Real Tax Reform!!!!!

It begins with my next “liberty amendment” to the Constitution…

Amendment XXVIII.  Section 1.  Congress shall make no law, nor allow any law to stand, which in any way allows for the withholding of employee wages, salary, payment, or compensation of any kind, for the purpose of tax collection.

The most insidious, insulting, and reprehensible tax policy ever conceived, is the idea that money can be taken from a paycheck before it ever gets to the employee.  And, that every employee has to file a tax return to get some of their confiscated income property back, after it has been used interest free, by all levels of government, for up to a year.

The Withholding Tax has been around since 1943 and was designed to collect huge sums of money, automatically, to fight World War Two.  Okay, the war is over, and so should be withholding.  Everything you need to know about the dastardly and deceptive nature of withholding is stated by Charlotte Twight in her book: “Dependent on D.C.,” where she says: “Withholding is the paramount administrative mechanism that since 1943 has enabled the federal government to collect, without significant protest, sufficient private resources to fund a vastly expanded welfare state.”  From a U.S. Treasury fact sheet comes the quote that withholding “greatly eased the collection of the tax, but also greatly reduced the taxpayer’s awareness of the amount being collected.”  Both of these quotes come from an article by Robert Hughes of The Independent Institute in December of 2007.

What all this means is that the American people have been completely duped into paying far more tax than they think they have, and have also been conditioned to accept without dissent that giving the government control of their paychecks is perfectly okay.  Well, it’s not.  And if the Tea Party, Libertarian Party, conservatives, and freedom loving people nationwide ever want to break this stranglehold on pre-confiscated wealth, then the elimination of the Withholding Tax has to become one of the most prominent issues of the 2014 and 2016 elections.  Right now the Withholding Tax isn’t even considered an issue.  My constitutional amendment above could be a great rallying point to make it an issue.  But there’s more.

Amendment XXVIII.  Section 2.  Whereas the 14th Amendment guarantees the equal protection of laws, it also guarantees equal enforcement as well.  The Income Tax shall be set at one percentage rate for all citizens and all levels of income.  Congress shall set the rate of income taxation.  Congress shall not set more than one rate, nor allow any graduated, progressive, or any multiple income tax rate law, regulation, or court decision, to stand.

The 14th Amendment is the most illegally abused part of the Constitution.  Judges are misusing the 14th Amendment to rewrite marriage laws which destroy the definition of marriage, to allow aliens born on U.S. soil to become citizens while specifically “under the jurisdiction” of their own nation, and are overturning voter security I.D. laws designed to eliminate vote fraud.  Judicial Review, a power not granted to the Judiciary in the Constitution because of exactly what they are doing now to misinterpret the 14th Amendment, has to be officially taken away in order to preserve present and future proper laws.  It is also time to use the 14th Amendment correctly, for it’s intended purpose to equally protect and enforce the laws.  Mandating and enforcing a single income tax percentage rate will do that, because only a single income tax rate will tax everyone equally.  This is why the 14th Amendment “Equal Protection” clause makes the Graduated Income Tax unconstitutional.

There are efforts right now to overhaul our tax system, which include eliminating the IRS, and repealing the 16th Amendment which gave to Congress the power to tax incomes.  Both of these reforms have problems.  The federal government has to have an enforcement mechanism to collect taxes as long as they have the power to collect taxes, and they do need money for the necessary expenditures of government.  However the IRS, especially with the current unresolved scandal, have proven that they can not operate impartially, and honestly discharge their enforcement duties.  The Congress has proven with the National Debt that they can not be trusted with the power to tax, and borrow, and spend.  So it is up to us to create a system that provides for the necessary expenditures outlined in Article 1 Section 8 of the Constitution, and an honest and accountable mechanism for collections.   This system must also bring under our control, a completely out of control federal government bent on economic suicide.

One of the most popular reforms is the Fair Tax.  This eliminates the 16th Amendment and replaces a bunch of taxes with a National Sales Tax.  There are two fatal flaws with this proposal.  The most significant is the idea that this reform has to be “revenue neutral.”  In other words, it raises exactly the same amount of money as the current system.  Why would we go through all the effort, time, trials and tribulations to completely change our tax system, only to give the government exactly the same amount of money they get to abuse now?  That is the economic equivalent of rearranging the deck chairs on the Titanic.

The second flaw is the calculation of the 23% revenue neutral, sales tax rate.  It combines the lowest income tax bracket of 15% with the Payroll Tax employee share of 7.5%.  There is a misconception that both the employee and the employer share the Payroll Tax.  This is a lie.  The employer pays the employee.  15% of what the employer would have paid the employee is withheld and sent in as payroll tax.  The lie is that on the paycheck only 7.5% of that 15% is shown to the employee as a withholding.  But the real withholding is 15%.  Does anyone actually believe that employers take their own money to pay the Payroll Tax?  No, they take it from the money that would have gone to the employee.  Therefore to make the Fair Tax fully disclosed, the real rate would be 30%.  This would make the tax on a $20,000 car, $6,000.  Now your car costs $26,000.  And this is reform?

