Ringo Starr and George Harrison’s unrelenting hatred of taxation lead Harrison, the most talented Beatle of all, to write a cute little bobbie sock dance tune that no one properly understood.

Image result for george harrison in photos

Image result for george harrison in photos

Ringo (Washington Concert) 2-11-64


















AUTUMN, 1996







2:00 PM






 Nettie Baker claims George Harrison wanted to buy her at a party when she was 15

Richard Starkey (Apple Beatles - an apple for Ringo)

1)  The paper begins with the closing lines of the Beatles 1966 classic pop song “The Tax Man.”  While at the time considered just another cute Beatles tune, the lyrics contained barely disguised rage at a British earned income tax system which at the time exacted a 95% rate upon earned incomes in excess of 250,000 British pounds.  The Beatles scored a number one hit with this very danceable tune, but they all quickly decamped to other countries and have, to this day, remained tax refugees.

2)  The paper then turns to the more scholarly, yet surprisingly no less amusing, observations of the learned Supreme Court Justice and philosopher Mr. Oliver Wendell Holmes who on one giddy occasion said “I like to pay taxes,” and in a more lucid moment said that “Taxes are what we pay for civilized society.”  This last Holmes observation adorns the external upper facade, in very large letters, of the headquarters of the Internal Revenue Service building on Constitution Avenue in this city.

3)  On a far more somber side, the paper makes comparative mention of the dire admonition of Supreme Court Chief Justice John Marshall that “The power to tax involves the power to destroy.”  The paper also draws considerable inspiration from the book The Golden Egg, The Personal Income Tax, Where It Came From, How It Grew,” by Gerald Carson.


 4)  The paper then moves to an examination of the conflict between these radically differing views of income taxation and, more to the point, to a description of the various purposed modifications, substitutions and dismantlings of the instant system of income taxation now being hotly debated on all levels of the political landscape.

5)  The paper demonstrates that there is an obvious, and compelling, need for a substantial

     revamping of the current system of personal income taxation.

6)  The paper makes appropriate mention of the need to tax, often overlooked in the near political stampede to undo the present system and admonishes the reader that while tax in any form may never be a payment that anyone truly “likes,” there is a general comity of opinion regarding the need for some tax system.

7)  The paper’s argument line employs a rather standard presentation of the instant condition, a critique of the more widely espoused remedies to the failures of that system and moves finally to an endorsement of the most plausible, simple, equitable and readily understandable of the proposed remedies.

8)  The paper then asks  “which way out of these woods?”

9)  The paper resolves this question by arguing for the complete elimination of the personal income tax as it is now constituted and for its replacement with a National Sales Tax (NST).

10)  The paper concedes that there are many particulars of the NST to be resolved but concludes that the NST makes the most sense of the proposed changes being considered.


Let’s start this talk with a little tune.

“The Tax Man,” from the album “Revolver”

The Beatles, 1966

“Let me tell you how it will be

There’s one for you, nin’teen for me

Cause I’m the tax man

Yeah, I’m the tax man

Should five percent appear too small

Be thankful I don’t take it all

Cause I’m the tax man

Yeah, I’m the tax man

If you drive a car, I’ll tax the street

If you try to sit, I’ll tax your seat

If you get too cold, I’ll tax the heat

If you take a walk, I’ll tax your feet

Well, I’m the tax man

Yeah, I’m the tax man

Don’t ask me what I want it for

If you don’t want to pay some more

Cause I’m the tax man

Yeah, I’m the tax man

Now my advise to those who die

Declare the pennies on your eyes

Cause I’m the tax man

Yeah, I’m the tax man

And you’re working for no one but me.”

Image result for george harrison in photos


The last line of this Beatles hit has a pertinence to our topic today which cannot be over emphasized.  Because “And you’re working for no one but me,” lamentably sums up the attitude of many in the federal tax bureaucracy of today toward large segments of the American population who deal with that system on all too regular a basis. 


This paper concerns the current war, and it is just that, over personal income tax policy in the United States.  The subject of tax policy has the somewhat unique capacity to put audiences to sleep and put their blood to boiling at one and the same time.  Before we tackle that subject, I want to visit England of 33 years ago.  Then, and there, the Beatles were all the rage.  However, the Beatles were also in a bit of a rage themselves.  Over taxes.  In 1966, The Beatles had a simple, cute, very danceable hit song, “The Tax Man.”  However, the Beatles took little amusement from the tune themselves.


At the time, the earned income rate for earnings in excess of 250,000 English pounds was 95%.  Ninety-five percent!  Hence, the sarcasm which permeates the song, “The Tax Man.”  “Let me tell you how it will be, there’s one for you, nin’teen for me.”  In short, a rate of 95%.  Clearly, an intolerable situation.  Rather than have their feet taxed any further, the Beatles beat feet—initially to the south of France.


I regret to have to tell you that those comparatively recent times were an age of innocence in Western societies and most particularly in the United States when it came to national income taxes on personal earnings.


