If you have the stomach for real tax reform, the 63-year-old retired salesman suggests, try chewing on the “fair tax” – a proposal that was first introduced in Congress 13 years ago and would replace all federal income and payroll taxes with a national sales tax advocates say would be about 23 percent.
As assistant state director for Fair Tax Indiana, the Fort Wayne resident and tea party supporter spoke to about 20 groups in 2011 and was in Wabash Monday night to expound the virtues of a system that would tax consumption instead of productivity.
“I was surfing the radio in 2005, and I don't know whether it was serendipity or divine intent, but I heard somebody talking about the fair tax,” Armstrong recalled. “I told myself I was going to find out if it really was a crazy idea, and I've been studying this for three years and I'm convinced it will work.”
Now, I'm not about to endorse a radical shift in tax policy on the basis of an interview, a few handouts and a quick scan of a sympathetic website. But there can be little doubt as to the basic premise behind fair tax: that the nation's current income tax code is an indecipherable mess overseen by an army of 144,000 Internal Revenue System agents empowered to seize the assets of and jail those who fail to comply.
“Money is power,” Armstrong said, and he's right: Think of all the ways politicians use taxation to influence your actions or in effect punish and even discourage success by targeting successful corporations and individuals.
In an economy increasing dependent upon consumerism, wouldn't a 23 percent national sales tax – that's in addition to existing state sales taxes – throw the nation even further into an economic tailspin? Nope, insist Armstrong and other fair tax supporters.
If you can keep all of your paycheck, they point out, you'll have more money to spend. With corporate taxes eliminated, companies would stop sheltering their cash offshore, using it to create jobs here. In fact, supporters insist, studies indicate that passage of the fair tax would result in more revenue for the government, higher incomes for workers and retires and would result in increased philanthropy despite the elimination of deductions for charitable giving.
What's more, they say, the fair tax is progressive – a byproduct of the wealthy buying more stuff and so-called “prebates” – a monthly return of sales tax revenues based on the size of families.
You've got to admit, there's a certain appeal to being able to control your taxes simply by controlling your spending. What's more, Armstrong pointed out, the fair tax is consistent with the Constitution's original intent.
In a time dominated by politicians willing to do anything for votes – and me-first citizens only too willing to let them – such a notion may seem quaint, even obsolete. But the fact that America survived and prospered for more than a century without an income tax, and has seen its bureaucracy bloat to unsustainable levels since its passage, is too important to ignore.
The 16th Amendment, it should be remembered, was deemed necessary because the Supreme Court in 1895 had ruled an earlier income-tax law unconstitutional.
Currently, Armstrong said, nine senators (including Richard Lugar) support fair tax, 12 are opposed and 79 (including Dan Coats) are uncommitted. In the House, 67 (including Marlin Stutzman, R-3rd) support it, 70 are opposed and 298 are uncommitted. That's fertile ground for Armstrong and any others who hope to win converts.
As I said, the fair tax is too complex to explain in a single newspaper column and it will do nothing to control spending. But the plan at least deserves a thorough congressional review and, if feasible, some kind of limited trial to test the theories behind it.
“There two types of people who oppose this: Those who don't understand it and those who do.” Armstrong said. Most presidential contenders are simply silent, but in the latter camp are those committed to the politics of envy and class warfare – the overdue elimination of which would be among the fair tax's greatest achievements.
Or, as Stutzman explained, "America isn't built on class distinctions. We believe in equal opportunity. So, instead of dividing Americans into classes and tax brackets, the fair tax treats individuals equally.”