June 18, 2002 

AMERICAN CONSTITUTIONAL RESEARCH SERVICE EXPOSING THE "FAIR TAX" HOAX 
June 6, 2001 By: John William Kurowski 

There has been much discussion concerning tax reform during these past
twenty years and still, the carpenter, the plumber, the electrician,
the housewife, the butcher the baker and candlestick maker, remain
under the iron grip of a taxing system imposed upon them by the folks
in Washington, which not only violates what the American People agreed
upon by the adoption of the Constitution of the United States, the
system is blatantly used by tyrants in government to reward political
friends, punish enemies, and is also used to subtly control and
manipulate the private lives of the American people through unequal
law, the priority of which is not to raise a federal revenue, but
rather, is class legislation, intentionally designed to affect the
economic circumstances of people within arbitrarily created categories,
which a free people, if truly free, would be absent of such government
influence. 

The "Fair Tax" : is one of several proposals being considered on
Capitol Hill to appease the American People in their want for "tax
reform", but when it is analyzed beyond its featured attraction to
abolish federal taxes calculated from income___ a know vehicle used by
tyrants in government to practice part of their evil___, it is found to
cleverly maintain essential elements allowing a continued reign of a
bloated, omnipotent and inquisitorial federal government. 

The primary sponsors of the alleged FT boast that it is "revenue
neutral", which really means it is intentionally designed to raise
current levels of revenue in order to continue to finance existing
levels of government spending, regardless of whether or not that
spending is authorized by the powers delegated to Congress by the
people via the Constitution. To pretend the alleged FT is desirable
because it is "revenue neutral", and will support existing levels of
federal spending, when a major portion of Congress' current
expenditures are not authorized by the people via the Constitution, is
to close one's eyes to truth and substance, engage in a deception of
the issue, and intentionally promote the means necessary to continue
financing existing un-constitutional expenditures of Congress! 

In addition, the alleged FT, although it would do away with the current
IRS and its forms, would resurrect similar tools of oppression in a
morphed body, keeping enslaved half, if not more, of the nations'
entire population, including small businessmen and women , individual
tradesmen and entrepreneurs, and, even ordinary working people engaged
in self employment, forcing the above to "register" with folks in
government in order to pursue a livelihood [ see SEC. 502.
REGISTRATION]. ___ In short, the FT proposal would require these poor
souls to become a modern-day regiment of enlisted tax gathers for
government, increasing the number of tax gathers throughout the United
States to an all time high, and compelling them to maintain burdensome
and inquisitorial records and reports under a penalty of perjury to
satisfy the wants and fancies of tyrants in government___ all the above
to be implemented under the pretext of the "fair tax" proposed reform. 

And, if the above is not enough for a real freedom loving American to
recoil from such a proposal, another telling part of the plan requires
those who would take advantage of what is called a "FAMILY CONSUMPTION
ALLOWANCE", to also "register", on an annual basis, with folks in
government and provide personal information in order to receive the
blessing of subsistence, which is what the allowance is. The stated
reason for the "FAMILY CONSUMPTION ALLOWANCE" is so nobody pays tax on
the necessities of life, but, the real reason to grant such an
allowance is because the proposed method of an across the board tax on
"all goods and services in the United States" has a fundamental flaw
___an immediate 23 percent increase in the cost of the necessities of
life___, and so, it is necessary to hide the most glaring and obvious
inequity of such a hideous broad based tax, which the Founding Fathers
never intended to allow by the taxing powers granted to Congress by the
Constitution. 

The truth is, the proposed tax is not a consumption tax as it is being
erroneously promoted, nor a tax on any specific article of consumption,
nor is the proposal a tax imposed upon a specified list of articles of
consumption… it is a tax on the occasion of doing business, it is a tax
on unspecified business transactions which may involve the sale of
private property or services, and not a tax on articles of consumption
as fraudulently suggested by its promoters. 

The fact is, the founders intended, whenever it was found necessary to
impose internal taxes on consumption by way of an "excise" or "duty",
Congress was required to select each specific article for the
imposition of the excise or duty, and then, to determine the specific
amount of tax on the specifically chosen article of consumption. These
are the historical identifying characteristics of an excise or duty on
consumption as known by the Founding Fathers, and is carried forward in
the Constitution . The Founders never intended to grant authority to
Congress to lay the kind of tax described in the so-called Fair Tax and
it is not within the historically documented definition of the use of
an excise or duty, and therefore, its promoters are engaging in a
subjugation of our Constitution by pretending their hideous proposal is
within the taxing powers of Congress. 

For those who are interested in real tax reform, see and study the
Founding Fathers original tax reform plan at the following web pages.
This is what real Americans [those who support and defend our
Constitution] ought to be promoting. 

http://www.iresist.com/ice/salestax.htm 

http://www.uhuh.com/taxstuff/kurowski.htm 

[Permission is hereby given to reprint this article if credit to its
author and the ACRS appears in such reprint. No copyright is claimed
for quotes within the article which are public domain materials.] 

NOTE: The following will be found at the above two sites and is what I
was referring to. 

Statement of John William Kurowski Founder Of The American
Constitutional Research Service Before the Committee on Ways and Means
United States House of Representatives June 1995 

Mr. Chairman and Members of this Committee: 

The subject of tax reform was extensively debated by the Founders of
our country. I do not know if other participants in these Hearings have
take the time to research the accounts of these historical debates when
formulating the suggestions they will present to this Committee, but,
having researched the Founders' original tax reform package, I am
inclined to believe its fundamental principals are as valid today as
when they were put into practice over two hundred years ago. 

Our nation's first revenue raising Act was "...in a certain sense a
second Declaration of Independence; and by a coincidence which could
not have been more striking or more significant, it was approved by
President Washington on the fourth day of July, 1789." [See, Twenty
Years of Congress, James G. Blaine, 1884, Vol. 1, page 185] James
Madison, in discussing this Act before Congress identified a
fundamental principal concerning the power delegated to Congress to lay
and collect taxes: 

"...a national revenue must be obtained; but the system must be such a
one, that, while it secures the object of revenue it shall not be
oppressive to our constituents." 

The Act went on to imposed taxes, not on Congress' constituents, but on
specific "goods, wares, and merchandise, imported into the United
States", and not one dime was raised under the Act by internal
taxation! Internal taxes were frowned upon by the Founders, especially
when a national revenue could be had by requiring foreigners to pay for
the privilege of doing business on American soil! 

Jefferson, in his Second Annual Message (December 15, 1802) states: "In
the department of finance it is with pleasure I inform you that the
receipts of external duties for the last twelve months have exceeded
those of any former year, and that the ratio of increase has been also
greater than usual. This has enabled us to answer all the regular
exigencies of government, to pay from the treasury in one year upward
of eight millions of dollars, principal and interest, of the public
debt, exclusive of upward of one million paid by the sale of bank
stock, and making in the whole a reduction of nearly five millions and
a half of principal; and to have now in the treasury four millions and
a half of dollars, which are in a course of application to a further
discharge of debt and current demands." [emphasis added] Imagine...all
this in consequence of "external duties"! 

In Jefferson's Second Inaugural Address (March 4, 1805, he points out:
"At home, fellow citizens, you best know whether we have done well or
ill. The suppression of unnecessary offices, of useless establishments
and expenses, enabled us to discontinue our internal taxes. These
covering our land with officers, and opening our doors to their
intrusions, had already begun that process of domiciliary vexation
which, once entered, is scarcely to be restrained from reaching
successively every article of produce and property... 

