Saturday, April 3, 2010

Constitutionality of the IRS Rules and Regulations?

One major theme now of those who object to the new health insurance reform bill is to challenge its constitutionality, saying that nowhere does The Constitution give the government the right to require citizens to purchase something from a private business.  Maybe not, but it’s a fine point because, regardless of the original intent of the Constitution, there are well established precedents for the right of the government to require citizens to purchase something directly from the government.  Social Security and Medicare are prime and very large examples.  There are also many well-established precedents for the government’s right to collect taxes from citizens and then use the tax money to purchase things for the citizens.  Highways and armies would fall into that category.  So, while the current approach to health insurance reform might be challenged on a technicality, there is no doubt that, if those favoring a government single payer health care system had won out, challenges to constitutionality would be futile.  After all, that is what Medicare is for the over 65 crowd, and it has been in effect for 45 years.

And, of course, strictly speaking, we are not being required by the recently signed law to buy insurance.  We are just being penalized with a tax if we fail to do so, or, alternatively, we are getting a tax benefit or avoiding a tax by doing so.  I don’t believe anybody will go to jail for failing to buy health insurance.  They will just have part of their income confiscated by the IRS, and that can happen for lots of reasons.  For those liberal leaning folks who start with the position that all belongs to the government and that any tax break consists of government expenditure, buying health insurance will now just be another tax break similar to deductions for mortgage interest and charitable contributions. Those liberal leaning folks are ones who might argue that renters are being penalized by additional taxes because they cannot deduct their rent the way home owners deduct their mortgage interest or that single folks are being penalized by additional taxes because they cannot file joint income tax returns and enjoy the lower rate granted to married couples.  (Added: A very frustrating liberal view would be that the government is "spending" on tax breaks for home owners and married couples and that, to be fair, the government needs to also "spend" on tax breaks for renters and single folks.)

All of which explains exactly why the present tax system is so corroded and corrosive and corrupting (For more explanation go here.) and pretty much assures the continued growth of government and expansion of socialism at the expense of free enterprise in America.  With it’s progressive rate structure, exemptions, exclusions, deductions, credits, alternative minimums, phasing out of deductions with income, etc., it gives the US Congress unlimited power over the economy and the people.   All this in spite of Senator Harry Reid's argument that income taxes are voluntary.  And of course the linkage of the health insurance reform bill to the Internal Revenue Service and the rumored hiring of thousands of new IRS employees to monitor and assure compliance with the health insurance reform bill support this argument. 

So, if we want to challenge the constitutionality of something, let it be neither the health insurance reform bill nor the income tax itself which was authorized by the Sixteenth Amendment consisting of thirty words, but just the volumes of discriminatory government-expanding, economy-destroying, and congress-corrupting rules and regulations which have grown up as a result of that simple amendment and which make it so easy for our congress to manipulate and control.  Just for reference, here is the simple and innocent sounding February 3, 1913, 16th amendment on which our incomprehensible tax code is based: 
"ARTICLE XVI. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Addendum: For those of us arguing in favor of the Fair Tax, a tax on consumption to replace the income tax, there is a sobering article in the April 5 WSJ about the political struggles in VAT (Value Added Tax, a consumption tax) countries to determine what is and is not subject to the VAT.  When is "food" just food exempt from the VAT and when is it a luxury to be taxed?  And now the rumor is that, in order to stop the growth of our deficit, we will get a VAT not in place of but on top of the income tax.

16 comments:

  1. "there are well established precedents for the right of the government to require citizens to purchase something directly from the government."

    One problem. This is not the government forcing us to buy from them. They are forcing us to buy from a business. There is no legal standing for this and you have based your arguments on a flawed idea.

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  2. Well, I think one can argue that they are not forcing us to do anything...just taxing us for not doing something or, alternatively, offering a tax break for doing something.

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  3. fairtax has nothing to do with VAT. it completely eliminates taxes on personal/corporate income and untaxes every american up to the poverty level, requiring repeal of the 16th on a specific timetable. there is no "lower rate granted to married couples". married couples pay higher tax rates. this whole article doesn't really seem to have one valid point or purpose.

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  4. also, the fairtax is just an embedded retail sales tax on goods and services there is. how much simpler can it get? you walk into a store, you pay an embedded tax on what you buy that shows on your receipt. you leave. anonymous. total freedom.

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  5. There are supreme court cases from the 1920's that weakened the 16th amendement as well. Not that that stopped them.

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  6. Agreed the VAT had nothing to do with the Fair Tax. Go read or reread the Fair Tax book, they clarify very well what the Fair Tax, and why it is not a VAT. A VAT would be one more step into Socialism.

