Randomize

Bruce Williams thinks it would be a good idea for states to collect all taxes in whatever way they see fit and fund the federal government directly.

That’s exactly how the federal government was funded under the Articles of Confederation. We gave the federal government the right to levy taxes with the Constitution, but direct income taxes didn’t occur at all until the Civil War, and didn’t become the main source of federal funding until the enactment and ratification of the 16th Amendment just over a century ago.

If we forced all Americans (and their employer corporations) to live, work, and purchase everything within a single state, a little experimentation might actually work, and it would give power back to state governments, which are more representative than the 600 corrupt loons who run our system now from Washington, D.C.

But the problem is that we live in a federal economy, not to mention a global one. People can live in one place, own property in another, form corporations in another, be employed in yet others, and purchase goods and services just about anywhere.

If each state comes up with its own set of tax laws, each state would also become a “haven” of some sort or another, and commerce would be unduly influenced by tax laws rather than by market efficiency. Look at how states like Nevada and Delaware currently attract corporations based on their tax laws, and that’s just state taxes those corporations are avoiding, not federal.

Here on the border between Texas and Louisiana, we see the same thing on a smaller scale: groceries are exempt from sales tax here in Texas, and property taxes are lower in Louisiana, but Louisiana has a state income tax. People take advantage of this in complicated ways, and that is between two states with tiny cities on the borders (Orange and Vinton), imagine the odd market effects somewhere like Kansas City (two states, one metropolis).

The Fair Tax, in contrast, does require the states to do the collecting of taxes and eliminates the Draconian direct-tax system we have to deal with today, but it makes the system consistent across the entire country, preventing the creation of a patchwork of state-wide loopholes and confusing interstate commerce issues.