An analysis of national sales tax versus the income tax

The reason is that central banks react to variables, such as inflation and the output gap, which are endogenous to monetary policy shocks. Endogeneity implies a correlation between regressors and the error term, and hence, an asymptotic bias.

An analysis of national sales tax versus the income tax

Today we resolve constitutional challenges to two provisions of the Patient Protection and Affordable Care Act of We do not consider whether the Act embodies sound policies.

We ask only whether Congress has the power under the Constitution to enact the challenged provisions. In our federal system, the National Government possesses only limited powers; the States and the people retain the remainder.

In this case we must again determine whether the Constitution grants Congress powers it now asserts, but which many States and individuals believe it does not possess. These affirmative prohibitions come into play, however, only where the Government possesses authority to act in the first place.

If no enumerated power authorizes Congress to pass a certain law, that law may not be enacted, even if it would not violate any of the express prohibitions in the Bill of Rights or elsewhere in the Constitution. Indeed, the Constitution did not initially include a Bill of Rights at least partly because the Framers felt the enu-meration of powers sufficed to restrain the Government.

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And when the Bill of Rights was ratified, it made express what the enumeration of powers necessarily implied: The Federal Government has expanded dramatically over the past two centuries, but it still must show that a constitutional grant of power authorizes each of its actions. The same does not apply to the States, because the Con-stitution is not the source of their power.

The Consti-tution may restrict state governments—as it does, for example, by forbidding them to deny any person the equal protection of the laws. But where such prohibitions donot apply, state governments do not need constitutional au-thorization to act. Rather, federalism secures to citizens the liberties that derive from the diffusion of sovereign power.

United States, U. The independent power of the States also serves as a check on the power of the Federal Government: This case concerns two powers that the Constitution does grant the Federal Government, but which must be read carefully to avoid creating a general federal authority akin to the police power.

The power over activities that substantially affect interstate commerce can be expansive. Put simply, Congress may tax and spend. This grant gives the Federal Government considerable influence even in areas whereit cannot directly regulate.

The Federal Government may enact a tax on an activity that it cannot authorize, forbid, or otherwise control. And in exercising its spending power, Congress may offer funds to the States, and may condition those offers on compliance with specified conditions. Florida Prepaid Postsecondary Ed. These offers may well induce the States to adopt policies thatthe Federal Government itself could not impose.

We have long read this provision to give Congress great latitude in exercising its powers: Members of this Court are vested with the authority to interpret the law; we possess neither the expertise northe prerogative to make policy judgments.

It is not our job to protect the people from the consequences of their political choices. Our deference in matters of policy cannot, however, become abdication in matters of law.

Madison, 1 Cranch And there can be no question that it is the responsibility of this Court to enforce the limits on federal power by striking down acts of Congress that transgress those limits. Madison, supra, at — The questions before us must be considered against the background of these basic principles.

The Act aims to increase the number of Americans covered by health in-surance and decrease the cost of health care.

An analysis of national sales tax versus the income tax

This case concerns constitutional challenges to two key provisions, commonly referred to as the individual mandate and the Medicaid expansion. The mandate does not apply to some individuals, such as prisoners and undocumented aliens.

Many individuals will receive the required cov-erage through their employer, or from a government program such as Medicaid or Medicare.

But for individuals who are not exempt and do not receive health insurance through a third party, the means of satisfying the requirement is to purchase insurance from a private company.

Infor example, the penalty will be 2. The Act, however, bars the IRS from using several of its normal enforcement tools, such as criminal prosecutions and levies. And some individuals who are subject to the mandate are nonetheless exempt from the penalty—for example, those with income below a certain threshold and members of Indian tribes.

Those plaintiffs—who are both respondents and petitioners here, depending on the issue—were subsequently joined by 13 more States, several individuals, and the National Fed-eration of Independent Business. The District Court agreed, holding that Congress lacked constitutional power to enact the individual mandate.

An analysis of national sales tax versus the income tax

The District Court determined that the individual mandate could not be severed from the remainder of the Act, and therefore struck down the Act in its entirety. The Court of Appeals for the Eleventh Circuit affirmed in part and reversed in part.Professional tax and management guidance for small to medium-sized businesses since The FairTax is a proposal to reform the federal tax code of the United States.

It would replace all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales.

State & Local Tax

In , Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. About Us. The Tax Foundation is the nation’s leading independent tax policy research organization.

Since , our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels.

Annual Meeting of the National Tax Association November 9, to Nomination and Election of Officers Treasurer’s Report: Eric Toder, The Urban Institute Presidential Address: Victoria J.

Perry, International Monetary Fund. A national retail sales tax is a consumption tax that is collected as a flat-rate tax on all sales from businesses to households. For example, the sale of a newly constructed home .

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