Challenge to Ron Paul Economic Revitalization Plan (printable)

Topic: Taxation
Challenge to Ron Paul Economic Revitalization Plan

There is an uncanny silence about the Economic Revitalization Plan published by Ron Paul on January 24th. Neither MSM nor the "top tier" candidates have pounced on it as voodoo economics or what-have-you. But it has caught us off guard too.
by Larry Ward
(libertarian)
Monday, January 28, 2008

There is an uncanny silence about the Economic Revitalization Plan published by Ron Paul on January 24th. Neither MSM nor the "top tier" candidates have pounced on it as voodoo economics or what-have-you. I suspect the cat's got their tongue because they don't have analytical competence to understand it. It talks about issues that are not in their script. But it has caught us off guard too.

Finally we have a rational, grown up proposal for specific action to improve things. Media and the "top tier" puppets aren't fatiguing us with demands to defend against foul play and adhominem attacks on this issue. The internet has opened wide the doors of opportunity for debate and we, the people actually have a chance to debate an issue on its merits.

On a straight yea or nae vote on the plan today, given the alternatives, I'd vote you bet your life. But I also think we can do better and we have one of those miracles of the Ron Paul Revolution, an opportunity for the first time in decades to forge political policy in the furnace of serious and constructive, public debate. The pundits have stepped out of our way on this one. And it is very much the message of the founders that such debate refines and perfects policy and legislation because, as Ron Paul reminds us often, our knowledge is imperfect, even, for example, if we are that giant of the Revolution, Mr. Jefferson. We are not infallible pontiffs or divine right kings. We are just honest and diligent men.

One of the great, and therefore unheard of women of American letters, Catherine Drinker Bowen, writes a wrenching description of Jefferson fidgeting in his seat while the Continental Congress of 1776 made deletions and revisions to his draft of the Declaration of Independence. Franklin, glancing at him quizzically thought he might feint. Jefferson was unthrilled with the Congress's intervention and thought they were butchering his draft. But Mrs. Bowen argues convincingly, that in all instances the Congress's interventions improved the document.

So with that said and in that spirit and at the risk of getting avalanches of angry email for pinckin' on Ron, I have a few objections and a suggestion for revision to the plan. Here goes.

Argument: The seven provisions of the tax reform point of Doctor Paul's economic revitalization plan are, like so many bound and gagged lawyers, a good start. But they are reactionary. By that I mean that they react to particular tax lunacies that are already in place. They let the tax lunatics of congress set the agenda and they offer no protection from the tax lunacies that politicians will invent and put in their place in the future. Tax lunacy A can be easily resurrected in the next session of congress by renaming it tax lunacy B.

Also, if we are to have self government we must have common sense laws that the people can know. No one, including the authors, knows what the so-called Patriot Act or so-called Civil Rights act mean. They can mean just about anything you want them to mean so we wind up with laws that are improvised, as in German in the 1930s and we can never be fully in compliance with the law because lawyers and politicians change the law's meaning to suit the needs of the moment. And, clearly, bureaucrats improvise the meaning of vague and labyrinth tax laws. Because the seven provisions in question are reactionary, they require people to be acquainted with the nonsense of recent tax legislation to which they react. This is a proper duty of a Congressman but an unreasonable imposition on ordinary citizens who are just trying to obey the law. I propose an alternative that requires understanding of only one brief and simple common sense alternative.

And finally, the Paul plan obviously soars ahead of anything of it's kind coming out of Washington or the political establishment by being brief, clear, specific and concrete. But what comes out of Washington is not a very demanding or admirable standard of review. The language of the Constitution however, is. It too, is brief, plain spoken and specific- but not particular. It is not married to any long since irrelevant legislation or event. And I'll tack one other concern at the end of this paragraph. The seven points back away from the dramatic and exciting proposal of abolishing the infernal revenue service.

So I offer the following alternative to the seven points of the Paul plan as it stands. Are you ready? Revenue to pay for the legitimate activities of federal government shall be raised exclusively, from sales tax imposed on manufactured goods at the wholesale point of sale and from import tax at the point of entry on imported goods. This statute supersedes all previously passed tax legislation.

Now as an act of mercy to the server that delivers my email, I would like to defend a few of the objections that can be easily anticipated. These 47 words do not in any way depart from the Paul plan. They accomplish all the cuts, eliminations, repeals, accelerations and supports in the seven points of the Paul Plan and more. They also block politicians from introducing any new tax by stating that the one allowed tax shall be the sole and exclusive tax. So the question is, is the the wholesale sales tax and import tax one that we can live with.