The American government has long been fond of saying that our tax system is voluntary.  An honor system.  Recently, the government has toned down that tune.  And with good reason.  But its own estimates, the United States Internal Revenue Service (The IRS or The Service) is short changed to the tune of $150 billions annually by over 10 million taxpayers, both individuals and corporate entities, who either skirt the law via some loophole in the system or who simply do not pay.[1]


That is a great deal of money.  Moreover, I don’t suppose I have to tell anyone here who picks up the tab for this revenue shortfall.  The law abiding taxpayer picks up the tab.  And the tab becomes more onerous with each subsequent year.  And with the growing shortfall grows also resentment and suspicion.  Suspicion that while I am paying the other fellow is not.  Suspicion that I am carrying both my load and the other fellow’s as well.  Suspicion that the system is made overly complex deliberately to benefit those who can afford high priced counsel to abet them in avoidance of their fair share.  Suspicions that are all well founded.[2]


How did the climate in the United States become so nasty regarding taxes?  How can one stand across the street on Constitution Avenue and look at the impressive headquarters of the IRS and read the inscription at the top and not help but feel that the building and the inscription are from another time?  Another era?  A system now having long outlived its usefulness?



Read the inscription set in that stone edifice.  It is from Justice Oliver Wendell Holmes.  It reads “Taxes are what we pay for civilized society.”  Incidentally, Justice Holmes’ complete quote reads “I like to pay taxes.  Taxes are what we pay for civilized society.”[3]  The designers of the IRS building were wise to leave off the “I like to pay taxes” segment of the Justice’s quote.  Every indication in the writings of Justice Holmes suggests that he fully believed those words.  Why do they ring so hollow to us today?


Why would it be hard to find a citizen today who would consider that he is getting his money’s worth of civilization in exchange for the taxes he pays on his income?  Where did the system begin to come apart?  When did the average citizen begin to feel that there was little or no relationship between the money taken from him in taxes by the government and the civilization we today call America?  And what can be done to set right this suspicion, this hostility, between Americans and the agents of their own government whose task it is to collect taxes?  An answer is needed and needed pressingly.


In stark contretemps to the attitude of Mr. Justice Holmes is the dire warning of the great Supreme Court Chief Justice John Marshall, who said of taxation that “ the power to tax involves ultimately the power to destroy.”[4]  How do we reconcile these utterly opposite views of taxation?  One learned man looks at tax and sees civilization itself, one equally learned man looks at taxation and sees the very destruction of civilization itself.



Another man,  Mr. Gerald Carson has written a great book, The Golden Egg, The Personal Income Tax, Where It Came From, How It Grew, which provides a solid overview of how we managed to get ourselves into the present jam over taxes and the IRS and just what to do about them.  The Golden Egg takes its title and its inspiration from a fable of Aesop which in turn gives all of us this caution:


“A certain man had a wonderful goose that always laid golden eggs.  But thinking to seize the whole treasure at once, he killed the goose.  So, trying to become rich all at once, he lost his steady supply of gold.  The Moral:  Don’t be greedy or you will end up with nothing.”

–Aesop’s Fables[5]


Mr. Carson tells us that the Internal Revenue Law went into effect in October, 1913 with first payments due on March 1, 1914.  The rate was a joke by the standards of today: 1 percent on incomes above $3,000 ($4,000 for married couples), less very substantial deductions and abatements, sloping gently upward to a high of 7 percent on incomes above $500,000.  The entire system, from the low end to the high, affected the pockets of less than 1 percent of the population and, joy to those on the left, if joy is the right word given the mess that has resulted, the system was deliberately and consciously discriminatory.  It was designed less to raise money for the treasury and more to punish the rich.[6]  While I suppose that there are still those who would like to see the tax system used to punish the rich, that is hardly what it now does.  It punishes, or at a minimum annoys, virtually everyone.  Rich and poor alike.  I guess only in that sense, and in that sense alone, can the present day tax system which grew out of The Golden Egg, be said to be fair and equitable.  It robs us all.

Image result for ringo starr vintage photos 

To address this nightmare, there are quite a number of proposals being floated around to correct the massive and manifest inequities in our national income tax system.  Tax policy is complex to say the least.  When an individual politician sets out to market a comprehensive reform package, he has a rough row to hoe.  That is because politicians are today forced to speak in clipped and elliptical slogans.  Slogans do not suffice as appropriate tax policy reform, but politicians drive our system of national debate and they operate, as do we all, under certain constraints upon time.


That said, I was initially very taken this last political season with the ideas for a flat tax as put forth by Malcolm Steven “Steve” Forbes, Junior, heir to his family’s magazine empire centered on Forbes magazine, “The Capitalist Tool.”  Mr. Forbes and his ideas on tax policy struck me initially as a breath of much needed fresh air amid the stale, overused, double-talk that for so long has driven both the Democratic and Republican parties.  Mr. Forbes proposed a single, across the board income tax rate of 17 percent.  For rich and poor alike.  No dodges, no deductions, no loopholes.[7]


It did not take long for the entrenched interests who for various reasons like the present system to attack and vilify Mr. Forbes and his ideas.  Mr. Forbes was called a rich dilettante, a dabbler in politics who was primarily interested in preserving his family fortune at the expense of the national interest.  Nevertheless, his message struck a responsive chord with voters and with myself.  For a time.


I suppose that the primary attraction for my part to Mr. Forbes and his flat tax was in the simplicity of the Forbes proposal.  A flat tax on income of a stated percentage for both rich and poor alike.  No dodges, no deductions.  A straight up, uncomplicated formula in which everyone paid a set percentage of income as tax to run the vital systems of the American government.  On the surface, it was a policy difficult to discount.  On the surface.


