The FairTax and the Constitution

With respect to taxation, the Federal Constitution provides the following:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Federal Constitution, Article I, Section 8, clause 1 [Sec. 8.1]

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

Federal Constitution, Article I, Section 9, paragraph 4 [Sec. 9.4]

No Tax or Duty shall be laid on Articles exported from any State.

Federal Constitution, Article I, Section 9, paragraph 5 [Sec. 9.5]

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Federal Constitution, Amendment X

The Taxing Powers of Congress

In Sec. 8.1, the people granted Congress the power to impose four types of taxes. Based on the usage of similar language in Sec. 8.1, Sec. 9.4, and Sec. 9.5, reasonable people can agree that the word "tax" connotes taxes in the category of direct taxes and the words "duty," "impost," and "excise" connote indirect taxes.

The last portion of Sec. 8.1 mandates that the category of indirect taxes must be uniformly applied.

Reasonable people can probably also agree that the FairTax proposal falls under the general category of indirect taxes, either a duty or an excise.

Except for the taxing powers granted to Congress in Sec. 8.1 and the prohibitions placed on those powers by Sec. 9.4 and Sec. 9.5, all other taxing powers are reserved to the several States, as granted by the people in their own State constitutions, by the Tenth Amendment.

The States have been exercising their taxing powers, as the States have seen fit, for many years with respect to the category of taxes labeled sales, use, or consumption taxes.

Does the FairTax Fall within the Taxing Power?

Leaving aside the prohibition placed on Congress by Sec. 9.5, how can the FairTax claim to be within the powers granted to Congress in the Constitution?

As observed earlier, the FairTax is clearly an indirect tax. The mandate to Congress for indirect taxes is that indirect taxes must be uniform.

The FairTax proponents loudly proclaim that the FairTax is progressive because of the optional rebate (or pre-bate). A progressive tax is clearly not uniform because different people will pay different amounts based on their levels of consumption and whether or not that consumption falls into a favored category. In fact under the rebate formula, some people may even experience a net gain because their unfavored consumption falls below the starting level at which the FairTax becomes, effectively, a tax.

We now have another (Mike Huckabee was the first) Republican presidential candidate, Herman Cain, promoting the FairTax as part of his campaign. There has also been a recent hearing in Congress, where Mike Huckabee, among others, presented testimony in support of the FairTax scheme.

With our current focus on limiting the Federal government to the powers granted in the Constitution, can we simply overlook the argument that the FairTax is unconstitutional because Congress is not granted the power to impose a duty or excise that is not uniform?

Notably, it is the rebate feature that makes the FairTax palatable to most, but it is also the rebate feature that, arguably, causes the scheme to fail constitutional muster.

Besides the rate, one might look even deeper into the scheme where it outlines the articles that are not subject (favored) to the tax, notably, articles that are not "new" and education. Clearly the exemptions provide more evidence of lack of uniformity.

The obvious rebuttal is that the common rate, twenty-something percent, makes it uniform. But as with other acts of Congress or State legislatures, the judiciary should look beyond the nominal tax rate to the effective rate, which is, in its very nature, designed to be anything but uniform.

The preceding argument is based on the issue of uniformity of indirect taxes as mandated by the Federal Constitution. Would anyone like to respond in that limited scope? I'm not particularly interested in the pros and cons of the FairTax versus the income tax and the other taxes that it proposes to replace. Let's just stick to the powers granted to Congress, if you please. My wish is for constitutional arguments, not policy arguments.

Corporate Personhood Amendment

A lot has been written about corporations and their treatment in the courts since the 1880's as persons, primarily because of the 14th Amendment, under the Constitution.

When I speak about corporations, I'm talking about any of the fictitious legal entities that are chartered under Federal or State statutes. The last half of the twentieth century saw a rise in alternative legal forms that People can create, so I don't intend to exclude any organization that relies on a statute for its existence.

The Bill of Rights was written specifically to protect the natural, common law rights of the People from infringement by the government. The judicial branch has granted corporations many of these unalienable rights by substituting its judgment for the judgment of the legislative branch. These court-approved rights have steadily moved in an inexorably more expansive direction.

So here, I'm not going to rehash what has already been written about the absurd and intricate logic that got us here. I'm going to focus on a solution.

Unfortunately, because the United States Supreme Court has put its collective foot on the scales of justice to favor corporations, the only sure way to destroy over one hundred years of precedent is to amend the Constitution.

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I start off by declaring a simple, straightforward purpose for this proposed amendment. This will give you the gist of what this amendment is trying to accomplish. And it gives you a basis to criticize it if it fails in that purpose.

Purpose: Corporations have no rights. Individuals are responsible for crimes. Judges may not eviscerate this article.

First, I want to disabuse everyone of the idea that corporations, by some stretch of the legal imagination have rights. Corporations are, in fact, creatures of statute. Therefore, in the hierarchy of things, they are subject to the government that created them. Corporations are granted the privilege of limited liability. If that's not enough of an incentive, then incorporators can create a partnership which is simply a contractual arrangement among People.

