No Reason to Subscribe to Fortune

Let’s cut to the meat:

[I]f America fails to enact historic, structural reforms in spending, an entirely new source of revenue will be needed. And it’s likely to be enacted in haste and near-panic, as the only option to forestalling a crisis. “The gap between revenues and outlays will be simply too large,” says J.D. Foster, an economist at the conservative Heritage Foundation and a former budget official under President George W. Bush. “Three points of GDP need to be closed to make budgets sustainable. Either government spending gets back near where it used to be, or we’ll need an completely new type of tax.”

The new levy will need to be big, so big that the most probable choice is a European-style value-added tax or VAT. That looming revenue machine is the phantom in the room, the tax that’s still invisible to most Americans, but that threatens precisely the group that’s supposed to emerge from all the deal-making as the Great Unthreatened, our middle class.

Now then, let me explain why a VAT — particularly a hastily enacted VAT — is absolutely not going to happen. It’s called the 16th Amendment:

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.

Congress has two ways of taxing us. The first is a tax based on the number of people in the state. It should be obvious that it’s not entirely fair to make your tax bill based on state population without regard for your ability to pay (it seemed like a good idea in the 18th century), so the 16th Amendment had to be passed to make income tax legal. I am not a lawyer or a constitutional scholar, but I don’t see a damn thing in the Constitution or Amendment 16 that makes a national sales tax legal.

Anybody who wants a VAT had better start working on an amendment to the Constitution. That cannot be done in haste.

This article is supposed to scare you and I into insisting on austerity rather than implement this improbable, middle class “crushing” tax. Heaven forbid we should raise additional revenue through higher taxes on the wealthy at the rates they were under Reagan, or Nixon, or heaven forbid Eisenhower (all “conservative” Republicans of their day). Nope, easier to frighten you into giving up the things your taxes have paid for: well maintained roads; safe water coming out of your tap and safe food available at your local grocer; police and fire services; public schools that make sure businesses can hire literate employees anywhere in the nation; a minimal retirement income you already paid for. Nope, gotta cut back somewhere.

In Closing: scientific method suggests that when your experiment doesn’t work, you change the hypothesis; what a sleeze; let’s not lock kids up in solitary; wealth gap grows; agreed; women will die because their parents are afraid they will think sex is ok; I find it hard to believe that’s cost effective; “Just how many female-headed single-parent families with two children under 10 are there in the United States making $260K/year, anyway?”; and wouldn’t that be a waste.

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2 Responses to "No Reason to Subscribe to Fortune"

  • bmagnus says: