Does a fair tax system require eliminating the 16th Amendment?

There is much discussion about changing our tax system and in that discussion one of the frequent topics is a fair tax. A fair tax system would drastically change the tax structure as we now know it today. One of the stumbling blocks in the fair tax legislation now being considered in Congress is the argument that it cannot go into effect unless the sixteenth amendment to the Constitution is abolished. This may not really be the case. The language of the 16^th amendment is provided below:

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”

It is clearly identified in this amendment that Congress has the authority given it by its ratification to lay and collect taxes. One thing missing is the fact it does not identify what level of tax will be levied. I believe that this opens the door for fair tax legislation to be enacted without abolishing the 16^th amendment, which would require a vote of the state legislatures. Congress has the power to alter the amount of taxes to be paid in proportion to the amount of income an individual earns. This is a fact and has been evident through tax cuts and tax rates being adjusted by legislation enacted by Congress and signed by the President. It is therefore within the power of Congress to reduce the rates in conjunction with the creation of a fair tax structure such as the ones now being considered.

Some of the provisions of a possible fair tax system are the elimination of many of the taxes now in place including income tax. Taxes such as payroll taxes, estate taxes and gift taxes are also items being considered in the fair tax legislation being proposed. Some may even say that without income taxes the government would lack the funds to address their responsibilities. On the contrary, there are examples where several states have chosen to eliminate their income tax structure and in so doing they created an environment for businesses to succeed in their respective states. Businesses need to have an environment in which their costs are such that they are not draining their resources to create jobs and expand their operations. Reducing the cost of doing business needs to be the priority in the present economic environment.

To get into more specifics, some combination of legislation not yet being considered to create a fair tax type of structure may be the answer. Several proposals basically have the same objective, but are different in how they achieve it. The Fair Tax Act of 2011 and the Comprehensive and Fair Tax Act (Senate Bill 7) are just two of the examples where Congress is attempting to address the complicated tax structure now in place.

One point which needs to be made clear is that there is always going to be some type of tax structure in place. It will never go away because the government needs income to function and provide the mechanism and resources to address their responsibilities as defined under the Constitution. This we can all understand. Developing a new tax structure or revamping the present one must take into account the responsibilities of the federal government and what funds are needed to address those responsibilities. These two issues must be addressed in conjunction with each other. Part of this analysis should involve determining what are the federal responsibilities identified in the Constitution; what responsibilities are best accomplished by the federal government, and what responsibilities are best addressed by the states.

In closing whether or not the 16^th amendment to the Constitution needs to be abolished to implement a fair tax system will be defined in any final legislation that is passed. The benefits of a fair tax system cannot be denied in that much of the burden on individuals and businesses will be removed. Another benefit is that under a fair tax system we will know what taxes we are paying. The price we now pay for certain products and services include taxes that are sometimes not identified in the register receipt. In these instances we do not know how much the product or service costs in relation to the taxes incorporated into the price.