As the campaign for the Republican nomination for President heated up, certain flaws and fault lines appeared in Mr. Forbes proposed flat tax which became of serious concern to voters and to initial supporters such as myself.  My own research indicated that there was nothing particularly new or even that innovative in Mr. Forbes’ proposal.[8]  The concept of a flat tax has been around for quite awhile, in various guises, and has been proposed and endorsed by politicians and academics from the hard left to the hard right.  What gave Mr. Forbes a bit of limelight was the vast amount of personal money he was willing to put into his crusade and the attendant media interest in his proposal.


What made the Forbes phenomenon click with the voters was that prior to the candidacy of Mr. Forbes, the flat tax concept had primarily been an inside politics, think-tank and academic point of discussion.


Ordinary citizens, the taxpayers who support the very system so few understand, were, in the main, not familiar with the particulars of the flat tax proposal until the advent of Mr. Forbes’ campaign.


His appeared to many to be fresh ideas in a political wasteland.  His appeared to many to represent true reform of a system which almost no prominent American will publicly say that he likes, but which no prominent American seems particularly interested in changing to any appreciable degree.


Forbes caught fire for a time.  And, for a time, the flat tax debate was on the front burner of every political talk show and seminar in all the corners of the land.  Then, Mr. Forbes fizzled out.  His campaign stalled.  His ideas seemed to many less fresh than simplistic and self-serving.  He got his message out but he failed to ignite the sort of political maelstrom which he had anticipated his ideas were ignite and which, given how universally despised the present system is, his ideas ought to have sparked.


Why did Steve Forbes fail?  If the tax system is so hated, why did the Republicans instead nominate a man who has safe-guarded that system his entire political life?  How were the Democrats successful in re-electing a man who evidences no interest whatsoever in tax reform of any kind?  Are people truly as disaffected with the present system as everyone assumes they are?  If so, why do the citizens continue to nominate, elect and re-elect men who are at best lukewarm apologists for the present system and at worst, full-blown supporters of it?


The answer in part has nothing to do with economics and speaks more directly to the failure of the major party political system and the entrenched areas of self-interest that the major parties represent.  Put another way, neither the Republican nor the Democratic nominee really had the latitude to challenge the existing system in any serious manner.  These men are too beholden to interest groups who want all or part of the present system kept in place.  Just as groups from the hard left to the hard right denounce the present system, so such groups stand foursquare in opposition to reform of that system.  Why?  Because, in truth, over time, the income tax system has come to embody, in part, the ideologies and beliefs of both the left and the right.  In part.


So, we are left with the peculiar condition of having a system of taxation which everyone purports to hate, while many at the self same time offhandedly support it.  In part.  Hence, the touchy assignment visited on any establishment politician who attempts to truly step outside the box and offer up real reform to the system.  And so, the average citizen, who understands not very much about either politics or taxation, but who heartily dislikes both the tax man and the politician with equal fervor, never gets anywhere in his quest to get reform.


Let’s take a quick look at some of the commentary on the flat tax proposal floated by Mr. Forbes which emanated from various establishment left and right thought centers.  While one might think that a proposed tax reduction initiative would be the primary province of the right tilting policy centers, the single flat tax also has historically enjoyed support within the left tilting power centers.  Primarily however, the flat tax has been a conservative crusade.  It is not entirely clear to me why this is.  On the surface, the flat tax is about equity and fairness, which are liberal battle cries.


And liberals and leftists were given ample opportunity to climb aboard the flat tax bandwagon.  Some have.  Most notably House Democratic Leader Richard Gephardt (D-MO) who has said of the present tax code:


“It has become a test of legal brainpower, an accountant’s decathlon, a treasure hunt for hidden deductions and buried tax breaks.  Our tax code has become a dense fog of incentives, inducements, and penalties that distort the most basic economic decisions, constrain the free market, and make it hard for Americans to run their own lives.  The Internal Revenue Service has become a symbol of what is wrong with American government.”[9]


On the other side of the aisle, then-Senate Majority Leader Bob Dole (R-KS) has had this to say about our income tax system:


“During most of the past century, tax policy has been a primary tool with which government has wielded power, fed the bureaucracy, and redistributed wealth.  Any fair system would not penalize, but instead reward people for working harder, investing wisely, and saving more.  It would eliminate the lobbyist-drafted loopholes that benefit the few, but force the rest of us to pay.”[10]


How can powerful men with such radically different agendas generally, come to such nearly identical assessments of our income tax system?  And, if these men are to be taken at their words and believed, how come nothing ever gets done about the problem?  After all, at the time, these two men wielded immense power over the generation and passage of bills of all sorts, tax bills most particularly.  If they agree on this issue, and they agree on virtually nothing else, how come nothing ever gets done about tax policy?


Are our politicians simply inept, or are they really not interested in fundamental tax reform?  With politicians, questions such as “what is this fellows’ real motivation,” are perhaps best left alone.  But in this case, the evidence of nationwide disgust both in and out of politics suggests to me that politicians of all stripes would be ginning out tax reform proposals right and left if for no other reason than simple self-preservation, which is generally a swell motivator of politicians.


