FAQs (Questions and Answers)

Q. How can a five percent tax pay for government? The so-called “fair tax” said it had to be 23.5% just to be revenue neutral.  My sales tax alone is 6%.  Is this real?
A. We make no bones that ClampIt is not revenue neutral and has never has had any intent to be so. It clearly states its objective to reduce the ratio of government taxation from its current bloated size of 40% down to 25% and provides a transition plan make this possible by retiring public debt and the interest expense that goes with it.

The “fair tax” tries to compensate for the extreme regressive nature of its consumer-only tax by imposing a whopping 23.5% consumer-only tax, then tries to add elasticity by including complicated rebates to keep it from putting all the poor on the street. Whether or not the poor get the rebate depends on their income, which paradoxically the fair tax advocates have vowed they will to do away with by eliminating the income tax. Unlike any sales tax which nearly all are under ten percent, the “fair tax” is over double the maximum recommended by renowned economist Adam Smith. Worse, it does not even repeal the 16th amendment that established the federal income tax nor does it address tax limits on the number of taxes the federal government can have, let alone state, federal and local. It further makes no provision for health care or social security. In short, it is just “another” tax, with a beginning rate of 23.5%.

The “Fair Tax” rate is too high because:
 * 1) it does not cut government's bloated size and
 * 2) every entity is exempt except the consumer.

Contrastingly, ClampIt permits no exemptions and eliminates all other taxes; every transaction pays a small amount included in the selling price, thereby eliminating loading up on the consumer.

Q. Was Neal Boortz wrong?

A. To Neal Boortz's credit who wrote a book promoting the bill's author Rep. John Linder (R-GA), he did a good job of explaining how the income tax used withholding shenanigans to dupe the public; however, he just dodged the issue of “revenue neutral,” caving in to making the “fair tax” a big change that agrees to do nothing. Nearly all of Boortz's arguments against the current tax system are sound. The “Fair Tax” is just a poor solution that has been compromised so much as to be worthless. The “Fair Tax” leaves business vulnerable to other taxes and capital as well. ClampIt does not.

Q. How does ClampIt differ from the “Fair Tax”?
Here are some of the more important differences:
 * 1) ClampIt limits the amount of taxation. The “Fair Tax” does not.  The current tax scheme does not.
 * 2) ClampIt restricts every sale to one and only one tax. The “Fair Tax” permits state, local, income and what Congress can think of next to be added to what you pay with the “Fair Tax.”
 * 3) ClampIt restricts the Federal government to a fixed ratio of one fifth of all tax revenue and insures that respective state and local governments are directly paid the same fixed ratio. The “Fair Tax” sends all the money to the Federal government.
 * 4) ClampIt prohibits any and all other taxes. The “Fair Tax” permits any number of local, state and federal taxes to be added to the "fair tax."
 * 5) ClampIt specifically prohibits any tax or fee to be assessed on anything you own. The “Fair Tax” leaves property, auto, tag, excise and other taxes intact and does not limit any fees any state, federal or local government may dream up in addition to taxes.
 * 6) ClampIt restricts all government funding to only that revenue derived directly from ClampIt – all other fines, fees, and windfalls of the government must be assigned to a national distribution to every citizen's charity account.  The “Fair Tax” permits fines, fees, and property seizure by government to be used by government for whatever purpose they desire.
 * 7) ClampIt prohibits any tax levied by market (who) or territory (where) and only by product or service (what). The "fair tax" does not.
 * 8) ClampIt applies the tax across the board (manufacturer, jobber, wholesaler, retailer and consumer), thus its rate can be very low. The "fair tax" only applies to consumers, thus even its initial rate is very high.
 * 9) ClampIt requires annual progressive plurality approval of the members of both houses of Congress to change any product tax rate from five percent. The "fair tax" requires no progressive approval to raise its rate.
 * 10) ClampIt funds and budgets charity. The Fair Tax does not.
 * 11) ClampIt funds and budgets individual entitlements of social security and health care. The Fair Tax does not.
 * 12) ClampIt constitutionally fixes the ratio of the share of tax revenues to federal, state, individual entitlements, charity (welfare), and local governments. The "fair tax" does not.

Q: How can the ClampIt tax rate be so low?
A: The reason it can be so low is the elimination of sacred cows. Every element of the economy (wholesalers, retailers, individuals, governments, international companies, finance and insurance companies, newspapers, televisions stations, lawyers, doctors, stockbrokers, commodity merchants) all pay a very reasonable default rate of five percent of the value of anything they sell under ClampIt. This is exacted from proceeds due the seller by independent transfer agents (typically your bank or credit card company and others). On the Boortz/Linder proposed "fair tax", only the consumer pays any tax at all, thus excluding four out of five hands in distribution, production and finance. It strongly favors big business and big government, thus it has received a “preaching to the choir” endorsement from these elements. “Revenue neutral” is a kiss your sister reform that does nothing, roughly akin to an obese patient telling his doctor that he will go on a diet only if his exercise regimen is reduced – insisting that his net caloric intake stay the same. So he will stay fat and die of a heart attack. The ClampIt amendment reduces the ratio of government expense to Gross National Product to that very near the ideal growth ratio of 21.9%. It is also important to realize that after the unit price tax rate of government is adjusted to the optimum growth rate, its government revenues will increase.