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  7. We'll get a VAT if we continue to let Democrats/Marxists/Socialists run things. VAT is the dream tax for these elite politicians because it is a hidden tax and can be raised at will.

    The FairTax is embedded in the retail and would be itemized on your receipt when you buy something new at the retail level. Used items would be tax free. Simple and anonymous.

    Government types hate the FairTax solely because its power limiting ability, not because of the revenue it would generate. The income tax code is used to make the people jump through various hoops to qualify for tax breaks, whereas the FairTax requires no hoop jumping. Just buy something and you pay the tax. Keep It Simple, Stupid.

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  8. The Fair Tax would make everyone's lives easier and let us keep all the money we actually earn. This would immediately put money back into the economy, reduce the cost of hiring employees increasing the number of jobs available and prevent the government from using taxes as a way to punish hard working Americans.

    I often hear politicians talking bad about the Fair Tax but when I hear their objections it becomes apparent that they either have not read the Fair Tax bill or they don't understand it.

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  9. Fair tax is a cool idea. But, if it is intended to replace the income tax, we don't need either. The income tax only makes up 20% of federal revenue. So, why not get this new Congress we are about to elect cut out 20% of unneeded government.
    Also, why are we not all raising hell about our local government ignoring ART1, SEC10 of the US Constitution?

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  10. Ken you are sorely mistaken if you thing we don't need the Fair Tax. Try reading the Book and informing yourself on exactly what it would do for our country.

    Our congressmen and Senators will back the Fair Tax, they are just afraid of where the votes are coming from. Call them and write them and tell them you support the Fair Tax. When they hear enough of you supporting it they will then support it.

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  11. A litle clarity for those who may be confused. VAT taxes are hidden from the public because they are added to a product at every stage of production (ex. raw materials, machinery, I believe shipping). Since there is no entry on their receipt at the retail counter, they don't realize that it is the government causing the price to go up. With FT, as stated earler, it's all right there on the receipt and in the open. A sales tax requires the government to be open that they are raising OUR taxes if it was added on to the retail price at the counter. A VAT allows them to "claim" they are raising taxes on industry when in fact it is always passed on to the consumer. Would be much more efficient to just be honest and add the sales tax and not a VAT.There is is theis little pesky with the Constitution, but they/ve already ignored it wuth cigs, fuel, alcohol, etc. "No Tax or Duty shall be laid on Articles exported from any State."

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  12. Sir, with all due respect, you are confusing the Fairtax (a national sales tax/ consumption tax) proposed by guys like Steve Forbes and Governor Mike Huckabee, with the Values Added Tax (VAT) tax in Europe. They are two entirely different things. Firstly, the Fairtax, as proposed by some Repblicans already, is a consumption tax that would eliminate all federal, payroll, capital gains, alternative minumum, gift, estate, and corporate taxes, by replacing them with one flat 23% national sales tax. The 16th amendment, the IRS, and the income tax, would be GONE under the Fairtax. However, the VAT tax is entirely different. This kind of consumption tax, taxes EVERY point of production - thus, the name VALUES ADDED tax. The Fairtax, however, only taxes the final point of purchase. Very two different things. The VAT Obama is talking about is on top of all those other taxes that I mentioned above that the Fairtax would get rid of. Please read up on the two, and you will discover that they are two very different ideas, and are completely unrelated, not to mention that they function very differetly.

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  13. Thanks, but I'm not confused. I just think that congress loves the idea of a VAT because of the power it will give them and hates the idea of the Fairtax because of the power they would have to give up.

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  14. If everyone understood the last post by skepticalobserverwithdirtyhands, there would be a revolution on every capitals front lawn right now! Information is the key!

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  15. What if, as a result of the 16th Amendment, Congress had established a tax of 10% on all income from any source with no deductions, exemptions, exclusions, credits, etc.?

    Does anyone believe that the Fair Tax would not be subject to the same manipulation over the years that has corrupted the income tax? Once a system is in place to exempt those "below poverty," there will be continuous toying with that definition and demands for relief from various constituencies. And congress will not be able to resist the temptation to tinker.

    Still, it would be a nice fresh start.

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  16. It is all very simple. The States need to have a new Constitutional Convention, and repeal the 16th Amendment. Then replace it with something that says any money collected by the Federal Gov't is considered a tax, whether it be income tax, use fees, license fees, etc., and them LIMIT total taxation to 10% of income. ALSO, another Amendment is needed that says the Federal Gov't cannot direct any induvidual or business how to spend their money. These 2 things would in effect limit the power of the Feds and also bring an end to massive Social Security and Medicare. Leave these up to the States to decide...

    Anyway, a Constitutional Convention is what is needed. Congress cannot nullify them or influence them. Nancy and Barack would suddenly find themselves without power. Which is the way it should be. :)

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