FairTax or Flat Tax?

The income tax was established by politicians for politicians. It gives politicians control over our entire economy as they choose. It was a Marxist strategy for a Marxist philosophy.

Those who favor tax reform are divided. Some favor the FairTax, a complete overhaul of the system, replacing all taxes with a single consumption tax. That means no income tax, social security tax, capital gains tax, estate tax, corporate income tax, property tax, etc, all to be replaced by a national sales tax of 23%. In addition, a monthly check would be sent to all households that would cover the cost of the taxes of necessities (food, shelter, etc), so that essentially no taxes are paid on the basics of life.

Others prefer a flat tax, keeping our current tax structure, but making the income tax rate an equal distribution instead of the current progressive income tax. This would mean that all would pay, say, 15%, rich or poor. This gives everyone a stake in the government, and would put more pressure on politicians to keep rates low.

So which is better?

On a strictly financial sense, the FairTax is better, eliminating the majority of the overhead of tax collection. Thus the waste is minimized and our tax dollars go further. The flat tax would keep the expensive IRS tax collection system in place.

The FairTax will not eliminate tax fraud, but will likely reduce it, as businesses would have to operate in the black market in order to cheat the government. For most businesses, the benefit would not be worth the risk, and considering nearly all of our expenditures are to large businesses, it would be very few of our purchases that we could even consider doing under the table. Most of the purchases of even the cheats and crooks of society are with legitimate businesses (grocery stores, clothing stores, etc.), so even they will be paying their share of taxes for the most part. The current tax structure allows for fraud on a much wider scale, as each individual can (and most do to some extent) cheat the government come April 15th.

From a moral standpoint, the FairTax eleminates Congress' ability to use the tax code to pick winners and losers, to favor certain industries or companies or even moral values over others. This power is weilded openly and wildly by those in power now.

Economically, the FairTax encourages saving and investing more than the current tax system. After all the economic theories are debated over saving, investing and consuming, ultimately it is investing that must be our focus. Can this be encouraged in a flat tax system? Sure. But it can also be discouraged just as easily if politicians in power choose consumption over investment, as we have today.

The flat tax is argued to have an advantage in feasibility. It would be far easier to just make a simple adjustment to the current tax code than to shock the system with a complete overhaul. This is true, but an overhaul is needed. Our thousands of pages of rules and exceptions to the rules is so inefficiant that even the former head of the IRS said it needs to be thrown out.

Philosophically, I've heard it argued more than once that God uses a flat tax. If it's good enough for God, than it's probably the best system. I've had to stew over this for a while. It's easy to see why it's a convincing argument for a God-fearing people. First, it's obvious why God wouldn't use a consumption tax. He can't have businesses collecting tithing for Him. Perhaps we could keep track of all our expenidtures and pay tithing from that, but that's impractical. But could it be that a flat tax just works better?

It came to me as I was studying up on the FairTax.

"Frank Chodorov... once observed that, by enacting the income tax, the American government was proclaiming that all belonged to the government, and whatever wealth the government did not seize from the person who created it should be looked on as a concession -- a gift from the government."

Before the income tax was enacted, the government was a service that the public chose to pay for. But that changed with the 16th Ammendment. The public was no longer given any right to choose whether to purchase the services of
the government, or how much. Instead their income was usurped, and the government chose how much of it each person could keep.

With this in mind, the distinction is obvious. All wealth does belong to God. I remember, when teaching the discussions, we would make that distinction when teaching tithing. In fact, the example they recomended using was to explain, if I gave you 10 dollars, but asked for 1 back, would you be okay with it?

No contrast that with government. Governments are services, little different from doctors or entertainers. We pay them for their services (defense and maintaining an economic infrastructure). Our wealth and property is not theirs to dictate to us what we can keep. Did the government give you that 10 dollars?

Thus the income tax is theft. It is immoral, and must be done away with. Government is not our god, not the creator of our wealth, and it has no claim on it except what we choose to pay it for its services. As Neal Boortz puts it, "income taxes are seized. Consumption taxes are paid. Which way do you want it?"