So, what gives here?  In fact, the politicians have been ginning out tax reform proposals right and left as though their political lives might depend on it, and they might well.  The public however can generally only point to the flat tax reform program around which Mr. Forbes built his campaign as evidence of a proposal to drastically overhaul our system of collecting personal income taxes.


This is unfortunate because there are a number of alternative tax reform proposals which are well deserving of public scrutiny.  The public’s messenger, the media, for some reason has generally ignored all of these programs, save that of Mr. Forbes, and to some degree Senator Dole’s general election call for a tax cut. 


However the issue is not really about tax cuts per se, but rather about comprehensive and lasting reform of the entire tax system from the roots up.  I want to briefly touch on some of the more interesting tax reform proposals which have been put forward recently and then proceed to the business which we all, leaders and citizens alike, must address, and soon. 


That business is selecting which program, or more likely which combination of programs, best serves the national interest.  We ought to collectively resolve at the outset of this exercise to attempt, to the extent possible, to keep political ideology out of our decision making.


This resolution to make our decision in a manner uncolored by ideology is of crucial importance to my mind because a study of the history of tax policy since the inception of the income tax in 1913 suggests that political ideology has so driven the debate as to make fundamental reform unachievable.[11]


That resolution made, lets take a quick look at some of the more lucid proposed overhauls of the tax system and make our selection on the basis of our discernment of which program best and most simply and efficiently serves the common good.


Upon parallel tracks with the flat tax of Mr. Forbes concurrently run these other tax reform proposals.  Let’s have a look at their basic tenets:



1)     The Kotlikoff Consumption Tax Proposal.   The eminent professor of economics at Boston University, Dr. Laurence J. Kotlikoff advocates a national consumption tax.  I introduce Dr. Kotlikoff here first because he does not preach for the adoption of a particular form of consumption tax.  In fact, Dr. Kotlikoff considers the retail sales tax proposal, the flat tax proposals of various kinds, a personal consumption tax concept or some variant on the European Value Added Tax (The VAT) to be all forms of a consumption tax.  Dr. Kotlikoff argues that consumption taxation in any of the forms mentioned, or derivatives or combinations, taken from various plans would all be preferable to the present system.  According to Dr. Kotlikoff, the main points in favor of some form of consumption tax to replace the present income tax are: such a tax would raise savings rates appreciably; increase investment in plant and equipment; increase employment, industrial output and real wages and, such a tax would be far more progressive in its effects than generally recognized.  Dr. Kotlikoff concedes that all of the major proposed types of consumption tax have both advantages and disadvantages which would need ironing out and careful policing as they progressively replace the current tax system, but he writes that it would be nothing short of “tragic” for the present system to not be replaced by some form of consumption tax simply because of infighting among adherents of a particular type of consumption tax.  The key, Dr. Kotlikoff argues, is for Americans to embrace some sort of tax upon consumption as an expedient remedy for the failed system of personal income tax we now have.  And putting the present system to sleep is an imperative according to Dr. Kotlikoff.[12]


A brief note here about sources.  The plans that follow are all proposals floated by politicians.  As such, they are highly charged and frequently partisan in their intent, if not their word.  It is important then to be careful to avoid source materials which are biased, or which have a clear political ax to grind.  In Washington, it is very difficult to find a source which is not biased, but I have chosen a report by the Congressional Research Service an arm of The Library of Congress[13] as the document from which to draw the description of the political plans which follow.  The CRS is not completely objective, but it comes as close as any source material I can find.


2)     The Armey Proposal.    Representative Richard Armey (R-TX) has been in the forefront of the tax reform battles on the Hill for over a decade.  In fact, in can be plausibly argued that the Armey proposal forms  the predicate basis for all derivative flat tax proposals which  have since been enunciated.  Now House majority leader, Armey advocates a consumption tax to replace the existing individual and corporate taxes and all estate and gift taxes.  The proposal has two fundamental component parts: a wage tax and a cash-flow tax upon business entities.  Armey’s proposal is basically a variation on the European Value Added Tax (The VAT) with wages and pensions taken out of the tax base but taxed at the individual level.  Under the standard VAT tax employed in many European nations, a business would not subtract its wage and pension contributions when it calculates its tax base.  The Armey plan would permit such subtractions.[14]


3)     The Danforth-Boren Proposal.  While its lead advocate, Senator John Danforth (R-MO) some time ago left the Senate, this proposal still retains some allure on the Hill.  It differs from the Armey plan primarily in that it would retain the current individual income tax, with some modifications while replacing the corporate income tax with a business activity tax, which would function much like the Armey subtraction type VAT tax.[15]


4)     The Crane Plan.  Representative Philip Crane (R-IN) would do away with all individual, corporate estate and gift taxes and replace then with a straight tax upon wages.[16]


5)     The Forbes Plan.  As earlier mentioned, presidential candidate Steve Forbes proposed a 17 percent adjustable flat tax that would replace the individual, corporate, estate and gift taxes with wage tax on individuals and a cash-flow tax on business.[17]


6)     The Gephardt Plan.  Richard Gephardt (D-MO)  has long espoused major revisions to the current income tax system in order to make the system flatter and simpler to understand.  He does not intend to do away altogether with any major component of the present system, he proposes primarily targeted modifications to that system.[18]


