Changes

Though frequently advertised by supporters as a "voluntary" tax, this is not entirely true. Consumers can indeed forestall the tax by choosing not to spend money, or by electing to purchase only second-hand goods (which are not taxed under this proposal). However, at some point, all consumers must purchase new goods and services, including various necessities such as health care, food, fuel, phone service, etc., at which point the tax would no longer be "voluntary" but mandatory. To help counter this effect -- and to make the tax more "fair" -- expenses such as those listed would be offset to a certain degree by a "prebate" -- a monthly check issued by the government to each worker. However, given the income level of most Americans, the vast majority of citizens (about 85%) would end up paying some measure of tax on these items, prebate or no. The Fair Tax would therefore operate in direct conflict with the Constitution, which prohibits Direct taxes (those paid on the necessities of life, or on any unalienable right) without apportionment. Legal challenges to the tax would probably emerge shortly after its passage and lead to nullification by the U.S. Supreme Court for violating Article I, Section 9. (See Criticism below.)

Though frequently advertised by supporters as a "voluntary" tax, this is not entirely true. Consumers can indeed forestall the tax by choosing not to spend money, or by electing to purchase only second-hand goods (which are not taxed under this proposal). However, at some point, all consumers must purchase new goods and services, including various necessities such as health care, food, fuel, phone service, etc., at which point the tax would no longer be "voluntary" but mandatory. To help counter this effect -- and to make the tax more "fair" -- expenses such as those listed would be offset to a certain degree by a "prebate" -- a monthly check issued by the government to each worker. However, given the income level of most Americans, the vast majority of citizens (about 85%) would end up paying some measure of tax on these items, prebate or no. The Fair Tax would therefore operate in direct conflict with the Constitution, which prohibits Direct taxes (those paid on the necessities of life, or on any [[unalienable right]]) without apportionment. Legal challenges to the tax would probably emerge shortly after its passage and lead to nullification by the U.S. Supreme Court for violating Article I, Section 9. (See Criticism below.)

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None of the 2008 Democratic presidential candidates support the Fair Tax either, although [[Mike Gravel]] has indicated he supports a new kind of system based around consumption (expense) rather than income.

None of the 2008 Democratic presidential candidates support the Fair Tax either, although [[Mike Gravel]] has indicated he supports a new kind of system based around consumption (expense) rather than income.

Aside from political criticism, however, the FairTax suffers from serious constitutional infirmities. Supporters have tried to paint the tax as an "[[excise]]". But this is flat wrong. The constitutional definition of an [[excise]] is a tax that is strictly limited to '''privileged''' or '''luxury''' goods and activities. The writings of the Founding Fathers, as well as numerous U.S. Supreme Court and lower court rulings, confirm this definition.<ref>http://www.conservapedia.com/Excise</ref> However, the FairTax encumbers '''necessities''' ''in addition to'' privilege and luxury items, thus making it a '''Direct tax''' within the constitutional meaning of the term. Unlike true excises, the FairTax cannot be "avoided" because it taxes things which are necessary to live. These include food, clothing, housing, transportation, medicine, health care, arms for self-defense, phone service, sundries, education, etc. Any tax that encumbers such items must be apportioned among the states, or it violates the Constitution.

Aside from political criticism, however, the FairTax suffers from serious constitutional infirmities. Supporters have tried to paint the tax as an "[[excise]]". But this is flat wrong. The constitutional definition of an [[excise]] is a tax that is strictly limited to '''privileged''' or '''luxury''' goods and activities. The writings of the Founding Fathers, as well as numerous U.S. Supreme Court and lower court rulings, confirm this definition.<ref>http://www.conservapedia.com/Excise</ref> However, the FairTax encumbers '''necessities''' ''in addition to'' privilege and luxury items, thus making it a '''Direct tax''' within the constitutional meaning of the term. Unlike true [[excise]]s, the FairTax cannot be "avoided" because it taxes things which are necessary to live. These include food, clothing, housing, transportation, medicine, health care, arms for self-defense, phone service, sundries, education, etc. Any tax that encumbers such items must be apportioned among the states, or it violates the Constitution.

Although proponents suggest that necessities are effectively relieved from the tax by virtue of the prebate, the fact remains that necessities ''are'' taxed. Furthermore, once an individual's spending on necessities exceeds the poverty level, the prebate no longer offsets the tax, and the tax ''operates fully'' as an unapportioned Direct tax, in violation of the Constitution. In ''Brushaber v. Union Pacific Railroad Co.'' (1916), the Supreme Court ruled that whenever any "excise" morphs into a tax on items of common right (such as anything necessary to preserve and carry out a normal life) "the duty would arise to disregard form and consider substance alone, and hence subject the tax to the regulation as to apportionment which otherwise as an excise would not apply to it." Regardless of whether the FairTax is called an "excise," it is, in substance, a Direct tax which cannot be apportioned among the states. It is therefore unconstitutional.

Although proponents suggest that necessities are effectively relieved from the tax by virtue of the prebate, the fact remains that necessities ''are'' taxed. Furthermore, once an individual's spending on necessities exceeds the poverty level, the prebate no longer offsets the tax, and the tax ''operates fully'' as an unapportioned Direct tax, in violation of the Constitution. In ''Brushaber v. Union Pacific Railroad Co.'' (1916), the Supreme Court ruled that whenever any "[[excise]]" morphs into a tax on items of common right (such as anything necessary to preserve and carry out a normal life) "the duty would arise to disregard form and consider substance alone, and hence subject the tax to the regulation as to apportionment which otherwise as an excise would not apply to it." Regardless of whether the FairTax is called an "[[excise]]," it is, in substance, a Direct tax which cannot be apportioned among the states. It is therefore unconstitutional.

Finally, the FairTax shares a major flaw with the current income tax system: There is no cap on the rate that Congress may impose. Initially, that rate might be established at 23%. But nothing in the FairTax proposal prevents Congress from raising the rate to 30%, or even higher. Given the government's proclivity for spending money, an eventual increase in the FairTax rate, were the tax to become law, seems inevitable.<br />

Finally, the FairTax shares a major flaw with the current income tax system: There is no cap on the rate that Congress may impose. Initially, that rate might be established at 23%. But nothing in the FairTax proposal prevents Congress from raising the rate to 30%, or even higher. Given the government's proclivity for spending money, an eventual increase in the FairTax rate, were the tax to become law, seems inevitable.<br />