LINDER’S 16TH PROBLEM

One of the very first “Liberation Links” we put up at the inception of To The Point was to John Linder’s FairTax. John is a Republican Congressman from Georgia who has authored a bill, HR 25 for the 109th Congress, that would in his words, “repeal all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes – and replace it with a revenue-neutral personal consumption tax.”

If the FairTax were to become law, the IRS would cease to exist, and we would pay our taxes like we buy a gallon of gasoline. Yes, that gallon and just about everything else would cost 23% more in a national retail sales tax – but since business-to-business transactions are not taxed, nor would businesses be paying corporate taxes or the employers’ share of payroll taxes, consumer prices would drop by at least that 23% if not much more.

The extent of the explosion of increased prosperity that would happen throughout America if the FairTax were to replace the IRS is difficult to exaggerate. Let’s put it this way: The FairTax would be the single greatest act of wealth creation in the history of man.

We are now fast approaching a tipping point of acknowledgement that the federal tax code is irretrievably broken and has to be replaced. Linder’s FairTax is by far the best fix. Except there’s this one little problem – actually, it’s the 16th problem.

The 16th Amendment to the Constitution, ratified in 1913, gave the Federal Government the power to “lay and collect taxes on incomes, from whatever source derived,” in direct violation of the Founders’ desires. Nonetheless, there it is. The IRS and the Federal Income Tax are constitutional, no matter how much we wish it otherwise.

Thus the insuperable fear preventing the passage of the FairTax: since it only legislatively eliminates the income tax, Congress can at some later date bring the income tax back. You can end up with the nightmare of a huge national sales tax plus income taxes, not in place of them.

There is only one solution: Repeal the 16th Amendment. This can be done with fifteen words, the same number contained in the 21st Amendment repealing Prohibition (the 18th). All the 28th Amendment would have to say to permanently, constitutionally, eliminate the IRS is: “The sixteenth article of amendment to the Constitution of the United States is hereby repealed.”

Congressman Steve King (R-IA) has introduced HJ Res 16 to do just this. It must be approved by two-thirds of the House and Senate, and subsequently ratified by three-fourths of the State legislatures. Until this is done – if ever – Linder’s FairTax hasn’t got a chance.

So the bad news continues this April 15. The best we can hope for is the “postcard flat tax” proposed by economist Stephen Moore. The clever twist here is that it would be offered as an alternative to full filing: you would have the option to do either. It’s a good idea, with the very substantial benefit that it could actually be achieved and quickly. Nonetheless, it’s thin gruel compared to the FairTax. Reality can be grim, most especially on April 15.