7)     The Gibbons Plan.  Representative Sam Gibbons (D-FL), proposes a plan which would levy a single-rate subtraction method VAT type tax as a replacement for the current individual and corporate income taxes and the employee portion of the FICA, or Social Security, tax system.[19]


8)     The Gramm Plan.  Senator Phil Gramm (R-TX), another Republican presidential primary aspirant this past season, has long advocated a repeal of the current individual and estate and gift tax system with a flat tax that would be levied at the individual level.  Gramm also advocates a transition to a flat corporate tax.[20]


9)     The Nunn-Domenici Plan.  These two Senators  proposed a reform which would replace the current individual and corporate income tax with a two-tiered consumption-based tax.  The corporate tax would also be replaced with a cash flow business tax, which like a number of the other plans, would function much like a subtraction type VAT tax.  The individual income tax would be replaced by a tax upon consumption set at the individual level.[21]


10)   The Souder Plan.  Representative Souder would replace the individual and corporate tax with a wage tax on individual incomes and on the taxable income of businesses.[22]


11)   The Specter Plan.   Senator Arlen Specter of Pennsylvania, another entrant in the early field of Republican presidential aspirants this past season, would replace individual and corporate income taxes with a tax on individual wages and on the taxable income of business.[23]


12)   The Lugar Plan.  Senator Richard G. Lugar (R-IN)  would replace the individual income tax, the corporate income tax and the estate tax with a national sales tax, levied at the point of sale for goods and services.[24]


An even dozen plans.  And there are others as well.  But many are so derivative that to mention more would serve no real purpose here.  Many listed here as you can see have much in common.  Most propose many of the same reforms to the present tax system.  So it is not accurate to say that the politicians, on either side of the aisle, have been ignoring the manifest problems inherent in the present system.  There seems to be a rather broad consensus to make some rather fundamental changes.  All of the political solutions also seem, in some measure, to mirror the fundamental theory of consumption taxation as set out by Dr. Kotlikoff of Boston University.[25]  All the politicians seem to be in basic agreement with the basics of Dr. Kotlikoff’s argument line.  That said, political change is the duty of politicians not academics, for good or for ill.


Moreover, we are called upon in papers such as these to make a decision.  A paper is not really simply a report.  It requires, appropriately, that the writer draw some conclusions from the information presented.  So, to the obvious question.  If the tax system in America is so flawed, which way out of the woods?  Whose program makes the most sense?


I opt for Senator Richard Lugar’s National Sales Tax (NST)[26] the most reasoned, well constructed and beneficial of the plans described here.  As with our political leaders, students presenting papers must choose, and I choose the Lugar plan.


Senator Lugar ran for president on the Republican side this past season and I personally think that it is lamentable that he received so little notice for his ideas respecting tax reform.  The media tends to search for the sensational and to chase political gadflies.  Senator Lugar is certainly no gadfly, but his proposed tax reform is sensational and should have been given a reasoned hearing in the media.  That it was not given such a hearing resulted in large measure in the anemic, disenchanting and dispirited presidential race just witnessed, in which national disgust with our leadership was the only real winner.


Senator Lugar favors abolishing the federal income tax and all of the Internal Revenue Service apparatus which has grown up to collect and enforce the income tax.  Senator Lugar proposes to completely eliminate the federal individual and corporate tax, capital gains tax, gift taxes and inheritance taxes.  And with these taxes, so also all the loopholes designed to benefit special interests.


Here are some specifics of Senator Lugar’s Plan:[27]


*       The plan is predicated upon the belief that in order to spur economic growth, America needs to balance the federal budget and abolish the federal income tax.


*       A National Sales Tax (NST) on goods and services would replace the federal personal and corporate income taxes, as well as the capital gains tax and all estate taxes.


*       Economists estimate that replacing the revenue generated by our current tax system would require a National Sales Tax Rate of about 17 percent.


*       Prices would decrease under the plan because companies and individuals would not have to factor the cost of the income tax into their retail product costs.


*       The NST rate will decrease as increased savings and investment fuels more economic growth.  The NST rate calculation would fluctuate in accordance with economic conditions.


*       Social Security taxes and benefits would not be affected by the NST.


*       The IRS would be eliminated.  A vastly smaller office or agency would be required to administer the NST and the FICA, or Social Security tax.  For most Americans, tax record keeping, audits and the filing of forms would be quaint custom of the past.


*       Legislation to implement the NST would have to reflect difficult choices on a number of issues.  The objective of the NST is to have as few exemptions as possible.  However, in the debate proceeding enactment of the NST, various allowances for the exemption of medicines and food as well as for poor families, would of course be reflected in the final enabling legislation.


*       The NST is fundamentally different from the various flat tax proposals because it is not a tax on income.  With all flat tax proposals, the IRS remains intact.



*       The NST is fundamentally different from the various proposed versions of an American value added tax (VAT) in that VAT taxes every transaction in the economy.  The NST applies only to retail sales and service transactions.


*       The purchase of a home would not be taxed, nor would the sale of investment securities.


*       The NST would eliminate virtually the entire IRS collection and enforcement apparatus.  Currently, businesses and individuals devote in excess of 5 billion man-hours a year simply attempting to comply with the tax code.  This is an absurd waste of time.  Moreover, the IRS, while intrusive, is inept at its own business.  The IRS itself estimates that it fails to collect over $150 billions a year due the agency.