'''Q. What about welfare and social security? Every economist says taxes must be raised to pay for this. How does ClampIt dodge this bullet?'''

A. ClampIt is not a federal tax, but a nationally uniform, jointly applied single tax that finances federal, state and local governments, individual citizen entitlements of social security and health care, and charity (welfare), the latter as individually determined by each and every citizen. Each of these five funds directly receive the same fixed percentage of revenue that is constitutionally protected and paid directly by independent transfer agents. Any revenue obtained by any government in excess of that provided by ClampIt for their operations (this includes fees, fines and windfalls) are required to be Assigned National Distribution as a supplement each individual citizens' charity accounts. Responsible citizens who are close to real needs replace government bureaucrats “best legislature money can buy” to allocate these funds to charity. Local and state governments are relieved of taxation revenue planning and need only concentrate on the application of their share of revenues. The expense of revenue collection is greatly simplified and "piggybacked" on commercial clearings. Individual entitlement is fully funded under ClampIt as a ratio of the entire economy (see discussion elsewhere), not just labor. Under the status quo, taxes are too numerous, too complicated, too high and out of control. ClampIt addresses all of these faults head on.

'''Q. How is this enforced? What if people just don't pay the tax?'''

A. Good question.


 * 1) The tax is reasonable. Adam Smith in his epic work --The Wealth of Nations-- that forms the basis for every college economics course, warned that any tax over ten percent would invite bootlegging and cause problems of non-compliance.  When it is 10% or under, it doesn't provide sufficient margin for any bootlegger to get traction.  ClampIt (like nearly every other sales tax except the Boortz/Linder proposal) fits this criterion of being under 10 percent.
 * 2) The tax is always exacted from the person who gets the money, namely the seller – it never assesses a tax from someone who has no money to pay it.
 * 3) It uses neutral third-party transfer agents (banks, credit card companies and perhaps others) to do the accounting and these are always audited and batch balanced. It is “piggybacked” on commercial clearings who are paid as sales tax is paid now as a small percentage of each transaction.
 * 4) Cash withdrawals are “pre-taxed” at the maximum rate of ten percent (no big deal for small expenditures), thus any anonymous purchase or underground element will pay more to remain anonymous; most will just take the convenient route of a transfer agent. Though it does not mandate it, it is envisioned that certain purchases (real estate, securities, autos, major appliances) will be required by statute to be paid through a recording transfer agent to encourage compliance and transfer of title.
 * 5) Since every buyer and every seller split credit for taxes paid, the buyer will be expecting (and his charities too) notification of tax credits for any purchase.
 * 6) Tax collections are batch balanced (note that all of the local government revenues must equal their respective state revenues and all of the state revenues must equal federal revenues) and these are published. As a consequence, even transfer agents are checked by broad public vigilance.  It is no accident that there are precisely ten accounts (five for the buyer and five for the seller), thus the fixed ratio is extremely easy to calculate.  This was the same reason we made our currency base ten instead of sixpence.
 * 7) Local citizens will want to make sure that their local governments get their share of their purchase revenues. If you buy locally, the local government gets double the revenue.

Despite this, individual financial transactions are rightfully private. No citizen has to annually “file” anything with the government and can have as many (or as few) transfer agents as they like just like we now do with credit card accounts.

Q. What if someone sold their house for a dollar to their spouse?

A. Another good question. Undervalued or “not arms length” sales from a willing buyer to a willing seller, illegal kickbacks and dumping have been a chronic problem with the present system because it is so complex and the rate of tax paid is hidden and only statistically sampled, the tax basis is on cost rather than price and the transactions themselves are hidden. With ClampIt, ownership value is limited by evidence of tax paid, thus if the house burned down the insurance company could not be forced to pay for it. Under the special instance of the transition plan, a separate appraisal (under the watchful eye of a tax assessor) is a noted precaution. In short, few would want to take the risk for just a 5% margin.

Q. Would I still be able to get a deduction for my home mortgage?

A. Yes, you would get a 100% deduction because ClampIt does away with all income taxes.

Q. What would be the annual tax if I bought a house for $250,000?

A. Zero. There is no recurring tax on ownership under ClampIt. However, there would be a 5% tax paid by the seller (in lieu of any other taxes the seller used to pay) when you buy your house included in the purchase price. The buyer never has any add on tax of any kind.