"The remaining revenue on the consumption of foreign articles, is paid
cheerfully by those who can afford to add foreign luxuries to domestic
comforts, being collected on our seaboards and frontiers only, and
incorporated with the transactions of our mercantile citizens, it may
be the pleasure and pride of an American to ask, what farmer, what
mechanic, what laborer, ever sees a tax-gatherer of the United States?"
[emphasis added] 

Although today's national sales tax proposals appear to be somewhat
fairer than existing taxation, each would do ill to our nation as they
are all based upon internal taxation, which would ultimately increases
the cost of goods manufactured on American soil; burden the American
Citizen in its collection; and, are to be paid by the "farmer,
mechanic, laborer", etc., who will continue to see the intrusion of the
"tax-gatherer of the United States" if such a system is adopted! In
view of the undesirable effects of an internal national sales tax,
perhaps it is wise to further study the Founder's plan and learn how
imposts and duties (external taxation) were successfully used to fill
the national treasury, encourage domestic manufacturing and assist in
building a strong industrial base. 

In addition to imposing a specific amount of tax on specific articles
of consumption imported, the first revenue raising Act also imposed an
across- the-board tax on imports which was higher for imports shipped
in foreign owned foreign built vessels, and discounted the tax for
imports arriving in American owned American built ships: 

"...a discount of ten percent on all duties imposed by this Act shall
be allowed on such goods, wares, and merchandise as shall be imported
in vessels built in the United States, and wholly the property of a
citizen or citizens thereof." 

This patriotic and skillful use of external taxation not only filled
our national treasury, but gave American ship builders a hometown
advantage and predictably resulted in America's merchant marine
becoming the most powerful on the face of the planet. Unfortunately,
today when I visit the docks in New York's Hell's Kitchen area, I am
saddened that I can no longer read the names on the docked ships as
they all seem to now be foreign owned foreign built vessels...an
irrefutable sign of America's decline traceable to the acceptance of
thirty pieces of silver. 

Yes, there was a day when our national treasury was gladly filled by
foreigners paying for the opportunity to do business on American soil.
But this was when members of Congress, and those running for Office,
put American interests first and would have considered the NAFTA, GATT
and the WTO as acts of sedition, and would have tarred and feathered
those participating in the surrender of America's sovereignty which
such Acts have obviously accomplished. 

A national sales tax plan which omits external taxation as a principal
source to fill our national treasury, is in fact a surrender of
national sovereignty to the advantage of foreign and/or international
interests! 

A Second Source To Fill The Treasury. 

Having identified imposts and duties (external taxes) as being the
Founder's intended primary source to fill our national treasury, I will
now turn to their intended internal consumption tax plan. 

An across the board national sales tax would unquestionably increase
the cost of production on American soil, as previously pointed out. To
avoid this, and other unwanted effects of an across the board national
sales tax, common sense dictates we must exclude from the list of
taxable items, tools of production, supplies necessary to conduct
business, services needed to sustain business, and the necessities of
life (food, shelter, clothing, medical expenses) i.e. all those items
which makes labor possible must also be excluded from taxation. 

In simple language, a consumption tax plan ought to be limited to
articles of luxury, and each article must be individually selected by
Congress and the appropriate amount of tax must be determined for each
specific item chosen, just as was done in the first revenue Act of our
country! 

By limiting the tax to articles of luxury, and requiring each article
to be specifically chosen and the appropriate amount of tax determined
by Congress, a self regulating check and balance is imposed upon
Congress! If Congress does its job properly and the nation as a whole
is productive and prosperous, the purchase of articles of luxury will
undoubtedly increase, and with it, the flow of revenue into the common
treasury. But, if Congress' policies become burdensome and its
regulatory requirements upon business, industry and our nation's labor
force inhibit a hearty economy, or any particular article is
excessively taxed, the first sign would be is a decline in the flow of
revenue into the national treasury! 

Thus, the free market place determines the limit of taxation under the
Founder's internal consumption tax plan, and it establishes a self
regulating gauge beyond the reach of Congress' manipulation! 