*       The NST would end intrusive IRS enforcement of the tax code, which harms the basic American tenets respecting personal privacy.  As presently constituted, the IRS system is so inequitable that it encourages, some would say forces, Americans to become criminals and evaders.  The NST would eliminate the ambiguity inherent in the present code, which also forces many Americans to live in fear and anxiety over the possibility of unwitting mistakes that could lead to financial penalties or criminal charges.


*       Under the NST plan, Americans would have a great deal more money in their pockets every payday.




*       The American people, not the government, would decide how much they pay in taxes.  You, personally, would calculate the additional sales tax into your decision making respecting if you will buy or not buy.  The government would not have a role in your decisions.  You decide if you want to spend or save.


*       The NST  would provide a powerful incentive for Americans to save.  The United States has one of the lowest savings rates of any industrialized nation.  Raw estimates suggest that the American savings rate would leap from a laggardly 2% to about 7.6% in the first year after enactment of the NST.  Americans do not save because they lack proper incentive.  The present economy encourages buying not savings.  Further, capital gains on savings and investments are taxed at very high levels presently.  Under the NST, these investments and the gains that grow from them, would not be taxed at all.


*       The American savings rate is a key factor in achieving strong economic growth, lower interest rates, improvement in real wages and the expansion of revenue necessary to balance the budget.  Investment fuels all of these key economic factors.  Investment ought to be encouraged and rewarded, not capriciously taxed.


*       Presently, America’s low savings rate has forced the Federal Reserve to forcibly restrict economic growth for fear increased economic growth will fuel inflation.  Under the NST,  fear of growth will not be a concern.  Growth will be a good once again, not an evil.



*       The NST is simple.  There are no complicated forms or special interest loopholes.


*       The NST will discourage Congress from constantly changing the tax code.  In the past 41 years, Congress has changed the code 31 times.  Few would argue that these changes have resulted in a better system.


*       Unlike an income tax or a VAT type tax, a national sales tax is not hidden.  The American people will know precisely what they are being assessed.


*       With respect to enforcement, 45 states already have state sales taxes in place.  These states have the experience and the mechanisms in place to administer the NST.  The federal government would work collaboratively with the states to assure that administering the NST is done without imposing any additional costs on the states.


*       The NST will provide a great boost in exports because American producers, freed from the corporate income tax, will produce more cost competitive products.  Foreign export sales would not be taxed, while foreign imports will be taxed.


*       Even criminal elements, who today altogether avoid federal income taxes, will be subject to the “at the pump” national sales tax when they buy products.[28]


Enactment of a national retail sales tax of the sort advocated by Senator Richard Lugar would mean that for every American the money they earn is theirs.  It is not on loan to them from the government.  No longer will the Beatles be quite so on the mark in saying of our American Tax Man “And you are working for no one but me.” Your money will be yours as it ought to be in a free society, to do with as you will.


The Senator’s program recognizes that there is no tamper proof system of tax collection.

Lugar’s system however is designed to replace one which is, by any objective calibration, too intrusive, too complex,  too much of a burden on competitive export markets and which places punitive taxes upon savings, investments and individual hope for the future.  His program puts decision making respecting purchases and taxes back in the hands of those who earn the money in America in the first instance, the citizens and the workers.


In testimony before the House Ways and Means Committee Hearings on Tax Reform on 8th of June 1995, Senator Lugar set down these fairly simple predicate conditions for an effective new system for raising the funds needed to run the vital systems of government.  At that hearing, Senator Lugar advocated “pulling the current tax system out by the roots.”  He remarked that the current tax system is, and has been, choking growth in our economy for decades.[29]


From 1950 through 1970, hourly compensation, including wages and benefits, increased an average of 3 percent per year.  Since 1973, the average wage increase has been less than one-half of one percent.  During the past two decades, economic growth has been cut in half, averaging only 2.4 percent annually.  And as if that were not depressing enough news, limiting growth to 2.5 percent is the stated economic policy of the Federal Reserve Board.  Put short, our own government actively seeks low growth rates.  This must change.



The root causes of the economic doldrums in America today emanate from two basic sources: the huge federal deficit that robs us of capital we need to grow and a federal income tax system that not only discourages, but confiscates, our savings and investment.  Our net national savings rate has reached alarmingly low levels.  After averaging close to 9 percent in the 1960’s, we recently have seen our nation’s savings rate hit 1.1 percent in 1992.  As a nation, we do not save enough.  Savings are vital because they are the source of all investment and productivity gains.  And recent polling indicates that fully 72 percent of our citizens realize that they, as individuals, are not saving any appreciable amount for their future.  Our net national savings rate in the 1990’s has been 1.8 percent of Gross Domestic product (GDP) compared with a rate of 8.1 percent in the 1960’s, 7.2 percent in the 1970’s and 3.7 percent in the 1980’s.[30]  The Japanese save at a rate nine times higher than we do and the Germans save five times as much as do Americans.[31]


Our tax policy is directly implicated in our declining savings rate.  That alone is reason enough to do away with it.   But our tax policy causes so many other problems, most notably intangible ones such as suspicion and mistrust, making citizens feel like criminals and even causing them to become criminal evaders to protect their assets, that to be rid of the present tax system is a social as well as an economic imperative.


