Part II. National Sales and Use Tax

SECTION 2. FINDINGS
 

The Congress finds that —

(1) contrary to popularly held belief, the progressive income tax is actually regressive because it is often easily passed through as a hidden tax in the price of goods and services.

(2) the progressive income tax falls most heavily and unfairly on working middleclass citizens who pay the tax twice, once when it is withheld from their wages and again as a hidden tax in the price of essential goods and services.

(3) a progressive income tax is counterproductive in that it discourages industry and productive activity.

(4) taxes based on personal income reduce or eliminate the incentive for recipients of government aid to become productive citizens.

(5) shifting taxes from productive activity to consumption will encourage the former and discourage the latter.

(6) individuals of modest means can be protected from the adverse effects of federal taxation by removal of the hidden elements of current tax policies on productive activity and by exempting groceries, rent, insurance, medicines, and some categories of previously used articles from consumption taxes.

(7) an income tax, being essentially a uniformly imposed annual tax, provides only a poor means for the regulation of commerce.

(8) the very nature of the income tax, being administered as a commercial code rather than as positive law, invites constant congressional lobbying by powerful special interest groups for tax provisions that benefit themselves, often at the expense of others less able to influence legislation.

(9) to remain constitutional, the current income tax system, as applied to individuals, relies on voluntary compliance for its success.

(10) voluntary compliance with the federal income tax system is steadily decreasing, the number of non-filers currently estimated at ten million, making the system increasingly non-enforceable.

(11) a huge “underground” and thus untaxed economy is depriving the government of billions of dollars of revenue annually.

(12) the reform of the current federal income tax system, as outlined in this Act, is necessary to eliminate its counterproductive and abusive aspects, to promote social welfare through a more equitable distribution of the national tax burden, and to improve regulation of the national commerce, all for the benefit of the American people.

Read Explanation and Details for Section 2.