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The biggest flaw with the Fairtax is the assertion that the Sixteenth Amendment needs to be repealed. Apparently, the Fairtaxers believe the Amendment is the source of the federal government’s power to impose income taxes and said power will vanish if they succeed in getting the Sixteenth Amendment removed from the Constitution. All of the various federal income taxes (corporate, individual and employment) are simply indirect excise taxes just like the FairTax. These taxes have nothing to do with the Sixteenth Amendment. If we repealed the Amendment tomorrow, the federal government would retain the constitutional authority to impose every tax it presently imposes. <br> <br> In 1980, The Congressional Research Service prepared a Report for Congress concerning the federal income tax. The Report discussed two 1916 Supreme Court decisions and the effect of the Sixteenth Amendment on the federal government’s power to tax:<br> <br> “The Supreme Court, in a decision written by Chief Justice White, first noted that the Sixteenth Amendment DID NOT AUTHORIZE ANY NEW TYPE OF TAX…” (Emphasis added)<br> <br> Source for above quote: “Some Constitutional Questions Concerning the Federal Income Tax,” Howard M. Zaritsky, (Congressional Research Service, Washington, DC., 1980) p. 5, Report No. 84-168 A 734/275.<br> <br> The Report made the following statement concerning the Court’s decisions on the nature of the income tax:<br> <br> “Therefore, it can be clearly determined from the decisions of the United States Supreme Court that the income tax is an indirect tax, generally in the nature of an excise tax.”<br> <br> Source for this quote: page 6 of the above Report.<br> <br> In 1989, the Congressional Research Service revised and updated its Report to Congress concerning the federal income tax. This Report addressed the nature of an excise tax:<br> <br> “An excise tax is a tax levied on the manufacture, sale, or consumption of a commodity or any various taxes on privileges often assessed in the form of a license or fee. In other words, it is a tax on doing something to property or on the privilege of holding some property or doing some act, not a tax on the property itself. The tax is not on the property directly, but rather it is a tax on the transaction.<br> <br> When a court refers to an income tax as being in the nature of an excise, it is merely stating that the tax is not on the property itself.”<br> <br> Source for this quote: “Frequently Asked Questions Concerning the Federal Income Tax,” John R. Luckey, (Congressional Research Service, Washington, D.C., 1989) p. 5, Report No. 89-623 A.<br> <br> The so-called federal income tax is not a tax on income; it is a tax measured by income. Income is not the source of the tax; it is the basis for determining the amount of the tax. <br> <br> So the $64,000.00 question is-what activity or privilege is Congress taxing and measuring by income? By Slade
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