Letters

From the May 1999 issue

(Page 5 of 5)

Before the 16th Amendment of 1913 gave us the income tax, imports did not get a free ride. Then imports and domestic products both were taxed. It is folly and economic illiteracy to discuss free trade without taking into account the changes in our tax system that occurred after 1913.

Bert Loftman
Atlanta, GA
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Brink Lindsey replies: The argument that duty-free imports enjoy a tax advantage because they don’t bear the full burden of U.S. income taxes assumes that foreign producers are exempt from corporate income tax in their home jurisdictions. That assumption is, by and large, unfounded. More broadly, all forms of taxation distort economic activity in one way or another; the trick is to avoid those taxes that do the most damage. While I’m no fan of income taxes, import duties–which reduce incentives to innovate in the face of foreign competition, block access to needed inputs and supplies, inhibit exports, and restrict consumer choice–are even worse. They have no role whatsoever in any sensible tax policy.

Tax Theories

David Levenstam ("Constitutional Challenge," January) is quite correct that merely repealing the 16th Amendment, which created the income tax, would not prohibit future Congresses from reintroducing an income tax. This is particularly true give the inclination of the Supreme Court during the last 50 years to assign powers to Congress that are nowhere found in the Constitution. What I and most national sales tax advocates support is a constitutional amendment that has been proposed by Rep. Sam Johnson (R- Texas). Johnson’s simple amendment states: "The sixteenth article of amendment to the Constitution of the United States is repealed, and the Congress shall have no power to lay and collect taxes on incomes, except in time of war declared by the Congress." I think Mr. Levenstam would agree that this should do the trick.

Stephen Moore
Director of Fiscal Policy Studies
Cato Institute
Washington, DC