Q. What tax would I have to pay on my house I already own before ClampIt?

A. Whatever is now assessed by your state and local government. Optionally, you can purchase your house under the transition plan [see elsewhere], pay the 5% ClampIt tax, and end your recurring property taxes. Doing so helps retire public debt.

Q. Will I have to pay ClampIt taxes on my mortgage payments?

A. You never have a tax on anything you buy under ClampIt, including mortgage payments. By default, your monthly mortgage payment would have a five percent tax that would be paid by your mortgagor, but they would have no other income or other taxes. You will receive 50% credit for the tax the mortgage lender pays which will be shown on your charity, local and state accounts.

Q. What will happen to the IRS?

A. The IRS will no longer have income tax processing responsibilities and will have no cause to audit private citizens. They will be likely redeployed to continually audit transfer agents and to audit international imports and will probably have a role in implementing the transition plan to retire public debt.

'''Q. What if my business loses money? Will I be able to get a tax credit?'''

A. No. Anything you sell will still have (five percent by default) tax deducted from gross proceeds. ClampIt ignores profit and loss and is indexed only to the value of the transaction. Though this sounds harsh, it is substantially less than the current rate of taxation and you never owe a tax until you get the money to pay it. Moreover, it is constitutionally protected. This does not prevent your local, state or federal government from legislating other relief (from their charity account, for example), but it is not compelled.

Q. Will I still have to buy a tag for my car?

A. Only if you purchased it before the ClampIt amendment goes into effect. Thereafter, since no additional fee or tax can be assessed on any purchase under ClampIt until you sell it, any such fee additional fee made as a contingency is prohibited. (There can only be one tax applied on any transaction and no add on taxes are ever permitted on anything you buy). Your local government can assess an annual fee for a tag, but it must surrender any money so collected to the Assigned National Distribution (AND) account if they do, which makes it very unlikely that they will. If they require a tag, they can furnish it without a fee or require that you purchase it elsewhere (like most Europeans do now). The main reason for the annual tag and decal was to enforce tax collection with a minor purpose of theft prevention.

'''Q. What if I buy a car for $25,000. What would be the tax under ClampIt?'''

A. Zero. It would be included in the $25,000 and paid by the seller. You would get a credit for 50% of the $1,250 paid by the seller. There would be no other fees or taxes. The net price negotiated and invoiced always includes tax.

'''Q. What if I traded in a car that was worth $10,000? Would I pay tax?'''

A. Yes, your bank (or other transfer agent you select) would deduct $500.00 for tax (assuming the default of 5%) on the sale of your car to the dealer when you deposited your check. They would also transfer title.

Q. Would I have to pay tax on financing?

A. No, but it would be paid by the loan company (who is the seller of the loan to you in this case). It, too, would be typically 5% of your monthly payment. You would receive 50% credit for the tax paid on your monthly payment.

Q. Would that be on just the interest?

A. No, it would be on the total amount, principal and interest. ClampIt is always on the gross value of the invoice. The loan company, like you, would have no other taxes, however.

'''Q. What about food? Right now our state doesn't allow tax on food.'''

A. Today, your food producer and supermarket pay property, fuel, payroll and income taxes which are included in the price you pay for food, even though there is often no sales tax. Under ClampIt, there is never an add on tax on what anyone buys, and it is always assumed to be included in the price of anything sold. Tax is by product only (not by market or territory), thus Congress will likely set the food product category tax very low. This will lower the price you pay for food because the tax burden to all is lower. This is because the commodity market does not currently pay any transaction tax and doing so will be strongly resisted by them, but it is likely there will be some tax (say 2 or 3 percent). Congress cannot exempt the commodity market under ClampIt as they have done now, because ClampIt only permits them to vary a tax rate by product. Thus, if beef is taxed at 3%, the commodity trader must pay that same rate as well as the rancher, food processor, distributor and retailer. This is a good thing, because the commodity market will lobby to drive down the transaction tax on necessaries and this will lower the price of food by reducing tax burden throughout the distribution chain. ClampIt thus succeeds in making the producer, the commodity trader, the distributor and the consumer allies in holding tax rates low. Because there is a transaction fee, it dampens speculation somewhat. The current system of exemptions lessens the bite on these hands and they tend to care less.

Q. Will my church lose their property tax deduction under ClampIt?

A. No. For most areas, churches and other charities have been exempt from property taxes. The Mormons voluntarily pay property taxes, but they are an exception. Under ClampIt, there are no recurring taxes on ownership. Any recurring property tax is illegal after ClampIt goes into effect.

Q. Will my school have to pay ClampIt taxes?

A. No, if they buy anything. Yes, if they sell something.

'''Q. What about girl scout cookies? Will they have to pay tax under ClampIt?'''

A. Yes. No one is exempt.

'''Q. AT&T bought BellSouth a while back for $69 billion which I understood was tax free? Would they have had to pay any tax under ClampIt?'''