In his testimony before the Committee on Ways and Means, Senator Lugar suggested that in deciding what to replace our present tax policy with, we ought to  look to six fundamental criteria and ask:


*       Is the proposed new system simple?

*       Is the proposed new system the least intrusive?

*       Is the proceed new system fair?

*       Is the proposed new system flexible and adjustable?[32]

*       Is the proposed new system savings and investment friendly?

*       Is the proposed new system transparent or self-evident?


Senator Lugar testified that he has studied all of the proposed tax reform policies with these criteria in mind.  He concludes that while virtually any system is preferable to the chaos that exists today, only the national sales tax, NST, goes to the heart of the problem.



And I concur with Senator Lugar.  The other proposed reform measures, most notably the flat tax derivative measures which initially had caught my eye, are all flawed because they are half-way measures.  They do not contemplate doing away with the IRS.  As such, they do not recognize that the real problem is within the system itself, not merely on the margins.  So, nibbling on the margins is not a sufficient response.


When Senator Lugar speaks of ripping the present system “out by its roots,” these are not the words of a zealot.  These are the words of a man who understands that roots left in the ground have a disconcerting habit of growing back.  And the IRS needs to be uprooted so completely that it cannot grow back.



Assuredly, the NST needs polishing up and the fire of debate to toughen it, but it calls for doing away with the IRS and, in so doing, is far and away the best plan.


Even if you purport to “like taxes, with them I buy civilization,” as did our learned friend Mr. Justice Holmes, remember that there is more than one way to get the money needed for that civilization.  Remember also the more somber reflection of Mr. Justice Marshall that “the power to tax involves the power to destroy.”  How do we reconcile these two pronouncements?


In The Golden Egg, The Personal Income Tax, Where It Came From, How It Grew, Gerald Carson makes a great case, perhaps inadvertently, for Senator Lugar’s position.  His first chapter, There Ariseth a Little Cloud, explores how quickly and how monstrously a system such a the IRS, once set in place, can be used to abuse and coerce and how the little cloud can, over time, become an economic monsoon which can crush us all.  Carson cautions us to remember the fable of Aesop respecting the man who killed the golden goose to get all the gold at once:  Don’t be greedy or you will end up with nothing.[33]


The tax man does not understand this adage.  So it is the tax man himself, not simply parts of his apparatus, who must be done away with.  Otherwise, the tax man will be back for more.  And more . And more.  Let us remember as well the Beatles who are told by their musical tax man to be “thankful I don’t take it all.”





You see, ultimately, the tax man wants it all.  That is why all of his power must be taken away in order for there to be true reform.  The tax man must be taught that he is not the boss.  The citizen is his boss.   He must be taught that the notion, again from the Beatles’ tune, that “It’s one for you, nin’teen for me,” has things in reverse.  The tax man works for us.  But he will never understand this.  So, he and his system must go.


Of course there will always be taxes, and, in that sense, Justice Holmes is correct about the role of taxation in an abstract way.  But with respect to the IRS, Justice Marshall is more on the money.


The reconciliation between the two is simple enough: recognize the real, even civilizing, need for taxation, but make as little destruction out of the collection process as possible.  To forge such a reconciliation, the IRS must go.


The flat tax and the other proposed half-way measures do not accomplish this end.  Of the proposed reforms, only the National Sales Tax does get rid of the IRS, root and branch.  For this reason, this program ought to be given the highest possible political and media scrutiny and attention and ought to be passed by the Congress and made law as soon as possible.  Let us hear no more bragging from the tax man, except in old pop tunes, that  “you’re working for no one but me.”





Endnotes to Paper of Mr. Mohamad Ali Khatibloo

[1]  Internal Revenue Service, Publication Number 1415, Income Tax Compliance Research: Net Tax Gap and Remittance Gap Estimates 2 (1990).

[2]  Ibid.,  p. 12.

[3]  Gerald Carson, The Golden Egg, The Personal Income Tax, Where It Came From, How It Grew, Houghton Mifflin Company, Boston, 1977, p. 4.

[4]  Ibid.,  p. 19.

[5]  The Fables of Aesop, as quoted in the introduction to The Golden Egg, Ibid., Author’s Forward Note

[6]  Carson, op. cit.,  p. 3.

[7]   The Congressional Research Service, hereinafter CRS, Report For Congress, The Flat Tax And Other Reform Proposals:  Overview Of The Issues, Gregg A. Esenwein, Jane G. Gravelle, Jack Taylor, et alia., submitted  8th of April, 1996,  p. 3.

[8]  Ibid.,  Summary of Report

[9]  Remarks by House Democratic Leader Richard Gephardt, before the Center for National Policy Forum, presented 6th of July, 1995.

[10]  Senator Robert J. Dole, remarks prepared for delivery before the Economic Club of Chicago, Illinois, submitted 5th of  September, 1995.

[11]  Carson, op. cit.,  p. 9.

[12]  Laurence J. Kotlikoff, The Economic Argument For Consumption Taxation, presented as Testimony to The Committee on Ways and Means of  The United States House of  Representatives, 6th of June, 1995, p. 3.

[13]  CRS Report, op. cit., PPS. 2-3.

[14]   Ibid.,  p. 2.

