I'm sorry @Smokin Joe but that is incorrect as well! I do believe we revolted over a tax on Tea which is considered a food where I come from.
As to Some consumption not being optimal, that is precisely why the Fairtax would put consumers back in the driver's seat and is EXACTLY what was being discussed in the excerpt from Federalist 21 I posted!
I just wish the same understand of such things that the founders possessed were around today! If it were, The Marxist income tax would have been history already and I could move on to something else!
And BTW: Obamacare would have been and impossible dream had the Fairtax been in place at the time!
THe Marxist Income tax would never have happened, nor most of the programs it supports.
However, Tea (imported) was subject to duties as an import. People drank all sorts of things, and still do, and call them tea. However, the stimulant beverage was a mainstay (and still is) among the English, among other peoples worldwide. Americans, in response to that tax (and out of rebellion) became coffee drinkers (my drug of choice). Other items taxed included paper, and virtually anything imported--which became a bone of contention over tariffs 80 years later to the point that helped ignite another war. However, the Congress had the Constitutional authority to levy tariffs.
Study the history of our marxist income tax, and you will find that initially, it was a tax on profit from investments, not common labor. It was the jump in reasoning which led to the
exchange of time and skill for something more readily traded for other things or those things themselves being defined as "income". If I trade you a five dollar bill for five ones, is that taxable (generally, no, because we have only exchanged items of equal value. If you trade me a weaner pig for doing a valve job on your pickup, is that income? According to the Government, it is! Even though we mutually set the value of those things as equal and made an exchange. Ther's the rub--wages were not 'income'--yet today, in order to inadequately finance growing socialist programs and control the masses, such exchanges ("barter") are considered "income".
Tea, while nice, was not a necessity, despite being a drink heavily entrenched in English tradition. And the total tax levied was small--far smaller than most states' sales taxes today (if the state has a sales tax).
I;m not against the consumption tax model, but I do have issues with "prebates" because that is a decision to refund the taxes on something that may well be a necessity, something not all NEED in equal measure, and something people cannot live without (like heat in North Dakota in Winter). "Prebating" a portion of the taxes levied on heat is to decide that the surplus taxed is somehow not a necessity, when in fact it is, based on some formula that some bureaucrat concots. That is the government deciding how much you need, arbitrarily, and only refunding the tax on that fraction they consider essential.
That requires studies, bureaucracy, just to set the prebates which should vary from year to year depending on temperature. which would require more study, and if the people doing the studies are using AGW doctrine to predict the future, the gap between real needs and refunded taxes will increase, while those in more tropical latitudes are allotted more prebate for cooling. Heat kills, sure, but cold will get you quicker. I knew a couple of people who froze to death, one right in town.
Now, there is a way around all that. To reduce the allotment bureaucracy to a mere sliver of itself, and that is to not tax the broadly defined categories of food, clothing, shelter (one domicile), medical care, and energy, things which universally are understood as necessities, whether energy be defined locally as electricity from nuclear power or a dung fire.
That permits the person in Minnesota with Reynaud's Syndrome to heat their house adequately, the person in Corpus Christi to run the AC, without fear of going over their limit and having to pay taxes on it. People can eat what and as much as they see fit. They can see the doctor and not have to pay 30% tax on their chemo drugs or Cardiac Cath. They can live in as nice a house as they can afford, (not 30% less), and buy or sell that primary house without fear of losing 30% every time. They can wear clothing adequate to their climate, whether that be for subzero weather or a sunny day at the beach, again without being penalized for the needs imposed locally. ANd there is a bonus.
Any time the government issues payments, there are things to keep track of. Who died, who moved,who never existed. There will be those who are intent of defrauding that payment system, those who won't get their payment because someone typed in the wrong number or address. That takes an army of people to sort out, facilities and equipment to do so.
You an vastly reduce those needs by not collecting that tax on things which fall into the categories above. In fact, what you would need is only a smaller group to decide what does and doesn't fit under those headings and levy the taxes accordingly.
People would keep more of what they make, would not be taxed on the basics needed to live and stay alive, and the other items, the durable goods, the televisions, the appliances, automobiles, the hangers in the walk-in closet (or the ikea dresser) would be taxed. If someone wanted to scrounge pallet lumber and make furniture rather than have a house full of valuable antiques, that would be up to them.
My biggest problems with consumption taxes are that:
1 Some people will need more than others, simply to live. If the necessities aren't taxed,then the tax is more fair, and more of a tax on egregious and optional consumption instead of a tax on living (my biggest objection to the ACA, too).
2 Prebates will mean the government has to assign a level of sustenance expenditures to refund the tax on. In essence, this is the government telling us what we need to live, without any regard for the needs of the individual--an arbitrary and possibly capricious number. With the government's track record for getting things right, someone is going to get seriously screwed, and others will benefit. The government will pick winners and losers based on nutritional requirements, location (weather), and body size, as well as caloric output during the average day. (Workouts are optional, work is not. A large man who does heavy manual labor will need as much as three times the caloric input as someone who weighs 100 lbs soaking wet and has an office job. Yet the large guy who sweats for his money will pay three times the tax, just to fuel his efforts. Food, clothing, shelter (primary residence), medicine, energy, all vary wildly depending on the needs of the individual. They aren't, at some point, optional. Don't tax them.
3 Prebates also mean the government will have to have an administrative bureaucracy with armies of employees to administer, monitor for fraud, change addresses, keep the systems running, issue the payments, etc. Doing away with the prebate does away with that need. Only the enforcement division need remain, and those who count the money coming in.
So, I'm not against the consumption tax, written carefully, but I am against the prebate scheme.
Having everyone on a hunt for their government check is not the answer to being more free.
