I can't wait to see the lower prices. lol

[lapauvre]

http://www.thedilly.com/view.article.wtd?id=672




FairTax: Reagan would be so proud…
Are we really ready for the phrase “Corporate America” to take on a whole new meaning?

By SirSpanksalot
2005.05.14


As I read the 18 page FAQ for the FairTax proposal being pushed by the senate, it just got funnier and funnier.

"The FairTax is a single stage tax, meaning it will tax only the sale of new consumer goods and services at the final point of purchase. Used items will not be taxed. Business-to-business purchases for the production of goods and services will also not be taxed."

“The FairTax will replace all federal taxes except excise* taxes, which are typically small and meant for particular purposes. The FairTax will repeal and replace the individual income tax, the capital gains tax, the payroll tax, the corporate income tax, the self-employment tax, the gift tax, and the death tax.”

"All goods and services already contain hidden costs of the current tax system embedded in their prices. When these embedded taxes are removed, prices will come down 20 percent-25 percent in the first year after the adoption of the FairTax, according to Dr. Dale Jorgenson, chairman of the Harvard University Economics Department."

These are but a few of the MANY fallacies** used to rationalize the FairTax proposition. I could write a series of 10 or more articles addressing every idiotic statement or one that was 20 pages long….but instead, this is what I've chosen to address. Personally, I think it's more than enough to make my point.

Can we truly afford such naivete' when considering the reform of our entire tax system? As if anyone truly believes some corporate stuffed-shirt is sitting in his chair, thinking to himself "Gee…I have all the money I need." So when the cost of business goes down, instead of giving themselves a nice raise, perhaps giving raises to middle and lower management (some may even raise worker salaries)…and paying larger dividends to their stock holders, the entire corporate community (known for it's honorable, noble nature and sense of fairness) would deny themselves this increased profit or even a portion thereof by lowering the prices of their goods or services.

That goes against the very fundamentals of business. You don't have to be the chairman of the Harvard University Economics Department to know that. C'mon…

FairTax is little more than a re-hashing of supply-side economics, trickle down economics, Voodoo economics (GHW's catch phrase) or my personal favorite euphemism, the shameless pandering to Corporate America and the nation's wealthiest of citizens…a new twist of a flawed concept. This doesn't level the playing field. It stacks the deck.

The resulting economic prosperity trickles down like molasses in winter. It is this ill-conceived theory that is responsible for the widening of the gap between the classes which allows economists like Dr. Dale Jorgenson to prepare misleading studies that indicate our nation's enormous economic growth so we can feel good about our country while some millionaire adds a few more zeros to their net worth and we have a hard time affording little more than the basic necessities of life. Sure, our “average” income as a nation has risen by leaps and bounds. The lower-middle-class and working poor have seen only marginal increases in their income (usually just barely keeping up with inflation) while the wealthiest individuals of our nation have experienced increases in income that are downright pornographic. Add them all up together and divide by our population and it looks good on paper…but it doesn't make it any easier for you or me to afford our bills. That's not progress.

There are underlying ramifications of this FairTax idiocy too. It puts the entire nation at the mercy of corporate America by creating an environment where the whole of our government's revenue is dependant on consumption. Thus, any law or regulation that may inhibit production or expansion (and therefore consumption) could be deemed against the best interest of our nation's economy. Enter the defenestration of environmental protection measures, certain worker rights, etc…

Now, I appreciate the candor of the FairTax proponents. Instead of obfuscating their pandering to the interests of corporate America and the idle rich through subsidies and tax breaks, at least they're shooting straight with us. They're saying, in no uncertain terms, it is good and right. Corporate America shouldn't pay any taxes at all. Everyone benefits when a wealthy person increases their wealth. It might be idiotic…but at least their honest.

Ironically, more than half of American corporations already pay no taxes. This includes over 30% of “big businesses” (those with over $10 million in profit or over $50 million in holdings). The only thing that'll change for them is that they'll no longer have to use creative accounting to avoid bearing their fair share of the tax burden. They won't be expected to pay anything.