[15]  Ibid.,  p. 2.

[16]  Ibid.,  p. 2.

[17]   Ibid.,  p. 3.

[18]   Ibid.,  p. 3.

[19]   Ibid.,  p. 3.

[20]  Ibid.,  p. 3.

[21]   Ibid.,  p. 3.

[22]   Ibid.,  p. 3.

[23]   Ibid.,  p. 3.

[24]   Ibid.,  p. 3.

[25]   Kotlikoff , op. cit.,  p. 1.

[26]   CRS Report, op. cit., p. 3.

[27]   Senator Richard G. Lugar (R-IN), before the CATO Institute in Washington, DC, 5th of April, 1995.  Points taken in whole or in summarization from outline position paper released with the text of the speech to the press.

[28]   Ibid.,  p. 3.

[29]   Testimony of  Senator Richard G. Lugar (R-IN) Before The House Committee on Ways and Means, presented 8th of June, 1995, introductory remarks.

[30]   Ibid.,  p. 3. Cited Source: United States Department of Commerce publication “Competing to Win in a Global Economy.”, September 1994.

[31]   Ibid., p., 3. Cited Source: OECD Historical Statistics 1960-1990.

[32]   Ibid., p., 2.

[33]   Carson, op. cit., p. 12.


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  • At Washington, capital city of the terminally self-absorbed, mortal man holds to fleeting, feeble and fallible opinion, God immutable fact.
      • ~~
      • It is my assessment that America is dying inside, being eaten away by the horror of the collapse of the middle orders, the attendant societal and religious values and customs of those orders and the ubiquity of war making for dubious purpose.
      • ~~
      • The rich man ought not be taxed at all~~he ought be compelled to employ and train the poor man~~directly~~personally.


      The principal need in America today is~~financial and industrial De-Globalization~~to facilitate the promotion of the possibility for the average man to get and keep a good job with good benefits paid by the employer~~as was done not very long ago.~~


      ~~Bene Nati, Bene Vestiti, Et Mediocriter Docti~~

      ~~La crema y nata~~


      ~~Artista de la conquista



      In sunshine and in shadow~~I hold tight to the Republican view of time and money~~I write night and day~~yet~~while impecunious~~I am vastly overpaid~~in that taking pay to do what I love is unfair~~to my employer~~in a fair system~~under such circumstances~~I should pay him~~not he me~~I am far, far too old a man to be sexually confused~~praise Jesus~~but I am yet young enough to be politically confused~~is anyone not~~in an absolute sense~~I am a Catholic Royalist~~in a practical sense~~I am a Classical Liberal~~a Gaullist~~a Bonapartist~~an American Nationalist  Republican~~in either sense~~my head is soon for the chopping block~~to hasten my interlude with Madame La Guillotine~~I write without fear~and without favor of~any man. 
      Finis Origine Pendet…
      The escape commences…
      September, 1957
      Saint Jane Frances de Chantal Catholic parochial school, called, by anyone of any background, simply: “Chan~al,” a place where, of an autumn day in 1957, school,  for me,  began and ended in the first convening of the first grade in which a tiny nun, one Sister Dom Bosco, appeared before me, just behind the window appearing at far left of this photograph, and piped out this: “I may be small, but so then, is the Atom Bomb.”
      My determination to escape school commenced immediately on hearing about this Atom Bomb business and took 16 dicey and arduous years to finally accomplish.~~
      Non Sibi
      The declaration that:
      “I am here to save mankind,” means that:
      “I am here to rule mankind.”
      The escape continues…
      September, 1966
      The Cathedral Latin School
        Finis Origine Pendet
      Κύριε ἐλέησον

      Rejoice and Glad!!





      ~The Original Angry Bird~~The Catholic University of America Screaming Red Cardinal Mascot~~



      ~~EX LIBRIS~~
       19 Juin, Monday,  Anno Domini Nostri Iesu Christi, the 2019th
      Website: http://johndanielbegg.wordpress.com







      Tweets: @jtdbegg

      “Jean-Marie Le Pen is a friend. He is dangerous for the political set because he’s the only one who’s sincere. He says out loud what many people think deep down, and what the politicians refrain from saying because they are either too demagogic or too chicken. Le Pen, with all his faults and qualities, is probably the only one who thinks about the interests of France before his own.”~~
      Alain Delon~~Actor

      John Daniel Begg raises cotton.


      In the Old South, the real Southland, we had a charming expression, when asked what an idle man did for a living:


      “Oh, he raises cotton.”
    • Which meant, he did absolutely nothing at all, as cotton,  “the white gold,” raises herself.




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      Seal of The Catholic University of America



      Deus Lux Mea Est


      Acta Est Fabula

      The escape concludes…


      The Catholic University Of America, Washington, District of Columbia.


      1976, Anno Domini Nostri Iesu Christi.

       “Who first seduc'd them to that foul revolt?
      Th' infernal Serpent; he it was, whose guile
      Stird up with Envy and Revenge, deceiv'd 
      The Mother of Mankind"
      Paradise Lost
      Book One
       Verse 35
       Our Mr Milton
      How short the list one could compile of those of whom it can be said that fame and money did not deprave? 

      Acta Est Fabula.


      Deus Vult.

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Simply the best President we could ever hope to have.


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