The 28th Amendment to the United States Constitution shall read:
The Internal Revenue Code shall be replaced with a Flat Tax. All taxes on profit-making business enterprises are abolished. A levy of 20% shall be applied to all individual income above a tax-free allowance to be set yearly by the Department of Labor. All deductions and credits previously in effect are abolished.
This proposed 28th Amendment will not repeal the 16th; the Internal Revenue Service will be preserved in a far lesser capacity as the tax collection arm of the federal government. The Federal Reserve System will also be preserved as custodians of the nation’s money supply. The purpose of this amendment is to simplify the payment and collection of individual federal income taxes, and abolish all federal taxes paid by business. A tax-free allowance will be determined yearly by the Department of Labor. Income below that figure will be exempt from federal income taxes. For income above that figure, an assessment of 20% will be applied. No other deductions or credits will be allowed. Federal tax forms will be replaced by a post card. Taxpayers will receive their post card and postage -paid envelope by February 1st of each year.
The proposed amendment must be approved by a 2/3 majority in the U. S. House and Senate, requiring approximately 284 votes in the House and 67 in the Senate. It would then be sent to each state legislature for debate, and ? would have to vote for approval. If 36 states vote in favor, the amendment would be added to the Constitution.
As for a timetable for approval, the longest period of time between Congressional approval and ratification by the states was for the 22nd Amendment on presidential term limits. It took four years. The 16th Amendment, endorsing an income tax and creating the Internal Revenue Service took about 3 ? years. The others have taken two years or less. The 26th Amendment lowering the voting age to 18 took only four months. I would anticipate this amendment would take no longer than two years.
Opposition to this proposed amendment would be fierce, mainly from those whose livelihoods depend on the current convoluted tax code. Tax lawyers wrote the code and are paid by individuals and businesses to interpret it to their advantages. Same with accountants, financial planners, investors, and tax preparation experts. Home builders and real estate salespeople depend on mortgage interest deductions as an additional tool to help them sell homes. Charities also depend on tax-exempt contributions from members. Government employees whose jobs would be eliminated would voice opposition, as would lobbying organizations whose efforts at securing various tax breaks for its clients would be rendered moot if business taxes were eliminated.
They would, no doubt, couch their opposition in altruistic terms. They would argue home buyers and contributors would lose an incentive to invest in their operations, and their members would suffer an economic loss as a result. Others, such as tax professionals, preparers, and government employees whose jobs would be eliminated would probably make a “restraint of traded” argument; that they were being artificially denied an opportunity to work in their chosen profession.
Proponents should make two persuasive arguments: freedom and the resulting economic impact. Freedom has always been a powerful motivation in political movements in this country. From our founding through the slavery debate, women’s suffrage, and the struggle for civil rights, allowing an oppressed people the right to self-determination has been an emotional and unifying call-to-arms. The same arguments should be made in this debate. The tax code is at once oppressive, incomprehensible, and a drag on our national economy. Each taxpayer spends several hours each year gathering information, planning strategies, and filling our forms in order to pay the least taxes legally allowable. Business owners often have to do it twice; once for themselves and once for their entities. Albert Einstein gave up doing his own taxes. The Nobel Prize-winning physicist and author of the Theory of Relativity found the tax system too complicated. Many, for various reasons, simply do not file returns and risk imprisonment for their inaction. If taxpayers did not have to spend time with voluminous paperwork trying to avoid paying taxes, they could use those efforts more positively, such as ways to make even more money. Because no tax would be payable until their incomes reached a certain level, poor people would have an incentive to work and provide a greater opportunity for themselves and their families. The usual arguments used by tax reform opponents, that reform helps the rich and hurts the poor, and a progressive system is needed for income redistribution, could be totally discredited. No tax would be due on income up to a certain level, then everyone would be assessed the same percentage on their income.
The economic impact of this reform is self-evident. Business owners would no longer spend time calculating the tax implications of a certain decision. They would be free to invest, expand their operations, and hire more employees. Individuals would have more money to save, invest and contribute to charities. Government coffers would be brimming with new money; although the marginal rate on wealthy taxpayers would decrease, revenues would increase because more money would be subject to tax. The “fairness” argument against reform would be thoroughly demolished.
Passage would be assured just by the sheer numbers of those would benefit from reform against those who would be hurt. We are, or would be, all taxpayers. We are not all lawyers, accountants, government bureaucrats or others dependent on the tax code for a living. In fact, lawyers and civil servants are among the least respected of all professions in the country. How much political influence would their criticisms have?
The constitutionality of the amendment question has already been decided many times before. The 16th Amendment has been prosecuted in federal courts since its inception in 1913. Tax protestors have never succeeded in their efforts to prove the tax system is illegal. This amendment leaves alone the settled issue of tax collection. It only proposes to change the method of that collection.
The debate would be one for the ages. But with so many more “winning” than “losing”, the raw numbers point to quick and easy passage of the 28th Amendment.
REFERENCES
Carson, Clarence B., Basic American Government. Fifth Edition, 1995. American Textbook Committee.
Hall, Kermit L., Editor, The Oxford Companion to the Supreme Court of the United States. 1992. Oxford University Press.
Hall, Robert E. and Rabushka, Alvin, The Flat Tax Second Edition. 1995. Hoover Institution Press.