Completely without tax obligation, their only responsibility and accountability would be to their stockholders. Corporate America would then rule our nation with impunity while not contributing so much as a dime to its upkeep. The burden of supporting our government would fall entirely upon the consumer market…driven primarily (almost entirely) by the middle class and working poor.

The United States is already a thinly veiled plutocratic oligarchy living with the illusion of existing as a democratic republic. To embrace the continued distortion of the ideology of our country in such a manner is, if I may say, downright un-American.

Lastly, I have one extremely important question: If this FairTax passes, will Dr. Dale Jorgenson's endorsement cost 20%-25% less the next time some idiot comes up with another way to scam the American public?

*Excise tax: A tax levied on the purchase of a specific type of good or service, such as tobacco products or telephone services.

**No, I have not sifted through 18 pages of text and brought up the only 3 paragraphs that make it seem like a bad idea. In all honesty, I think the entire d0cument is an insult to the intellect of the reader. However, don't take my word for it. I hope everyone interested will click on the link provided and read the d0cument for themselves and see with their own eyes the unrealistic fantasy land this d0cument portrays. Sure, it's long…but it's worth it if you give a rat's ass about the well being of your country.

Link to the .pdf file that inspired this article: link

[Shreddesaurous]

1. From the author

Here's the link to the .pdf file

http://linder.house.gov/_pdfs/FairTaxFrequentlyAskedQuestions.pdf

[acmejack]

2. OMFG!

How much are we supposed to take?

[Technowitch]

3. Per DU article posting rules--

Please post *no more* than four paragraphs of any copyright-protected material, with a link back to the original article.

Thank you,
DU Moderator

[lapauvre]

5. My apologies

The author is a member of DU, but was having trouble posting his article. He asked me to do so. He is my son. In my enthusiasm, I forgot the rule.

Won't happen again.

[Technowitch]

8. Excerpts

Hi Lapauvre,

You can include the whole article if you have the permission of the author. But when I checked on the site, I saw that the material was listed as having a copyright -- hence the notice. If one has explicit permission, it's best to say such.

Not a huge deal, just something to remember for the future. Appreciate the feedback & additional info.

-Technowitch
DU Moderator

[Shreddesaurous]

10. Yep...

I'm the author. My mother read my article and thought it was worth sharing. Being new to DU, my post-count was insufficient to start new threads. So, she did the honors.

I appreciate your patience and understanding in this matter. Meanwhile, I'll look forward to sharing more of my ramblings in the future.

:)

[Selatius]

4. I'm not game with a sales tax. How about a counter-proposal:

Let's say everyone is at the table, and everyone says they're looking out for the America's workers. The question posed is what would be a more equitable tax code?

There are several proposals planted on the table, and I plant this radical piece:

Abolish the income tax and replace it with a flat tax.

1. This tax will apply to both earned and unearned income (capital gains or "portfolio income") both individual and corporate inside the US.

2. Your first 250,000 is untaxed by the federal government. If, for example, a family household has a combined income of 60,000, they pay no federal income tax.

3. Everything beyond 250,000 is taxed at 75%.

4. The 250,000 mark will automatically adjust according to either the cost of living or the rate of inflation, and it will adjust once every five years automatically. If the cost of living rose faster, then it will adjust according to the cost of living. If inflation, likewise.

[Shreddesaurous]

6. A bit too far...

I have thought a very similar concept for some time. Your example is a good concept taken to an unreasonable extreme, imho. Your proposal doesn't help our nation's poor. It penalizes success. It seems more like a proposal for vengence than healing.

Drop the rate to 25%...with an exemption of $40k and you have a far more reasonable proposal. Maybe 30% with something figured in for medical expenses. I'm no economist. Hell, that's one of the problems. Every high profile economist in the country is in the pocket of the republican party.

I have nothing against the wealthy as individuals. Look, republicans keep pandering to their interests and offering them loop hole after loop hole. They'd be idiots to NOT take advantage of what was offered to them. Some may characterize it as greedy. I am more apt to think of it as responsible self-interest. Not matter our income, we ALL try to hold on to however much money we can, don't we? Doesn't it make sense that a more wealthy person wants to hold on to that wealth in an effort to guarantee a future for their child or children, just like us?