A. Yes, BellSouth shareholders would have had to pay $3.45 billion if ClampIt was in effect. Goldman Sachs would also have to pay additional tax on their commission fee. You are correct that it was not taxable under the current system. It is also not taxable under the “Fair Tax”.

'''Q. What about tobacco? Would the tax be reduced under ClampIt?'''

A. By default, the tax would be five percent like everything else. It would be likely that Congress would, however, increase the tax to 8 or even 9 percent. No tax may be higher than 10%. Tobacco has many intermediate distribution channels and high markup, thus the net compounded tax would be higher since it is assessed at each point in the distribution. Note that ClampIt, since it delineates tax rates by product, easily provides for restricted sale control to minors.

Q. Wouldn't ClampIt put a chill on corporate mergers?

A. Somewhat, but that is not a bad thing. Some years back, stockbrokers charged a transfer fee of 10%, thus a five percent would not be too icy.

'''Q. What about foreign imports? Will they still be exempt from tax under MFN (Most Favored Nation) treaties?'''

A. International imports would be taxed the same as domestic goods and services at the port of entry. They would be taxed again each time they are sold through any distribution channel. Currently, they only pay sales tax collected at the final consumer level. So this will be an increase of about 6% to bring them up to par with domestic manufacturers.

'''Q. ClampIt says it includes health care and social security. How can it be financed for that little when I'm already getting hit about 17% or so on payroll deduction for social security alone?'''

A. The reason social security and health care rates are so high is because they are levied chiefly on payroll, with the remainder of the economy exempt. ClampIt assesses for individual citizen entitlement a full one fifth of all tax revenue of the entire Gross National Product, which equates to a 1% gross receipts transaction tax. New Zealand has funded both their traumatic emergency health care and social security system with a 1.5% gross receipts tax that is applied to roughly 60-70% of their economy. They have been doing this for several years. Though the individual entitlement fund of ClampIt is only 1% gross receipts, it applies to all sales (100%) of the economy, thus it is roughly setting aside the same funding as successfully done in new Zealand. Details of the health care benefit still need to be addressed. New Zealand still has private health care and insurance as well, but all accidental and emergency care is provided at no cost to New Zealand citizens. ClampIt thus sets a budget set aside to get this done which has been empirically found to be viable.

'''Q. What would illegal immigrants pay? Seems to me we're subsidizing the third world.'''

A. Since ClampIt embeds the tax in anything purchased, they would pay the same as anyone else. But they would likely require a record transaction (to process title) to buy things such as major appliances, automobiles and other high-ticket items. Cash transactions are “pre-taxed” at ten percent, thus an underground economy using cash would pay more. Further, if the individual is not a citizen or legal guest, the tax funds collected must be assigned national distribution to the general public charity account. This provision attacks “cheap labor” head on and provides the incentive for government to enforce immigration laws in that lax enforcement deprives government of funds.

Q. Why would the government want to enforce immigration laws because of ClampIt?

A. As it is now, social security, health care, state and federal income tax deducted from illegal aliens' paychecks is never claimed and is just spent by government, particularly sales taxes. This “free money” encourages local governments to “look the other way” and not enforce immigration laws; the resulting populace is disenfranchised and has no vote or representation, which is wrong. Governments can't keep such money under ClampIt, yet illegal aliens are not excused from paying these taxes. That becomes a powerful incentive to enforce immigration laws. Bear in mind, one half of the tax paid by the seller is credited to the seller's accounts; the buyers account must be reconciled to a legitimate account or it must be assigned national distribution under ClampIt.

Q. Does that mean you have to be a citizen to buy anything in the United States?

A. No. It does mean that you have to be either a citizen or a legal visitor for the federal, state and local government to keep any of the tax money. Else, it has to be assigned national distribution to charity of the entire population's predetermination. Charity under ClampIt is defined by each citizen of the population as a whole, not by any government entity. A student reciprocating in a study abroad program has an address and visitor status. An illegal alien meat cutter squirreled away in a truck living in deplorable conditions does not; ClampIt puts the incentive to fix the problem, not profit by it as is now done with the status quo. Q.  If the government can't get any tax revenue from illegal aliens, wouldn't they want to get rid of them?

A. That's the general idea, or make them citizens if they look like they would be a good addition, or be thankful of them as tourists for the money they spend.

Q. How is the Charity account paid?

A. Each citizen selects one or more transfer agents (which can be an individual or company similar to a credit card, bank, credit union, or accounting firm that qualifies). Initially when a citizen sets up an account, the individual charity payees are declared by the citizen (much like payees are declared by an on line banking) and a percentage of the charity fund they are to receive is declared. The account holder can change this declaration at any time. When charity tax credits are sufficiently accumulated, they are automatically held in escrow and then paid by the bank or transfer agent directly to those designated charities. A monthly statement is provided to the account holder and the gross amount (not individual accounts) is published and reconciled.

