How Does NESARA Compare to Other Proposals?
Tax Reform Foundations
 

Tax reform is a topic discussed by many people across a wide spectrum of beliefs and ideologies. No doubt the topic needs much attention, and new and different approaches are necessary to provide meaningful reform. Visitors to this web site will learn that NESARA proposes a national retail sales tax—merged with monetary policy reform.

Discussing various tax reform proposals and comparing to NESARA is not a simple a matter of creating some charts and responses. Yet, before any such discussion and comparison is possible, certain foundations and definitions must be provided. What follows is a general discussion of those foundations.

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First, understand that NESARA is not a fix-all proposal. Although opening the door to further remedies, NESARA does not attempt to address all ideological or philosophical challenges. We live in a mighty big world and no legislative proposal could attempt such a comprehensive feat. Instead, NESARA is a transitional tool designed to allow people to get their feet back in the door in an effort to regain control of monetary and fiscal policy. By focusing only on those two cornerstones, NESARA is designed to address two goals:

1. To slow and stabilize the mad economic train ride that everybody is on and,
2. To increase economic well-being by returning resources to individuals so later they can be in a better-leveraged position to dictate the terms of further reform.

NESARA attempts to attain these two goals by providing a reasonable and arguably politically doable remedy to the ever-contentious problem of monetary inflation and deflation. NESARA also replaces the contemptible income tax with a national retail sales tax.

Current monetary and fiscal policy problems are the result of runaway revenue collection and spending. In summary, those policies are ideological in nature, resulting in massive transfers and redistributions of wealth. We address those issues elsewhere on this web site. We do not believe those ideological foundations are quickly or easily changed, but we do believe such changes become possible after reforming current monetary and fiscal policies such that people can again own the fruits of their own labor and wean themselves from dependency on the state.

The goal of trying to remedy monetary policy is difficult, at least in a rational manner within the current system, but many people like the NESARA monetary reform proposal. By comparison, all tax reform proposals are less popular—and for straightforward reasons.

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Let us be frank. Without honoring the concept of explicit individual consent (tacit consent is difficult to prove, and the concept is difficult to justify or support), all compulsory taxation is forced extortion and theft. However, America has needed approximately 150 years to create the current mess and overnight solutions are impossible. The question then becomes, “How do we rationally back out without causing disorder and chaos?” Few people want to throw grandma out into the streets while accomplishing reform. Yet, ask 100 people this question and likely you will receive 100 different answers.

Many people take the wrong approach to reducing the size of the current state. Many want to simply abolish the state, but doing so throws many people out onto the street. That is why NESARA focuses on a politically doable transitory solution, whereby resources are first returned to people before they are encouraged to wean themselves from the state.

Living in the real world, we all know that within the existing political process too many people currently depend upon wealth redistribution to simply end the income tax without a replacement. Wealth redistribution cannot be peaceably defeated simply by collapsing the current system. Transitional thinking is necessary. Furthermore, few politicians (or constituents) would support such a blunt effort.

Throughout this web site we address the topic of a retail sales tax. A common quarrel with a retail sales tax is the potential regressive nature against poor people and those living with fixed incomes. However, NESARA addresses that volatile issue by establishing many common sense exemptions to the proposed national retail sales tax. Unlike other sales tax proposals, NESARA was designed to be progressive, whereas other current retail sales tax proposals are regressive although arguably containing measures designed to offset the very problem that they create.

NESARA emphasizes certain exemptions to quash objections of regressive taxation, but also to at least partially honor consent. As we previously mentioned, under statism no tax system truly honors consent, all compelled taxation is extortion and theft. Under transitional thinking then, the goal is to recognize that extortion and theft and propose reforms that get by with a lot less extortion and theft. The key in proposing any transitional reform is to open the doors for migrating away from statism to liberty. Most people living today were born and raised within the statism mindset. Thus, many people initially are unable to easily or quickly envision a world without the state. However, a transitional approach provides opportunities for people to peaceably grasp such thinking. Under the NESARA plan, people can avoid or reduce the burden of taxable retail sales by personally controlling their consumption, through self sufficiency, shopping for the best bargains, shopping at garage sales, buying used instead of new, etc. By offering that straightforward option, consumers arguably choose when they consent to be taxed. Furthermore, such an approach provides tremendous relief on the world’s resources.

A sales tax, although impeding and adding to the cost of retail exchanges, does nonetheless partially honor consent. Not completely, of course, because today people live in a world with a very high division of labor, and to survive almost all people are required to participate in retail exchanges. Although today all consumers more or less must participate in commercial retail exchanges, they often can choose where and when they participate and thereby reduce the imposed tax burden. The element of choice lowers the potential burden.

