Tuesday, August 23, 2011

Why Rick Perry’s War On The 16th Amendment Is The Third Prong Of His War On Seniors


By Ian Millhiser on Aug 23, 2011 at 12:30 pm

Texas Gov. Rick Perry (R) is taking a lot of well-deserved criticism for his absurd claims that Medicare and Social Security violate the Constitution. But these are hardly the only part of Perry’s constitutional agenda, which seem designed to inflict unnecessary cruelty on America’s seniors. Perry also wants to repeal the federal government’s 16th Amendment authority to enact income taxes and replace it with a tax system that would slash millions of Americans life savings:

Perry declares that the 16th Amendment represents “the great milestone on the road to serfdom” because it represented “the birth of wealth redistribution in the United States.”

Perry clearly states that “we should restrict the unlimited source of revenue that the federal government has used to grow beyond its constitutionally prescribed powers.” How? Here’s what Perry suggests, in addition to scrapping the current tax code:

Another option would be to repeal the 16th Amendment to the Constitution (providing the power for the income tax) altogether, and then pursue an alternative model of taxation such as a national sales tax or the Fair Tax.

There are countless problems with Perry’s national sales tax proposal (“Fair Tax” is just a more Orwellian term for the national sales tax), but one of the biggest problems is its impact on seniors or anyone else with significant life savings. Perry’s plan would require millions of Americans to be taxed twice on much of the money they have saved for retirement.

Imagine that you earn $10,000, and are required to pay 25 percent income tax on those earnings. That means that you are left with $7,500 that you are free to spend or save however you choose. If Perry gets his way, however, Congress will suddenly enact a massive new sales tax after you have already paid income taxes on your earnings. The result is that every single one of your $7,500 will be taxed again when you make a purchase — causing nearly one in three dollars in your savings to be eaten up by sales taxes. Thanks to Rick Perry, you are left with only about $5,000 of your original $10,000 in income.

Admittedly, there are ways to temporarily shield retirement savings from taxation, but few if any Americans will be able to shield their entire savings and still be able to maintain the flexibility they need to live their lives. As a result, Rick Perry’s double tax will eviscerate the savings that millions of American seniors depend upon. Add to this the fact that Perry also believes that Social Security and Medicare are unconstitutional, and it is unclear how he expects any but the wealthiest seniors to pay their medical bills and continue to put food on their tables.


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