Q. How can we be sure the bank pays the charities?

A. All transfer agents are continuously audited and batch balanced against one another. The sums of their tax distributions are published (but not individuals or firms). Since the ClampIt revenue distribution ratios are fixed, they must balance.

Q. How are illegal alien non-distributed money and the money from fines distributed?

A. Tax revenues that have no citizenship, visitor status or residence are accumulated to a special charity account called Assigned National Distribution. This fund is equally apportioned to all citizens of record as a supplement to their Charity account. It is not saved nor can it be used to fund any intermediate government activity. Thus the illegal alien pays the same (or more, if cash is used instead of a transfer agent), yet the government does not get any revenue for the buyer's account; it is instead assigned national distribution to every legitimate citizens Charity account. This alerts the public to the magnitude of the problem and simultaneously gives government the incentive to correct the problem.

'''Q. What if I want to cash a check to give my wife for groceries? Will I be taxed to give her the money?'''

A. Cash withdrawals are taxed at ten percent on the precept that it could be spent for anything. You would be better off to let your wife use a credit or debit card, or write a check to the grocer; it would be taxed (likely) at only 2 or 3 percent.

'''Q. What about my child's allowance? If I give her cash am I paying 10 percent tax?'''

A. Yes. A better solution is to use the Charity account as children allowances, which is not taxed.

'''Q. What about state lotteries? How will they be impacted under ClampIt?'''

A. State lotteries sales by default would have a tax of 5% under ClampIt. However, governments may not supplement general or special budget with the proceeds. All gross revenues would have to be assigned national distribution. Because of this, gaming may be legalized and not the exclusive function of government which will produce substantially more money at less expense to the state and eliminate the hypocrisy of “blue law” authority to establish non-competitive, exclusive state businesses. The contribution of state lotteries to higher education itself is minuscule, contributing less than ten percent of the typical University's budget. It is a highly regressive tax, since it preys on the ignorant. The majority of the money is absorbed in promotion and operations.

'''Q. What about red light cameras? Are they made illegal under ClampIt?'''

A. No, your local government can install red light cameras if the wish, but they cannot keep any money they receive in fines. The latter makes it unlikely that they will.

Q. If state governments have to give away lottery proceeds, wouldn't this wreck the education funding like Georgia's Hope scholarship?

A. No. State owned universities may charge fees or tuition under ClampIt, but they cannot keep the money thus obtained but must instead assign it to the national charity account; thus there would be no incentive for them to make any charges to defer. Qualified students (those that would win scholarships would certainly be qualified) will thus likely have no charges from the state to attend college. Private colleges can continue to charge tuition as they see fit. State colleges would be run similar to public schools, but perhaps with competitive exams for admission. This change will see private colleges as a viable alternative to state colleges in that they will vie for those that can afford higher education but may not meet the competitive criteria.

'''Q. No tuition for state colleges? Isn't this the main support of universities? Won't it have to made up by the taxpayer?'''

A. Tuition comprises less than 15% of a typical universities revenues4, making it a regressive barrier to poorer students. The “fork lift” college applications replete with “proof of need” invasive daisy chained income tax filings and other nonsense more than consumes this contribution, making its elimination a net plus for tax payers and college instructors alike. This financially unsound bias has depressed competition from private colleges, forcing many to the brink of bankruptcy as well as depressing the market for qualified teachers. ClampIt restores competition to higher education, both in merit of applicants to state colleges and in private college alternatives. Bear in mind that state funds are greatly enlarged over the “send to Washington, do what Washington says, and get back 50 cents on the dollar.”

Q. How can private colleges afford quality instruction without tax subsidy?

A. The largest cost of labor (professor salaries) is taxes. ClampIt reduces taxes on professors to 5% and insures that the same tax load carried by private colleges is also paid by state run colleges. All of a sudden, private colleges are competitive.

'''Q. What about local schools? Don't they depend on property taxes for support?'''

A. The major source of revenue for local governments is a shared sales tax, not property taxes. Earmarking revenue sources to “schools” or “parks” is therefore a creative accounting fiction. Local governments consume core taxes and often debt finance public schools, parks and those projects that are worthwhile, financing these with public referendums. This amounts to nothing more than a corporate subsidy to bond merchants. This ratchets up local budgets and adds interest expense, but never cuts the waste in the core budget or even exposes it to scrutiny. ClampIt exposes this “earmarking” fiction for what it is. Good local management no longer has to wrestle with securing funds through taxes and is free to concentrate on the application of funds for the benefit of their public.

