Today’s Chairman’s Report is written by Jade Walle. Jade is a partner of a CPA firm and is on the board of Americans For Fair Taxation.
Would the FAIRtax have made George’s job easier in 1794?
If we truly self-examine, the results can lead to thought-provoking challenges of who we are, what we do or don’t stand for, and give us some simultaneous insights of the most interesting kind. This tactic can be furthered in its usefulness by taking what we believe to be a good idea and not only challenging it, but taking it to an extreme to determine if its precepts still hold true even under the harshest of conditions.
The Whiskey Rebellion of 1794
Our nation’s first president, George Washington, side-stepped having the country engage in the international war being waged by England and France, electing instead for neutrality. On the domestic front however, Washington chose a different path when confronted with what some historians feel was the first test of federal power for the fledgling new nation and its first president.
To set the stage, Washington’s first Treasury Secretary and now Broadway star, Alexander Hamilton, had called for the federal government to assume individual states’ war debts from the American Revolution. To help pay for this, Hamilton proposed an excise tax on liquor, which became known as the whiskey tax. At the time, the idea of an individual income tax was unfathomable and specifically prohibited in the new country’s Constitution (confirmed by the Supreme Court over 100 years later in Pollock v. Farmers’ Loan & Trust Co. (1895)). However, in those days, excise taxes were allowed and frequently used.
While Washington was at first opposed to Hamilton’s suggestion of this whiskey tax, his journeys through Virginia and Pennsylvania, talking with citizens along the way, led him to support the tax, which Congress duly passed in 1791. Distillers and farmers in Pennsylvania were not fond of the excise tax and often refused to pay the federal tax collectors. The rift eventually led to violent confrontations, including tarring and feathering excise officer Robert Johnson, among other altercations. Ultimately, Washington assembled over 12,000 men, utilizing emergency power as stipulated in the Militia Acts of 1792, rode into Pennsylvania and quelled the potential uprising. He ultimately pardoned two men convicted of treason to help ease tensions. The whiskey tax was repealed a few years later in 1802 by Thomas Jefferson.
What if the FAIRtax were in place at America’s founding?
If we embrace Hollywood’s movie requisite, the willing suspension of disbelief, we may be able to self-examine and challenge the policy and precepts of the FAIRtax. What we must imagine is that the rugged wilderness and American frontier that existed in 1794 had point of sale terminals, computer systems, and mechanisms to easily track retail sales and collect sales taxes, just like we do in modern day America. Given this assumed setting, let’s dive in!
Imagine a new nation with the Constitution’s Article 1, Section 8 taxation clause having the specificity of a retail sales tax only, the FAIRtax! Frontiersmen, farmers and revolutionaries could choose when they were taxed. Their hard-earned income, when they could find the good fortune to earn anything, would be forever free of the threat of taxation, something meaningful at the time given the American Revolution’s “no taxation without representation” protest. They would only be taxed when they chose to consume and spend. The uniformity of the FAIRtax would be appealing to our new nation’s citizens, along with the fact that spending on their basic needs would be free of tax as well, which at the time might be all most citizens were spending.
The aforementioned whiskey tax allowed larger liquor producers to pay a six cents per gallon tax, while smaller producers paid a nine cents per gallon tax. This obviously was not uniform and was in part what drove anger towards the law and the government. Further, this was a tax on business itself as the tax was imposed at the production level, as opposed to the retail level, despite its “excise tax” label.
The FAIRtax would have solved each of these issues that drove the farmers and distillers to the point of rebellion. I venture to say that a tax on retail purchases above the poverty level, would have impacted only the very rich, who could of course choose whether or not to spend at these higher levels, thus avoiding their direct wrath.
Further, the FAIRtax eliminates 100% of business-to-business taxation in the U.S., taking with it the preponderance of the $600 billion in annual U.S. income tax compliance costs spent by our American businesses. These whiskey distillers and farmers would not have even been touched by the FAIRtax unless they also sold their product to end use consumers. The local taverns, shops and distillers that sold their spirits would simply collect the FAIRtax as they sold their product to their willing consumers and remit the collected tax to their state. There would be no lobbyists needed in 1794 to determine if whiskey was a “food” or necessity of life because the prebate would allow each individual to have the freedom to determine what was a life-sustaining necessity on their own, according to their own value system and family priorities.
Sounds like the FAIRtax would measure up to its high standard in 1794 as well as it does today! Let’s get to it because the reality is that our retail liquor stores, large and small, are well equipped and ready to collect a sales tax, as they currently do for approximately 99% of their U.S. sales each and every day.
The next rebellion might entail a much worse calamity than being tarred and feathered, so just imagine what future rebellions we could curtail and circumvent with the passage of the FAIRtax!
CONCLUSION
What can each of us do?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL, “Nobody made a greater mistake than he who did nothing because he could do only a little.”
If you want to prevent the IRS from being further weaponized to punish those of us who may object to the D.C. opinions and dictates of what is good for us, then help us PASS THE FAIRTAX!
The IRS will be gone and we will pay our taxes when we make purchases. WE and not D.C. Elites will decide how much federal tax we pay!
If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.
Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax
Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Is it hopeless? When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
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