Should my Amendment XXVIII ever become law, there is going to have to be a federal law to reform how paychecks are drafted.  Currently the right side of most paychecks has all the withholdings, and in really big numbers is the net amount left over from the pre-confiscation of income by all levels of government.  Somewhere on the paycheck is hidden in tiny numbers the gross payment, meaning the real payment, the full payment without withholding, that was due the employee.  I propose that the biggest number on the paycheck be that gross amount.  That way people will know clearly what they are being paid.  The withholding section would then go from the money taken, to a “suggested guideline” for what should be paid from that paycheck to maintain current tax status.  But the employee would have to physically write checks or pay online to cover the guideline amounts.  They could pay per week, per paycheck, per quarter, or per whatever time interval the law allows.  The longer the interval, the greater the difficulty in collecting, which should make things really interesting for government.

This would be a revolutionary change.  By imposing this paycheck freedom on the american people, and having them physically write federal, state, and possibly local tax checks, from potentially every paycheck, based on the new “guidelines,” this would remove two of the conditioning effects of the Withholding Tax; that being to collect vast sums of money without significant protest, and to hide the vast amount being collected from the taxpaying public.  For the first time since 1943, Americans would have to physically pay from their accounts on an ongoing basis to cover their taxes.  They would realize what they were actually making, and how much was going out in taxes.  And that simple change will change America.

Rather than accept the current tax system, or try to wrap yourself around the various reforms out there now, have you ever considered how you want to be taxed?  We are supreme over the government, so it is up to us to tell them how we want to be taxed.  I have two rather radical reforms to propose.  I look forward to the comments to see which way the consensus goes, and how the proposals can be improved.

The most radical proposal is that we go to a system where all taxes are local.  The local governments would then collect a percentage above their own necessary expenditures, and that money would be passed on to fund the county.  The counties would set aside a percentage from their revenue which would be passed on to fund the states.  The states would take a portion from their funding from the counties, and pass it on to fund the federal government.  The advantage for the citizen is that they would have direct access to the local tax assessor.  They could visit the local office of taxation without undue travel burdens.  Best of all the citizen would have no contact for tax purposes with any level of government higher than the local town, city, or unincorporated area where they live.  Each successive higher level of government would be dependent on the level below them for all their funding.  The government would be dependent on itself for funding above the local level, so all revenue conflicts would be internal, and would not involve citizens.

There are complications.  One is whether the amount of surplus collected by each lower level to fund each higher level of government should be mandated?  If the local governments essentially have all the power to determine the funding for every government level above them, the potential for abuse of power, and the elimination of checks on this power, makes it unworkable.  So it would be prudent to establish a mandated level of taxation surplus, say 15% for example, above local, county and state requirements, to insure adequate funding of government up through the feds.  This is where the Heritage Foundation and Cato Institute can use their vast resources and number crunchers to establish for each level of government, what correct percentage of surplus collection will fund the necessary expenses of the level above them, and of the entire system.

The local governments would also compete for revenue, businesses and residents, with every other local government.  Good policies and efficient operation of government will mean lower rates of taxation below the required surplus for higher levels of government.  We have seen in the Reagan Administration how lowering taxes actually increases government revenue, through increased growth and economic activity.  And that is how competition will lower local taxes and potentially increase revenue.  The other part of this reform is to have all local tax officials elected.  Therefore they would have to run on their tax policy, and be held accountable for it by the local voters.

The beauty of this system is that neither the federal government, nor the state governments, nor the incorporated areas of counties, would have any power to tax.  This would necessitate changing the Constitution and all state constitutions.  This would then require an alternate constitutional amendment.

(Alternate) Amendment XXVIII.  The federal government shall have no power to tax, nor borrow funding of any kind.  All necessary expenditures of Congress as delegated by Article 1, Section 8, shall be appropriated from a budget determined solely from the surplus collections from the states, which the states shall transfer to the U.S. Treasury each year.

This is a radical departure from every current tax and every proposed reform.  It will take a lot of study, number crunching, huge changes in legislation, law, regulation and constitutions, and a fundamental change in thinking, if it is ever to become a reality.  If enacted it would eliminate all deficit spending and would halt increases on the National Debt because the states wouldn’t tolerate that burden.  It would put the states back in charge of the federal government where they are supposed to be.  It might inspire a repeal of the 17th Amendment which would put the appointment of U.S. Senators back in the state legislatures where it belongs.  It is certainly worth beginning to explore the whole concept of locally based taxation and to discuss all these new possibilities.

There is one intermediate proposal that might be more readily acceptable, and far easier to implement, than a complete change to local only taxation.  That is where we leave everything alone at the state level and below as it exists now, but the federal government still loses all power to tax and borrow, and is solely dependent on the states for all their funding.  There are two ways that the states might fund the federal government.  One is a mandated percentage to be collected above state revenue requirements, which is transferred to the U.S. Treasury for Congress to appropriate.  The other way, and the more interesting way, is for delegates of each state to meet in a yearly budget convention, and decide exactly how much money the federal government will be given to operate.  Money could be apportioned from state budgets, or they could agree on a mandatory surplus percentage, or they could come up with an entirely new way to fund to the Treasury.  The possibilities of this system are endless.  Let the debate begin.

The power to tax is the power to control.  If the government determines the power to tax, then the citizens will be controlled.  If the citizens determine the power to tax, then the government will be controlled.  And that fundamental difference is what must be debated in both the 2014 and 2016 elections.

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