As Hamilton said, in regard to taxes on consumption, they: "... may be
compared to a fluid, which will in time find its level with the means
of paying them. The amount to be contributed by each citizen will in a
degree be by his own option, and can be regulated by an attention to
his own resources. The rich may be extravagant, the poor can be frugal;
and private oppression may always be avoided by a judicious selection
of objects proper for such impositions ... It is a signal advantage of
taxes on articles of consumption that they contain in their own nature
a security against excess. They prescribe their own limit, which can
not be exceeded without defeating the end proposed, that is, an
extension of the revenue." [No. 21 of the Federalist, emphasis added.] 

Balancing the Budget 

Still one more question remains to be answered: what is to be done if
insufficient revenue is raised from external and internal taxes on
consumption? 

Once again the Founder's plan shines bright above all contemporary
suggestions. Careful research into our Nation's early legislative
history reveals the Framers did in fact provide Congress with an
emergency power available to be used if deficits should arise. And the
wisdom of the Framer's method, unlike the proposed balanced budget
amendment (S.J. RES.1), contains a brilliant mechanism which would
abruptly end Congress' current profligate spending habits! Under the
Framer's plan, whenever the monies arising from Congress' normal taxing
powers (imposts duties and excises) are found insufficient to fund
federal expenditures during a fiscal year, and a deficit is produced by
Congress borrowing to finance expenditures, Congress must then use its
direct taxing power at the beginning of next fiscal year to raise an
amount sufficient to retire this deficit. 

Congress is required to follow the rules of apportionment when imposing
this tax, and bills each state for a share of the deficit. Each State
must contribute a share of the total deficit in proportion to its
allotted number of Representatives as set forth in Article I, Section
2, clause 3, of the United Constitution. The more votes a State
exercises in the House, the larger is its share toward extinguishing a
deficit . . . representation with proportional obligation! 

FOUNDING FATHERS' FAIR SHARE FORMULA 

The states are left free to raise their share of the tax in their own
way, within a time period set by Congress. But if any state shall
neglect to pay its share, then Congress must send forth its officers to
assess and levy that state's apportioned share, together with interest
thereon. 

Legislative History 

This method of extinguishing deficits appears in seven of the
ratification documents which gave life to the United States
Constitution. The first emergency direct tax was imposed in 1798, to
extinguish part of the Revolutionary War debt. It was later used during
the War of 1812, and also to extinguish deficits during the Civil War. 

The Sixteenth Amendment to the United States Constitution did not
repeal or alter Congress' power, or obligation, to impose the emergency
direct tax should a deficit arise. The power of Congress to impose a
direct tax still exists, and direct taxes are still required to be
apportioned among the states, as pointed out by the United States
Supreme Court [see Stanton v. Baltic Mining Co., 240 U.S. 103, 103,
(1916; Eisner v. Macomber, 252 U.S. 189 (1920); and, Bromely v.
McCaughn, 280 U.S. 124 (1929). Also see Congressional Research Service
Report No. 84-168 A 784/275, which was updated September 26, 1984]. 

Big Advantages 

There is no smoke and mirrors with the 'FAIR-SHARE' method of balancing
the budget. The emergency direct tax ought to be statutorily imposed
whenever Congress closes a fiscal year with a deficit. The structural
mechanism which would immediately bring fiscal sanity to Congress is
the requirement of having Congress send a bill to the Governor of each
state, notifying him to remit his state's apportioned share toward
extinguishing the deficit created during the year by Congress; the
governors and state legislators being left with the burden of having to
raise this money, and to send it off to Washington, D.C. Picture, for a
moment, the expression on the faces of the Governor of New York and the
New York State Legislature, if New York should receive a bill for its
apportioned share [31/435] of the 1995 federal deficit. This threat
would create a compelling incentive for the Governor of each state, and
the various state legislatures, to keep a jealous eye on the spending
habits of their Congressional Delegation . . . it would require the
fiscal accountability which the state governments once demanded from
their Senate and House Members! 