Q. Does this mean local governments can no longer borrow money after ClampIt?

A. No. But they are constitutionally constrained that they cannot agree to “increase taxes as required” to repay bonds since they no longer control the rate of taxation. Borrowing money to build public facilities that make economic sense is still sound (like that of Boulder dam hydroelectric power or similar projects). Shifting core requirements like police and fire protection, schools and road maintenance to local optional sales taxes is just smoke and mirrors that bilks the public. What happens are those boondoggle projects that could not possibly pass public muster are covertly financed from general funds and those that can are deferred and made a condition of public agreement for additional tax. Government gets larger, taxes get higher, debt gets higher and the economy gets weaker – because the boondoggles shouldn't be done.

Q. What if ClampIt ratio is too low to support fundamental functions of government, like poor counties? Don't we need federal money to provide a subsidy until they get on their feet?
A. There are four methods to increase revenues to poor counties under ClampIt.
 * 1) The ClampIt rate of taxation can be increased, but this requires national consensus and it has been deliberately made difficult by a constitutional requirement of progressive annual approval for any product or service that differs from the default of 5%. Theoretically, Congress could use this to nationally raise taxes (say, in time of war), but the distribution ratios remain the same, I. e., only one-fifth goes to the federal government, etc.  Thus this would not be an effective choice.
 * 2) The Charity funds of federal and state governments can be used to supplement poor local governments without public consensus and this is one of the ballast functions of this fund – since it cannot be given to the government entity that controls it and must be given away. This is the best choice for a state that has a poor county or city that needs temporary help and can also be done from the Federal government as well.
 * 3) There can also be an appeal to the general public to direct their Charity funds (like temporary relief for storm victims and the like). The use of these embedded charity funds for wealth redistribution is controlled because it requires all needs to be weighed against one another.
 * 4) ClampIt provides revenue for rural areas by giving them a tax share of their production. For example, a nuclear power plant or renewable energy source will provide appropriate revenue to rural areas (to keep it secure and support infrastructure), since they will perpetually share in the tax revenue from the gross wholesale value of the production revenues.   This is a more permanent solution than using Charity funds, but the latter can provide immediate relief.

'''Q. Wow. ClampIt seems to fit very well for better management of poor areas. But want this raise product and utility prices?'''

A. No, it will lower them. This serves to counter the NIMBY (Not In My Back Yard) mentality of plant location. Under the status quo, plants look for cheap labor and cheap taxes, with “enterprise zones” that defer local taxation to attract foreign businesses. This practice in effect subsidizes foreign competition and is a “greener pasture” method of thinking that deserts local businesses and citizens. It is wrong. Under ClampIt, the tax rate for the same product is always the same throughout the entire nation. That doesn't mean the cost is the same, but whatever community wins the project also wins the local tax share.

Q. So ClampIt does not allow “enterprise zones” or other tax deferrals for attracting new business?

A. No, it does not and should not. One example in Atlanta of this is a government group brought in a competitor from Korea in a tax free industrial park to a local printed circuit board manufacturer. The domestic manufacturer had to pay taxes through the nose and the foreign competitor got a twenty year free ride subsidy. The local politicians touted their action as “creating jobs.” This is sheer nonsense because it loads domestic business with the tax and gives unfair advantage to the foreign interloper. Under ClampIt, where a plant is located may certainly include cheap labor, but it cannot have any different tax rate for the same product. This keeps all competition fair and makes local, state and federal governments compete to use their share of money to produce the highest standard of living. Pollution free areas are attractive to plants. Right now, it doesn't matter; low tax (Mexico or foreign shores) is more important.

Q. Won't the construction industry lose if new plants are built because of this tax policy and the tax digest will suffer?

A. No. It is important to realize that increasing the tax load on a poor area does not produce any more revenue; it produces less revenue. It is very much like the fallacy of pricing a Coke at five dollars in a poor area; you won't sell hardly any, thus you won't get more revenue. You'll simply have a higher price. ClampIt is optimized to produce the most revenue, though tweaks are possible.

'''Q. What about monopolies? Since there is no recurring property tax, couldn't big financiers just buy up all of our land and there would be nothing we could do about it?'''

A. Monopolies are a problem in any free society because they destroy free markets and lower the standard of living by demanding artificial prices that are not competitively checked. Tax itself is a monopoly and it has been abused, rising from about 1% in the 1900's to over 34% of total GDP by the year 20005, making government taxation the largest of all monopolies in the United States. ClampIt addresses this monopoly directly, but it will not be enough because private monopolies will also have to be controlled. The British define a monopoly as any entity that controls over one third market share, yet in the United States we routinely tolerate utility monopolies that control over 95% of the market. Most of these are government sanctioned and they own large tracts of land and pay very little tax on it (due to their undue influence on our legislatures with their concentrated money, they simply buy legislation to their favor). Thus, historically, recurring property tax has not and is not a deterrent at all and history has shown that it has been loaded up on the little guy. ClampIt protects the little guy from excessive taxation and this forces government to spread out taxes and to revisit loophole concessions to monopolies. It is this protection of the little guy that motivates governments to have the gumption to resist monopolies for they will see consigning large tracts of land to perpetual trusts the same as the average citizen: trading your birthright for a bowl of porridge.