Again, this does not depart from Ron Paul's stated tax policies. He states repeatedly that we have revenue sources other than income tax and while he is, I think slyly vague on what those other sources are, he has from time to time mentioned import taxes, sales taxes and highway taxes. This merely consolidates all those other sources into one, uniform and and manageable tax that we can keep and eye on.

That statement, the we can on this tax needs to be defended. Politicians will be quick to note that the proposed, 47 word tax bill allows them plenty of room to do mischief. It empowers them to punish selected industries and nations with higher taxes and line the pockets of their pals with preferential tax treatment. The wholesale sales tax needs to be one, invariable percentage for all manufacturers and importers. We can still let congress have a yea or nae vote on the percentage amount from time to time. But that's it.

Ah, the politicians will say, but if we tax diaper manufacturers at the same rate as booze manufacturers, we are punishing, perhaps even murdering babies, while rewarding filthy rich distillers and rummies and winos. Therefore, government has to decide for us which products are good, meaning tax exempt products, and which are bad, meaning taxable products. Incidentally, this tax legislation makes it a moot point but churches and philanthropies should be subject to the same tax laws as any other business. But I digress.

Manufacturers will increase the price of their products by at least the amount of the tax and pass the new cost along to consumers who will decide for themselves whether, for example, they are willing to pay the higher price for disposable diapers every week or exercise thrift by buying cloth diapers once and washing and reusing them. No babies need die. Individual thrift decisions are the foundation of a free market.

There are politicians of course, who for a price will pass legislation saying, for example, that automobiles are not manufactured and are not, therefore taxable and that the air we breath and the water we drink are manufactured and are therefore taxable. For the moment, let me try to say what is manufactured by way of examples. Are medications manufactured? Yes. Are eye glasses and durable medical equipment manufactured? Yes. Is produce manufactured? No. Are farm tractors manufactured? Yes. Are frozen and canned foods manufactured? Yes. You can grow spinach in your garden and prepare it in your kitchen but canned and frozen spinich come from a factory. Are car's manufactured? Yes. Is a second hand car manufactured? Yes but the manufacturing tax has already been paid so no federal tax may be imposed on resale of the car- or house or boat or jewelry or any other capital asset.

It may be argued that this imposes an unfair burden on manufactures. They have to keep a new set of records and act as unpaid tax collectors. Nonsense. First of all, all manufacturers keep track of sales. The addition of one column in a spreadsheet is all that is needed to calculate the tax due on those sales. Compare this to the overhead of keeping track of the income, tax bracket, dependent status, social security number, addresses and other information about all employees that is required by the current infernal revenue system. Second, employers are already unpaid tax collectors. The only difference is that they will now collect the tax from a relatively small population of wholesale customers instead of individual employees. It is a blessing for any legitimate employer and makes it infinitely more possible for small businesses to employ workers and that means more jobs and more competition and productivity. The jobs will be needed since swarms of former IRS employees will be looking for work.

Since consumers will no longer be hemorrhaging money into the blood banks of the IRS, they will have more discretionary income to deal with the increased cost of manufactured goods. It will of course, then be argued that this tax policy returns money with one hand and takes it back with another. That's true but, as Ronald Regan used to say, not quite the whole truth. I can escape the manufactured tax by not buying the product. I can buy a Ford Sedan instead of a Hummer and I, for one, have way too much stuff anyway. The only way to escape the IRS tax is by paying a tax lawyer or going to jail.

But something else happens with the manufactured tax. Our 4th Amendment right to security in our papers against unreasonable search has been restored. If we ask a merchant what an item costs and he says, "that depends. How much have you got", the sane among us go to another merchant. Any time anybody or agency wants to know about your income or assets it is because they want to get their hands on your income and assets. You may chose to disclose that information, say to a bank for personal reasons that make it seem reasonable to you. But compulsory submission of financial papers to any government agency is illegal under the 4th Amendment. Period. End of Sentence. End of paragraph.

And one final point. It may be argued that we have first to repeal the 16th Amendment. Again, nonsense. That Amendment says that, "The Congress Shall have power to lay and collect taxes on incomes, from whatever source derived ....". It does not compel Congress to exercise that power any more thant Article I Section 8 which gives Congress power to declare war compels Congress to declare war. The 16th Amendment does not legislate income tax. Congress does.

The real objection that libertarians will raise is the suggestion that there are legitimate activities of federal government. But that's a whole n'other can of worms.

All comments and challenges are welcome

Larry Ward
Las Vegas Nevada

©2008 Larry Ward, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Monday, January 28, 2008
Last modified: Monday, January 28, 2008

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Reader Comments:

Posted By: Eric
Date: 2008-01-28 00:29:52

Really great words here about Jefferson and whats going on in politics. Thanks you.