Powers of Congress
To Lay and Collect Taxes:
The tax rates, deductions, exemptions and credits are to be clearly specified in the Constitution so that the Congress can not blindly raise taxes without a Constitutional amendment. This will also prevent the tax collectors from making up the rules as they go. In general, income taxes will be limited to 15% of taxable income. Individuals will receive a $10,000 standard deduction and there will be no other deductions or tax credits allowed.
All businesses will report their income and taxes as a pass-through entity (i.e. S-Corporation). The business will be taxed at the same 15% rate as individuals and will pay the taxes directly to the Federal government. The States will piggy-back on the Federal income taxes which will eliminate the need for the businesses to file state income tax returns.
Distributions from the businesses to the owners / stockholders will be tax free because the business has already paid the tax. The business will send a four line 1099 to the owners showing their portion of the taxable income, federal taxes paid, state taxes paid and any tax credits taken by the company. This could result in a refund for persons who have not used up the $10,000 standard deduction.
Businesses will only be permitted two tax credits. The first will be based on 5% of gross payroll paid to persons who live in this country. This is an incentive to hire residents and as a payment for collecting and reporting the payroll taxes to the government. A second credit will be given to banks for making loans within this country. [See the separate section on banks below.]
All businesses will be allowed to compute their income on the cash basis or the accrual basis. Cash basis businesses will be allowed to either depreciate equipment or directly expense the loan payments. Inventory can be expensed when purchased and receivables can be ignored when calculating sales.
As an incentive for banks to loan money to individuals and businesses in this country they will be given a 10% tax credit on interest income from such loans. Banks will pay a flat tax of 25%. If 100% of the interest income is from domestic loans then the banks will be eligible to take the full 10% credit reducing their tax rate to 15%. However, if 80% of their interest income is from domestic loans then the credit will be 8% and the effective tax rate will be 17%.
If the limitations on taxes, spending and borrowing result in a surplus, then this surplus shall be accumulated until it equals 10% of gross domestic product. After that, the income tax rate shall be reduced from 15% to a level which will result in a balanced budget.
To Borrow Money on the Credit of the Country:
The national debt will be limited to 10% of the Gross Domestic Product, excluding government expenditures. If in any year, the national debt exceeds the 10% limit due to unforeseen circumstances, then it must be repaid the following year. If the budget does not take this payment into account, then spending will be automatically cut by 10% across the board until the debt is paid down to less than 10% of GDP.
Gross Domestic Product must be clearly defined. It should be something simple, such as Final Sales of New Products (excludes the sales of used products) + Exports – Imports. Note that his excludes all government activities because the government produces nothing.
To Coin Money:
The money supply is to be backed 100% by gold and silver – period. The Federal government can issue paper money but only in quantities equal to the Federal governments reserves of gold and silver. These amounts will be audited annually by independent auditors and reported to the public. If it is found that paper money has been issued in excess of the amount of gold and silver then the persons responsible will be sent to jail for no less than 10 years. If it is found that the auditors have not properly audited the reserves then they will also be held personally liable.
To Establish and Enforce Uniform Bankruptcy Laws:
Total bankruptcy should only be allowed when it is caused by circumstances beyond the person’s control. Bankruptcy should not condone fiscal mis-management by individuals or companies. People must take responsibility for their own finances. When it is determined that the individual could have prevented the bankruptcy then they must be made to repay some portion of the debts and not be allowed to walk away from their actions scott free.
To Declare War:
Congress can declare war but cannot invade another country unless that country has invaded our country or has reason to believe that such invasion is immiment. Congress will not have the ability to station troops in other countries except during times of war.
To Establish Uniform Immigration and Naturalization Laws:
All persons born to citizens of the country will automatically become citizens. Persons born in this country to non-residents will not automatically become citizens.
All persons residing within a seceding state who are citizens of the United States as of the date of secession will automatically become citizens of the new country with the exception of persons who were born in the United States to persons who were not citizens of the United States (i.e. anchor babies).