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Some people believe that a sales tax is fundamentally a tax on labor. We agree, but we also add that all taxes are fundamentally a tax on labor. Although the manner in which any tax is measured or calculated can be based upon people, property or activities, only individuals pay taxes. There is no such thing as a tax that does not tax labor—even in a completely voluntary system. Revenues from taxation, whether compelled or voluntary, always derive from labor. Furthermore, although a tax might be labeled as a tax on production or consumption, because all taxation is a tax on labor, fundamentally all taxation is a tax on production.

We address in more detail the question of whether a sales tax is a tax on labor:

1. Isn’t a National Retail Sales Tax essentially a tax on labor?
2. Should labor/direct services be taxed?

To partially avoid those conflicts NESARA provides for reasonably segregating the labor portion of any retail sales contract. That is a start, but we also readily admit in our Details and Explanations that some labor-intensive retail exchanges will experience the retail sales tax. For example, barbers and hair stylists likely will see their services taxed as retail exchanges despite being predominately labor. Of course, the easy “legal” explanation is that the labor is not being taxed but only the activity of the retail exchange.

Direct trading and barter, such as neighbors directly exchanging carrots and peas, are not retail exchanges or sales. By definition, a retail sale excludes direct barter-like trades. Retail sales in commerce for profit are open to all consumers, whereas direct trade is strictly limited to the involved parties, does not necessarily use currency, and under NESARA is not a taxable event. Intent is controlling. Although not a detailed analysis, we do have on our web site an article that addresses the differences between barter, trade and commerce.

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Let us review some basic concepts and definitions. At our on-line dictionary we define wealth as:

“Ownership of labor, and of anything upon which labor has been expended, whether material or immaterial, which can directly satisfy human wants, needs or tastes. Goods and services (property) owned. Wealth is always a finite positive quantity, but its value often proves difficult to express in terms of currency.”

Notice that our definition of wealth differs from some conventional definitions. Like Frederic Soddy, 1921 Nobel Laureate in chemistry turned student of economics, many people believe there are two classes of wealth: 1) property created by labor and acquisition and 2) property created by nature. However, there is a defect with the second definition. Soddy believed a fruit tree provided wealth, but notice the fruit bears no benefit to humans unless labor is used to harvest the fruit. Thus, the second category of wealth is actually a conditional subset of the first and only category. Although natural resources contribute to wealth production, wealth cannot be created without labor.

Property is a concept, and has meaning only in relationship to people. The word property covers a large area of topics, and is broadly interpreted to include life, land, capital, as well as labor.

Likewise, rights have meaning only in relationship to people and property. The purpose of the concept of property is to create boundaries through which the actions of people are limited and restricted. The concept of property establishes lawful boundaries that create areas of jurisdiction to use resources, both natural and man-made. Thus, because property is a concept, nature can never produce property, only individuals can.

Property is not ownership of resources, but the right to use resources.

All rights have meaning only with respect to the concept of property and primarily with respect to other people. Robinson Crusoe possessed the individual natural rights all other people possessed, such as the right to learn from his experiences, but his associative rights were meaningless until other humans appeared in the story.

A cornerstone of voluntary exchanges in a truly free market is the concept of property. The concept of property necessarily includes the right of jurisdiction over the use of property; otherwise, transfer of legal title is meaningless. The right to discriminate is not only a natural right, but a fundamental cornerstone of property rights. The very concept of property recognizes the right to exclude other people.

The philosophy of civil rights (legislative privileges) has usurped that straightforward natural law.

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Because only individuals can pay taxes, and because all taxation is fundamentally a tax on labor and production, all taxation, regardless of form or nature, involves the exchange of property. In theory, taxation can be voluntary—an association fee, so to speak. However, when taxation does not honor consent, then taxation is extortion and theft, whether an income tax, a head (poll) tax, a sales tax, or a land tax (including “ground rents”).

The primary challenge with any tax reform proposal is not the form or nature of the tax, but realizing that all taxation, without true explicit consent, is a fundamentally flawed idea. The challenge, as we have already stated, is how to gracefully back out of the current mess—and as quickly as possible without chaos. As long as statism exists, all tax reform proposals must focus on how to minimize the damaging and intrusive nature of taxation, at least until the state fades from the picture.

No rational tax reform proponent would argue that any reform proposal will immediately eliminate statism. Thus, most honest tax reform proponents acknowledge that any proposal only helps encourage people to move from a statist mindset toward a more liberty-minded environment. In other words, the state still will exist after the reform is enacted. The state still will collect revenues by compulsion.

From that perspective, a national retail sales tax is a rational and politically doable transitory solution, and arguably provides partial consent.