The Grassroots Corner June 10th, 2024

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  • Source: FAIRtax
  • 06/10/2024

Hostile Argument: We will end up with both a Sales Tax and an Income Tax

iStock, Getty Images, Copyright CJP
Continuing with a series of Grassroots Corners about parrying criticisms of the FAIRtax, we address the attack that, if the FAIRtax passes, we will end up with both a national sales tax and an income tax.  It’s a valid concern.  Politicians on both sides of the aisle have clearly demonstrated a profound unwillingness to limit their spending to just what the government receives in taxes. Consequently, Washington has long had an insatiable lust for our money.

If, for some reason, you think having both an income tax and a sales tax is a good idea, then your best plan of action would be to support retaining the current income tax or implementing a flat tax.  With today's national debt of $34.6 trillion and the stress that servicing that debt is putting on our budget, Congress will sooner or later pass a VAT - on top of today's taxes. There is nothing in the Constitution stopping them from doing that.

 However, the FAIRtax has a provision that disallows permanently implementing the FAIRtax on top of an income tax. Some call it the “sunset clause.” In a nutshell, the FAIRtax bill contains language that says the FAIRtax goes away if the Sixteenth Amendment is not repealed within seven years of the FAIRtax first taking effect.

You may recall that the Sixteenth Amendment, adopted in 1913, allows for income taxation without "apportionment" among the states and without any census or enumeration. Before 1913, Congress could only impose an income tax if it apportioned the tax among the states according to each state's population. 

Imagine a group lunch where the person holding the check says, "You had the Cobb salad, so you owe $X, and you had the hamburger with fries, so you owe $Y." That is how a pre-1913-style income tax would likely work. We don’t know for sure. It was never tried.

The Sixteenth Amendment provided Congress with the Constitutional authority to tax citizens directly on their incomes.

Now, suppose the FAIRtax is enacted, but seven years later, the Sixteenth Amendment has not been repealed.  What happens then?  Do we automatically revert back to the current income tax?  Actually, not. Title IV of the FAIRtax states that if the Sixteenth Amendment is still in place seven years after initial enactment, the FAIRtax simply goes away.  There is no provision stating what would replace it.  

At that point, the country would have no tax system at all, and Congress would have to scramble to design and implement a new funding mechanism. There’s no telling what that new funding mechanism would end up being. They could re-enact the FAIRtax, re-impose a direct income tax, implement a VAT, or come up with some combination of the three.

FAIRtax supporters have discussed two kinds of repeal of the Sixteenth Amendment. The so-called “soft repeal” simply states that we go back to the pre-1913 rule, theoretically allowing for an income tax apportioned among the states according to their populations.

The other kind of repeal is a so-called “hard repeal,” which states that there shall be no income tax—period. This repeal skips past the issue of whether an income tax is a “direct tax.”

The FAIRtax may come under pressure to coexist with an income tax for incomes above $100,000, a hidden VAT, or a version that leaves the payroll tax alone. We advocate for the FAIRtax as written rather than bid against ourselves. But compromise, if forced, may get the FAIRtax camel's nose under the tent.

I would love your suggestions for putting these arguments into a soundbite.
We need more of you to send in pictures and news. If you have something to share, please send your material to me,, (908) 578-4975, or fax (908) 598-2888. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members, Senators, and even the President start to listen.
Jim Bennett
AFFT Grassroots Coordinator & Secretary


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