A-21 repealed A-18; A-17 for direct election of Senators; A-22, 2 terms for Presidents; A-26, 18 year olds could vote; all impossible, right??

Finally, it will require each taxpayer’s vigilance to assure they speak up when anyone hears there is possible legislation to have an income (or other tax) pass while we have the FairTax. There is also presently no statutory or constitutional provision to prevent a sales tax on top of our present income tax. Why doesn’t a congressman try to pass one? Hint: political suicide. The $22 million market research confirmed that people will not want an income tax with the FairTax. What does the taxpayer like? Have you heard any taxpayers prefer the income tax or flat tax when they know all the facts about the FairTax?

Past comments were that Congress has enacted our income tax 3 times before, and it stuck. One new difference. There was no other tax plan offered to replace the income tax in the past. There is now…..the FairTax.

Marvin Kuhn, State Director, Volunteer
Americans for Fair Taxation

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Posted in FairTax, Income Tax
5 comments on “FairTax AND an Income Tax? Not Possible!
  1. Bill E. Payne says:

    It’s only impossible if you want it to be. When enough people know enough about it, it will be impossible to stop.

  2. Daar Fisher says:

    The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars – $358 billion more than the taxes it replaces [BHKPT] ( http://snipurl.com/whatratewks ).

    The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan [THBP] ( http://snipurl.com/baserate ).

    Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case [THBNP] ( http://snipurl.com/realwages ).

    The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be [ALM] ( http://snipurl.com/econbenes ).

    Consumption benefits [ALM] ( http://snipurl.com/econbenes ) :

    • Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.

    • Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.

    • The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.

    • By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent.

    Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system [KR] ( http://snipurl.com/kotcomparetaxrates ).

    Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively [JK] ( http://snipurl.com/kotftmacromicro ).

    Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax [THBPN] ( http://snipurl.com/lessregress ).

    Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20 [THPDB] ( http://snipurl.com/moregiving ).

    On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base [TBJ] ( http://snipurl.com/staterates ).

    The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent [WM] ( http://snipurl.com/homebenes ).

  3. This is even a common misconception with Marco Rubio. Right at about 1:00, you will hear him say that “if we pass the FairTax but don’t abolish income taxes in the constitution we could end up having both at some time.”

  4. joe says:

    Article title is negative and will be repeated throughout blog world. A better title: “Fabulous FairTax Forever” or “Bye! Bye! Income Tax” or “Love affair with the FairTax Begins”. Really anything eye catching and positive would do the trick. Like the article though.

  5. Stephen Uhl says:

    It’s easy for the objectors to demagogue it with half-truths; but ONCE THEY UNDERSTAND IT, THEY DEMAND IT.

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