Friday, October 21, 2011

Schiff Wrong on the Capitation Tax

During one point during my interview/debate/ with Peter Schiff, after numerous times stating zero taxes were my choice, and with Schiff pushing for an answer from me on a theoretical basis as to what tax made the most sense, I said that you just take the revenues desired and divide it by the population over 18, a poll tax, aka, a capitation tax.

Peter caught me off gaurd when he said that a capitation tax is not allowed by the Constitution. Peter's wrong. The capitatin clause of Article I of the United States Constitution, reads "[n]o capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken."

Update: I further explain what went on in this part of the interview, here.


  1. @Fetz:

    I found a photo of Wenzel . First column, second row.

  2. Anon,
    I didn't know that Wenzel was a 21 year old, German defensive mid-fieldman. To be honest, I have seen a picture of Wenzel, but I respect his wish to remain private.

    What interests me more is how in the heck pics of Gene Callahan got filed under an image-search for Robert Wenzel.

  3. Well, there's this clause in the Constitution:

    "Representatives and direct Taxes shall be apportioned among the several States ..., according to their respective Numbers, ...."

    which... hmmm... I guess that supports your poll tax as well. Seems to invalidate the income tax, however.

  4. Anon 1:13,

    You do realize that the 16th Amendment changed that, right?

    Here's the text...
    "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."


    much love,

  6. @Anon

    It wasn't an interview, it was Schiff rambling on so that Wenzel wasn't allowed to speak.

  7. @Joseph Fetz

    While the view that the 16th amendment changed the rules of taxation of income is a common one, it is incorrect. All the sixteenth amendment did is nullify the Supreme Court’s Pollock decision that held taxes on income derived from a source where the same as a tax on the source itself (a tax on rents was the same as a tax on the house, for example).

    To avoid the question of whether taxes on income derived from a source where direct or indirect the 16th amendment eliminates the direct tax as an option leaving only indirect taxes: duties, imposts and excises.

    Later cases like Brushaber made it clear that Congress always had the power to tax income and the 16th amendment added no new power of taxation. The 16th amendment eliminated the question of whether taxes on incomes derived from a source where direct or indirect, by explicitly stating that the apportionment rule could not be used, leaving only the uniformity rule when levying duties, imposts and excises. So Congress can levy duties, imposts and excises on income derived from a source. A power they always had.

  8. I hate to see good government-hating, liberty advocates attacking each other. Peter can be rude to people, interrupting, and cutting off. It's unfortunately one of his faults. Generally though I like the guy. I regularly read Wenzel, Mish, Schiff, Murphy, and Gary North. I consider them all Austrians, even though they predict different things regarding China, inflation, and economic growth.

  9. @Fetz:

    My second comment is missing; which explained a display formatting issue (android mobile). My reference was to the Bernanke pic.

  10. @Deft

    I agree. All these guys are on the same team, pulling in roughly the same direction. I wouldn't say they are attacking one another though. Good ideas should be hammered out and there isn't a better set of guys to do it than these guys.

  11. Deft-

    I agree with anon- Bob has gone round and round with some Austrian heavyweights, and held his own, but dissent and discussion is good for deeper examination of liberty.

    I think the (T)Reason/Koch crowd is the real enemy when it comes to liberty, even though an outsider might see our views as similar. They want smaller MORE EFFICIENT government, where we want small LESS INTRUSIVE government. The distinction is huge.

    However I would prefer a world where the (T)Reason/Koch party and the Austro-Paulian party were the "big two" compared to what we have today!

  12. I don't know. I gotta say, I listened to the Schiff show with Bob's interview and I think Peter wasn't in the least bit rude. I respect both men but Peter came off totally prepared and his position well thought out. Bob, on the other hand, wouldn't or couldn't answer Peter's totally appropriate question designed to get at the HEART of the issue. Assuming we're to have a government at all, whether it runs on a $4 Trillion budget, $1 Trillion, or even better, $1 billion, WHAT IS THE LEAST economically destructive and least morally repugnant form of taxation. After avoiding the question several times, Peter was getting annoyed, and the best thing Bob could come up with was a capitation tax?? Really??

    Once Bob left, Peter rightly pointed out that under a capitation tax, not only would Warren Buffett pay a lower rate (which he correctly added wasn't actually true) than his secretary, but that he'd pay the same DOLLAR amount as his secretary! Even if it was only say, $1,000 as in Bob's more ideal world, that $1,000 might matter a whole hell of a lot to the secretary, while meaning only money under the sofa for Buffett. How can Bob seriously come back with this ridiculous assertion? Peter made him just look ridiculous.

  13. @Anonymous 5:10

    Well that's a fine theory, if you ignore the fact that you can clearly here Schiff interrupt Wenzel during the first three quarters of the show and that during the capitation discussion Peter took it into the possible need for a Amendment to the Constitution, which in fact had nothing to do with Wenzel's proposal.