ClampIt also has a transition plan will tend to dismantle this inequity, because the recurring tax on property for these privileged monopolies will continue and will very likely increase in rate. This will eventually force a conversion to ClampIt and it must be arm's length and under public scrutiny. National parks do not produce any recurring tax base.

ClampIt sets a favorable stage for monopoly regulation, but otherwise leaves it to Congress. It protects the little guy from abuse of government by artificial revaluation by eliminating recurring tax all together. The monopolies need no protection.

Q. Will I have to pay tax on prescription drugs?

A. There is no add on tax on anything you buy; you simply pay the advertised price. ClampIt has mechanisms to control pharmaceutical distribution. Here it is important to realize that the product delineation required by ClampIt controls the entire channel of delivery for a particular product. Thus reduction of the tax rate levied on the product throughout the distribution channel greatly affects the final price. By contrast, market separated tax schemes (such as the status quo and the so-called "fair tax" or "tax the rich" schemes of income tax) do not lower the tax burden of the delivery channel, but in fact increase it, even if there is no "sales tax" applied at the consumer. This is why a 2% ClampIt tax greatly lowers the selling price of milk.

'''Q. What about affirmative action? Will it be eliminated under ClampIt?'''

A. ClampIt has no bias and specifically prohibits tax treatment based on who one is or where they live. ClampIt is fair by design and needs no such program. But it does not specifically prohibit what any government (state, federal or local) does with its funds.

Q. What about the gold standard? Ron Paul and others say that is the fix we need and to get rid of the Federal Reserve. How does this sit with ClampIt?
A. The bloated size of government and runaway taxation are the chief causes of our economic distress. Although a better, non-manipulative currency standard has merit in that it prevents dilution, it does not restore the uncertainty that citizens have, nor does it address the inequities in taxation and centralized federal disbursements that are the real cause of the erosion of the United States economy. Ron Paul is right that this needs to be fixed, but it is not adequate in that it addresses only about three percent of the problem (printing money and causing inflation). To illustrate, assume we left the entire tax system intact and returned to the gold standard as a basis for currency. We would still have government at 40% taxation level, still favor internationally sourced goods over domestic, still have the health care crisis, and still have unemployment at record levels. We would either have to hold and protect gold ourselves (and if we took the option to “pay to the holder in gold on demand” replete with a chemical assay certificate to make sure it really was gold and sufficient security to make sure it won't be stolen); or we would have to trust someone to provide us a certificate that our gold is really being held for us as the only owner and really is there and not loaned out to someone else. Granted that gold is a lot harder to create or find than to simply print money, but the problem still exists.

Others have proposed kilowatt-hours as a basic denominator for currency, or other things that now appear to have a real constant value. Though gold or silver resists counterfeiting and figures don't lie, a lot of liars figure. Ron Paul and Jack Kemp were certainly right that the Federal Reserve was being gamed by dishonest financiers and that is now obvious. But returning to the gold standard is not a total solution. If you had a million dollars in gold, you would have to make sure it really isn't counterfeit (one can plate gold one molecule thick on baser metal), you would have to safeguard it, or you would have to put it in storage and trust the fellow that 's storing it.

Broad public vigilance is the best guard of value. We have in the Internet a tool that can continuously audit the value of our currency, regardless of the base. One such movement is called “bitcoin” (see bitcoin.org) which creates a distributed, constant value currency and it appears to have merit in that it prevents the currency from being gamed. ClampIt easily avails itself of this confidence-inspiring tool to assure the public that its currency is not being diluted, but it doesn't mandate it to fix the run-away government spending and taxation.

'''Q. A lot of people say that ClampIt is just a value-added tax that has been tried before and did not work. Is this so?'''

A. No. ClampIt requires that there can only be one tax applied to any sale event and that it must be based on the net value as that freely agreed to by a willing buyer and a willing seller. A value-added tax, whereby the purchased price is subtracted from the selling price, requires maintaining a history to determine the tax amount. This is invasive and constitutionally prohibited under ClampIt. No buyer is required to compute any tax (it is exacted from the net price from the seller). No seller requires any history to be maintained to compute any tax. ClampIt furthermore repeals all other taxes or fees that support any government function. It further requires that state, federal, local, charity and entitlement each get directly paid a respective fixed ratio of any ClampIt revenues. There never has been such a constitutional limit imposed on taxation. The latter is the reason that taxes inevitably creep up to financial collapse.

Q. Why does ClampIt only permit different tax rates by product?
A. There are only three ways to fairly segregate any contract and that is
 * 1) by product,
 * 2) by market, or
 * 3) by territory.