The wealthy are not the demons here. The true culprits are the conservatives that continue perpetuating that myth of supply-side economics...unwilling to face the reality that the Laffer curve has limits.

[Selatius]

7. Would you be happier with a figure in the 40-50 percentile range?

I don't see how it cannot help the nation's poor. Many working poor and middle class Americans pay a larger percentage of their income in taxes than the biggest corporations today. A recent GAO report bears this out. It is fact. The original point of the income tax was to raise revenue, but there's so many gimmicks, shelters, credits, loopholes, etc. now that the top crust are shirking their responsibility to the detriment of every single person in this country.

The money generated by instituting a simple, no gimmick, tax would be invested in things that do help people. Public education is one. Health care is another. Protecting the environment and enforcing labor standards is another.

[Shreddesaurous]

11. A thousand apologies...

I meant to indicate that your initial proposal wouldn't help the poor as much as it seems to be engineered to just stick it to the rich.

Shame on me for my poor wording.

I agree. I just had a conversation very similar to this on another site. The problem is I'm discussing a number the value of which is unknown to me. I'm not an economist. Hell, I'm not even a math major. heheh

I figure it like this:

Our nation's GDP (last I checked) was hangin' around $11 Trillion. Our current national deficit is almost $8 trillion.

For us to pay off that national debt obviously requires a surplus. To accomplish that surplus we'd have to make some major adjustments.

I would like to see dramatic reductions in spending in order to make that surplus easier to achieve. This is one place where everyone disagrees across party lines. What's expendable? Where to cut costs? Those answer's differ depending on who ya' talk to and what criteria they use to make their judgment. Surely, the parties could agree on a lot of things in this area too. I mean, seriously...wasteful spending is wasteful spending.

Then, you close the loopholes being abused by corporate America and our nation's wealthiest of citizens. When I hear about a company that generates over $10Million in profit in a year and pays no taxes due to creative accounting, it burns me by the short and curlies.

Now, when I say close the loop holes, I mean to shut the suckers down...no wiggle room. For instance, I'd like to see a price cap on business meals/entertainment. A company takes a client to dinner and everything above $100 per person is out of their own pocket...not on our nation's tab. They want to give each other season tickets to a sports event? Tough titty...their dime, not mine.

Only income in excess of $25K a year is taxed. Maybe a little higher or lower. Perhaps that could be calculated by state average instead of on a national scale. After all, a person could live comfortably with all the necessities of life on $25k a year net in Louisiana. In NY, the limit might be $35k-$40k.

Medical and child care are 100% deductible (child care tossed in to promote single parent employment). A few grand deduction for every dependant. The basics…

Now that we've leveled the playing field when it comes to making sure everyone can afford to live, we calculate what percentage of what's left over would result in the negation of our national debt within say 10 years. Considering interest costs and maintaining our government's smaller functional budget, I think 20% should do it. Perhaps a little more, perhaps a little less...but somewhere around there.

In summary:

GDP
Reduce spending.
Put an end to corporate welfare (and calculate it's effects on the GDP)
Close ALL loopholes (some are abused by those we wouldn't really consider "wealthy").
Tax relief for those in most need of it.
Calculate what percentage would result in depletion of national debt in 10 years or so.

After the debt is paid, taxes come down across the board and a few token expenses may return.

One of the problems with this idea is that the first hint of a surplus in Washington effects congress like a pack of wild dogs to a rotting OX carcass. Instead of legislatures saying to each other "I'll do without this if you do without that",it's the exact opposite. "I'll sign off on your ridiculous expenditure if you'll sign off on mine" is the constant mantra echoing through the congressional circle-jerk.

There are so many facets to this issue it's overwhelming.

[TexasLawyer]

9. Clear Skies, Healthy Forests, No Child Left Behind...

and FairTax. Another addition to the Orwell "NewSpeak" dictionary.