Any such citizen of a non-seceding state who wants to move to a seceding state will be given first priority. Any citizen of a seceding state who does not wish to remain in the new country will lose their citizenship once they have not resided in the seceding states for a period of six months.
Aliens can apply for work visas. All such visas must be renewed annually. The alien must prove that they have a full time job. Aliens may bring their immediate family (i.e. spouse and children) but they will not be eligible for any welfare benefits. After a period of 10 years the alien can apply for citizenship.
Aliens can apply for student visas. All such visas must be renewed annually. The alien must prove that they are a full-time student (i.e. 30 credit hours per year). After graduation the student can obtain a work visa. Students who apply for citizenship will be given credit for the time spent in school and this time will be deducted from the 10 year requirement.
Aliens who enter this country illegally will be subject to their country’s immigration laws or to this country’s immigration laws, which ever are the most severe. For example, if their country’s immigration laws require that illegal immigrants be jailed for 5 years and our laws require that they be jailed for 1 year then they shall be sentenced to 5 years. Our laws must specify that, at a minimum, illegal immigrants will be deported for a first offense and serve a minimum of 5 years in jail for a second offense.
To Establish Environmental Laws:
Congress shall only have the ability to regulate air and water standards in cases where they affect more than one state. Under no circumstances will any government have the ability to prevent citizens from collecting rain water on their own property.
Congress shall pass no environmental laws which have the effect of “taking” property from citizens for the protection of endangered species or “wetlands” without adequate compensation. Laws protecting endangered species will only pertain to hunting, fishing or trapping the endangered species. In no case will the life of an endangered species be protected at the expense of a human life.
Clean air and water regulations must provide a material cost / benefit ratio. For example, a clean air regulation costing billions of dollars that only reduces pollutants by 2% would be forbidden.
To Regulate Interstate Commerce:
The US Congress shall only have the power to regulate those goods and services that are sold in interstate commerce. The intention of this provision is to help States resolve problems with companies who sell products and services in more than one state where it would be impossible for the individual states to prosecute the company for violations of laws.
To Require Nanny Laws:
The Congress shall have no authority to force individuals to do anything which is solely for their own benefit or protection. This would include seat belt laws, motorcycle helmet laws, laws on what can be eaten or experimental drugs that can be taken by the sick. Congress will have no authority to outlaw the use of drugs or to make their use a criminal offense. However, Congress will have the ability to pass laws that make activities such as the sale of drugs a criminal offense and all drug dealers will be executed. [Drugs kill and therefore, convicted drug dealers are guilty of murder.]
To Regulate Banks:
Congress shall have no power to regulate banks except to require an independent audit and full disclosure of vital statistics so that customers can make informed decisions. Such disclosures would include, but not be limited to, the fractional reserve lending percentage, the amount of non-performing loans, the amount of sub-standard loans, etc.
To Establish Business / Consumer Web Site:
Congress shall contract with private companies to establish one or more web sites for the purpose of allowing consumers to post opinions about businesses they have dealt with. All businesses will be required to register on the web site. The businesses can be searched by industry, location and ownership. Anyone who files a false complaint will be subject to a fine of up to $10,000. Each business will have an opportunity to respond to every complaint. Businesses with many complaints will be investigated by the Attorney General. It should be possible to contract with companies such as Angies List who already provide this service. It may be advisable to have separate web sites for professionals, contractors, retailers, wholesalers, etc. [Hopefully, this web site will be better than the Obama Care web site.]
To Establish Laws against Collusion, Price Fixing and Predatory Pricing:
The Sherman Anti-Trust Laws will be repealed. In their place, the Congress shall establish laws to protect consumers against collusion and price fixing by businesses. They will also establish laws to protect smaller businesses against predatory pricing, where a large business lowers prices in small markets to force competitors out of business and then raises prices once the small business is gone.