Second, I want to eliminate the absurd idea that a legal fiction that cannot speak, see, hear, taste, or feel can commit a crime. The primary historical purpose for a corporation is to shield the individual officers and shareholders from personal liability for damages. Over time, by artful application of legal arguments, this has been stretched to include criminal liability. Today corporations can commit all manner of crimes and no individual will serve a day in jail. So, let's get rid of this. I suspect corporate morality will be born again as the criminals will now find no refuge behind a corporate veil.

Third, I want to prevent the courts from somehow finding ways to get around the clear intent of the article. In modern times, courts ignore the clear language of the Constitution with impunity, primarily because all three branches of government support each other against the People. Relying on elected or appointed officials to police themselves is insanity. So, I want the People to be able to directly remove any judge who violates the clear intent of the article. The People's surrogate is, and always has been, the grand jury.

Lastly, although perhaps not necessary, I don't want Congress to interfere with this article either. Many modern amendments have specifically granted Congress a new power to enforce the article. One might expect that by leaving that grant of power out of the article, that no new power is granted. But since we don't expect that the Congress honors its oath, I'm leaning toward including a specific negation of any grant of power that may be implied. I'm guessing that judges won't be too eager to find congressional power, when finding it might be the end of their careers.

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I'm of the opinion that brevity has its own intrinsic virtue, so I've tried to be brief. A lot of other related issues crossed my mind during the drafting process. Those that I eliminated were those that got too much into the specifics. Basically, what I've tried to do is overturn the Supreme Court decisions. This leaves it to the States, which charter almost all the corporations in the United States. I'm pretty confident that the States can figure out how best to deal with the details. With fifty different State legislatures plus Congress all working on revising their statutes at the same time, I'm sure the good ideas will surface.

Section 1: A corporation or other organization chartered under a statute of the United States, the several States, or a foreign power is a legal fiction and does not have unalienable rights. A chartered organization is wholly subject to the laws of the government that chartered it.

Section 2: A chartered organization is incapable of acting, except by the acts of its actors who may be directors, officers, employees, agents, members, or shareholders. Liability for criminal acts may not attach to the chartered organization, but only to the individual actors.

Section 3: An officer of any court of the United States or of the several States may not grant a chartered organization any privilege not explicitly granted by statute. An officer of any court who violates this prohibition is subject to presentment or indictment by a grand jury, impeachment and trial by jury under common law, and removal from office upon conviction.

Section 4: Congress is not granted any new power to enforce this article.

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Today we live in a corporate oligarchy of huge corporations with unimagined influence on our lives through their ability to influence government officials for their own benefit. In the hierarchy of importance, this amendment has a rather profound effect, when you stop to consider it, on almost every aspect of our lives.

For example, without rights, state legislatures can decide to cut corporations entirely out of the political process by outright banning use of the corporate treasury to influence politics whether it be lobbying or campaign contributions. And don't overlook the fact that almost all levels of government operate as municipal corporations.

While it will be up to the States to enact the laws, the States will no longer be subject to the judge-given rights that corporations now employ and abuse.

So there you have it. Let me hear your comments and suggestions.

#001 Constitution for the Everyman Teleconference Series

The First Amendment

The First Amendment is, perhaps, one of the most often cited, yet most misunderstood, parts of the Constitution of the United States. A great many Americans can recite at least some of the clauses of the First Amendment, but most often, Americans recite language that has been drilled into them from childhood by the mandatory public education system and popular media.

What the First Amendment Is About

• Prohibition on Establishment of Religion
• Exercise of Religion
• Freedom of Speech
• Freedom of the Press
• Freedom of Assembly
• Petition for Redress

What You Will Learn

• To whom the first amendment applies.
• How to use reason to read legal English.
• First Amendment rights in State Constitutions.
• Supreme Court's role in perverting the First Amendment.
• Application of First Amendment to the States.

Format

This session will be presented in three segments.

1. Opening: You will have a chance to raise your hand and ask a question related to the First Amendment. (Up to 15 minutes.)
2. Presentation: Discussion of each clause in the First Amendment with references to landmark Supreme Court cases. (About 30 minutes.)
3. Q & A: You will have a chance to raise additional questions related to the presentation. (Up to 1 hour.)

Purpose

To prepare you to knowledgeably discuss the issues involving the First Amendment.

To dispel myths perpetrated on the masses about the First Amendment.

To disabuse you of ideas about the First Amendment that most people believe.

To bring crystal clear clarity to the purpose and meaning of the First Amendment.

Materials

Additional materials will be made available to registered participants prior to the teleconference. To receive these materials, please send an e-mail message to Everyman.

To ask a question for one of the question periods in writing, please post your question in the comment section below.

Teleconference Details

Saturday, June 18, 2011
5:00 p.m. Pacific
6:00 p.m. Mountain
7:00 p.m. Central
8:00 p.m. Eastern

Access Number: 402-237-2873
Passcode: 17760704#