Broadly speaking, a market represents who, a product what, and a territory where any transaction event occurs. Before ClampIt, all three methods were used to define various tax plans. For example, sales tax plans general vary only by territory (different states, counties or cities have different sales tax rates). Sales taxes also vary by market. This is because, generally, only the final consumer market pays sales tax (retailers, manufacturers, importers and financiers are exempt). Sales taxes sometimes vary by product as well, e. g. they are generally applied to all products (milk, new cars, tobacco, clothes, etc.), but sometimes food and pharmaceuticals were exempt (from sales tax only) in some states and areas. Services (advertising, professional fees, contract labor) were also made exempt from sales tax. Used goods were also often exempt. Income taxes varies by market (corporate, individual, etc.) and also by territory (federal, state and local). The rate of income tax often also varies by amount and by time. Excise taxes vary mostly by product/service (tires, telephone, etc.).

All of these taxes in the past were often combined (added on), I. e., you could be hit with both an excise tax, a sales tax, as well as an income tax on what you purchase.

The problem with these various tax plans are that their total rate is uncontrollable (cannot be limited because of multiple, autonomous taxing authorities) and they are so complex and unfair as to be reprehensible. Tax loopholes are literally sold by federal and state legislators and these are chiefly by market and often by territory and are narrowly defined for the benefit of one lobbying element over a competitor, be it direct or indirect. Tax credits and exemptions created a constant churn of new taxes, fees and the like, making it compulsory that every major business and group have lobbyists in Washington. The system is corrupt (self-serving) and it is broken.

It is easy to segregate any group of citizens as a market and, when this is done, taxation becomes selective enforcement of the law. Some powerful groups of people (such as banks, stock markets, insurers and the like) secured exemption from transactional taxes. Other corporations (like the infamous GE) so manipulated their activities so as to pay no income tax at all - completely legally.

Likewise, citizens can be categorized by the area in which they live and this, too, invites selective enforcement of the law through taxation. International exports are often exempt from many taxes (which all other countries retaliate to effect the same treatment), which has left domestic producers bearing the lion share of tax load.

Consequently, ClampIt permits tax rates to vary only by product. Anyone selling the same product or service pays the same tax rate regardless of where they live or who they are. This ensures that all direct competitors have the same tax burden. It also enables necessaries (food, medicine) to carry a lower rate, yet still have only one tax per transaction. Since the rate is ubiquitously applied to all like products sold and no exemptions are permitted, it makes allies of the producer and consumer. Further, since the tax is assessed on and included in the selling price, it is very sensitive to compounding, markup and depth of the distribution channel. A three percent difference in product rate can make a profound difference in consumer price.

Thus milk may be taxed at only 2%, but wine and beer could be taxed at 7%. This avoids any need to vary by market or territory and prevents erosion of the tax base through lobbying for exemptions. In the case for milk, it lowers the cost all through the distribution chain and greatly reduces the net price paid. A ClampIt example shows that this facility enables sufficient elasticity to account for externalities without resorting to tortured rebate plans.

Using this product delineation, ClampIt makes milk cheap to a millionaire and to a poor mother with a needy baby. Liquor is expensive to both. It does so as simply as mathematically possible. Under the “Fair Tax”, both milk and liquor would carry the same tax burden, thus milk is expensive to a poor mother as well as to the millionaire but, on average, liquor is somewhat cheaper.

Under the income tax, no product delineation is possible. Q. But churches and schools would be required to pay the same tax as a millionaire?

A. No buyer pays anything but the net price, though it is true that the consumer pays for everything. In the case of necessaries, the tax load on milk is reduced from the cow to the school, which gives a better price than the old method of exempting the school from consumer add-on sales tax and heavily taxing the rancher, dairy, distributor and retailer, which really is responsible for jacking up the final price on milk. Moreover, that also applies to anyone needing milk, in school or not. It is a much simpler, and a better method. We want milk to be lower for children, not merely have a school not pay tax on a fleet of cars for fat cat administrators. What is being produced demands a lower tax rate, not merely who is ultimately consuming it.

Q. So ClampIt is a better plan than exempting certain people from taxation?

A. Precisely. It is also true for territories.

Q. You mean the tax rate in New York City is the same as Podunk, Iowa?

A. Yes, but that doesn't mean the price is the same – just the tax rate is the same for the same product.

Q. Would ClampIt tax the Internet?

A. There are no sacred cows under ClampIt.

Q. Won't corporations just raise prices and pass along any tax on food?

A. There is a somewhat specious argument that all corporations should be exempt from tax because all they do is pass it on. In reality, this is a self-serving lobbyist plea to create a tax-free elite (which GE has already achieved). The fact is that this is partially true in that a reduction by product reduces the tax load from cow to child. It is patently false that every corporation can pass a tax on unless they are a monopoly. The tax by product/service ensures that the tax rate is the same for all competitors selling the same product or service.