In addition, because each state's share of the tax burden is determined
by a fixed rule, similar to that which determines the House membership
size of each state, a barrier is erected preventing the kind of
mischief which Congress now practices, i.e., discriminatory tax
legislation; pork-barrel favoritism; special interest lobbying, etc. 

Bottom Line 

The Framers of the Constitution provided a specific method available to
extinguish anticipated deficits through an emergency direct tax.
Hamilton, in No. 36 of The Federalist Papers, reminds us: 

"Let it be recollected that the proportion of these taxes is not to be
left to the discretion of the national legislature, but is to be
determined by the number of each State, as described in the second
section of first article [United States Constitution]. An actual census
or enumeration of the people must furnish a rule, a circumstance which
effectively shuts the door to partiality or oppression. The abuse of
this power of taxation [direct taxation] seems to have been provided
against with guarded circumspection." (EMPHASIS ADDED) 

The rule of apportionment was written into our constitution to remedy a
major defect associated with "democracies", which Madison points out in
No. 10 of The Federalist Papers: 

"... have ever been spectacles of turbulence and contention; have ever
been found incompatible with personal security or the rights of
property; and have in general been as short in their lives as they have
been violent in their deaths." 

And so, the Founding Fathers formed a Constitutional Republic to avoid
the predictable disastrous consequences of democracy. 

The intended use of the emergency direct taxing power to extinguish
deficits is not only far superior to any of the proposed balanced
budget amendments being offered . . . it is already part of our
Constitution. The method in text form is as follows: 

The Fair Share Balanced Budget Method "A R T I C L E (?)" 

"SECTION 1. Congress ought not raise money by borrowing, but when the
money arising from imposts duties and excise taxes are insufficient to
meet the public exigencies, and Congress has raised money by borrowing
during the course of a fiscal year, Congress shall then lay a direct
tax at the beginning of the next fiscal year for an amount sufficient
to extinguish the preceding fiscal year's deficit, and apply the
revenue so raised to extinguishing said deficit." 

"SECTION 2. When Congress is required to lay a direct tax in accordance
with Section 1 of this Article, Congress shall immediately calculate
each State's apportioned share of the tax based upon its number of
Representatives as allotted by the Constitution, and then notify the
Executive of each State of its apportioned share of the total tax being
collected and a final date by which said tax shall be paid into the
United States Treasury." 

"SECTION 3. Each State shall be free to assume and pay its quota of the
direct tax into the United States Treasury by the final date set by
Congress, but if any State shall refuse or neglect to pay its quota,
then Congress shall send forth its officers to assess and levy such
State's proportion against the real property within the State with
interest thereon at the rate of ((?)) per cent per annum, and against
the individual owners of such property. Provision shall be made for a
15% discount for those States paying their share by ((?)) of the fiscal
year in which the tax is laid, and a 10% discount for States paying by
the final date set by Congress, such discount being to defray the
States' cost of collection." 

Conclusion 

There are participants at this Hearing, and many political pundits
appearing on talk shows across our country, who are far more articulate
than I in identifying the glaring defects and dishonest nature of
income taxation, whether flat or progressive. Likewise, there is also
an abundant supply of those presenting well rehearsed arguments against
an across the board national sales tax, and have displayed their
rhetorical skills quite admirably. But who, I ask, has made a
substantial argument against the Founding Father's original tax reform
package? 

Perhaps our only problem in regard to tax reform is that we, as a
nation, have lost touch with the original intent and wisdom of those
who framed and ratified our Constitution...such negligence culminating
in our current dilemma. 

In closing Mr. Chairman, I would like to take this time to thank you
and your staff for allowing me this opportunity to present my humble
opinion on a subject of such great importance. 

[Permission is hereby given to reprint this article if credit to its
author and the ACRS appears in such reprint. No copyright is claimed
for quotes within the article which are public domain materials.] 

John William Kurowski American Constitutional Research Service Box 4474
Seminole, Fl 33775