So what you're saying Ape is that the fact that I'm on ATS somehow limits my intelligence to a certain level, right? Afterall, publication makes you
smarter. A book or magazine article from a washed up old hack who has devoted years of research and education to selectively choosing the facts best
suited to their ideological end is necessarily of greater qualification than what somebody expresses online, always, right?
You're letting the zeitgeist push you around, and I don't recommend that. Right now, it's easy to make the superficial decision- I must not know as
much as John Linder and other propoents of the "fair tax" because I'm just some college student you heard from on the internet and they are
congressmen, authors, self-appointed experts, academics, whatever. But 12 years from now, who's to say I'm not a Ph.D and/or a senator? Then all of
a sudden this isn't just some contrary response from a dude online, but one of the early works of someone just as credible as your false authorites.
So don't be superficial and you'll have less trouble adapting to changes that time brings.
I hate to burst your bubble, because I have observed that people have A LOT of fun assuming that I live in a cave, but you're not the first person to
post this fair tax nonsense. Assuming that I don't know what I'm talking about around here is usually not a safe bet. I'm a very curious person and
I hate going outside- this means that I do more reading than any three people you'll ever meet.
The "fair tax" proposes to link taxation directly to consumption, in theory progressively taxing the wealthy and providing the poor and middle class
a greater degree of self-determination by making frugality a legal mechanism of tax reduction, thus empowering them better to save up to advance
themselves by through ownership. By not taxing capital gains or corporate earnings it encourages investment and the creation of jobs. This sounds
great for the common man.
There are hidden flaws.
First and foremost we must address the juvenile simplicity of the prebate idea. It hurts everyone who earns and consumes over 20,000 a year. If you
make more than twice the poverty level, a prebate of the tax rate times the poverty line is always less than the tax rate times the amount of
non-prebated consumption. The president's advisory committee projects that only people earning under 15,000 or over 200,000 would benefit. Greater
wealth would be concentrated in the hands of those who could not possibly consume as much as they earned and more wealth would be taken away from
those who have to consume what they earn to get by but are not in poverty. I find it laughable that the suggestion that we raise taxes on the middle
class and give tax breaks to the extremely wealthy could be called progressive.
Then there's the supposed guarantee of revenue neutrality.
By encouraging saving, the tax necessarily reduces both consumption and prices in America, making current numbers invalid for computation of a
revenue-neutral national sales tax. It is also worth noting that because the numbers used by Americans for Fair Taxation count taxes paid by the
government on purchases, in essence suggesting that you make money when you pay yourself, they have artificially lowered the number. Then of course
there is legal and illegal evasion to consider. The preference for buying used or going DIY would further shrink the tax base even before the very
real possibility of smuggling is factored in, and that IS a very real possibility given the state of our borders. For that matter, what is to stop a
Mexican retailer from buying goods made in America, unpackaging them, bringing them back under the protection of NAFTA, and selling them as used at a
swapmeet or second hand store? That would basically be legal. The Report
from the president's advisory panel on tax reform does not document any accounting either for changes in demand or the essentially legal smuggling
loophole I just explained and therefore even its dire assessment is probably light.
The only way to square things then is a rate increase, but each rate increase triggers new drops, and we only stabilize when people are down to the
bare necessities that they can't afford not to consume.
Now let us consider the kind of economy we build with a tax policy like this one.
It creates an incentive to export by offering the ability to sell tax free abroad and by encouraging savings, thus depressing demand and forcing
domestic prices down. To sell in America, you have to be willing to reduce your price to accomodate the price raise created by the tax, and to
convince the consumer that he can afford your product and still pursue things such as home ownership which have been newly opened up to him. The
American market's ability to remain lucrative enough to attract all of the products we want at the quality to which we are accustomed becomes almost
entirely dependent on other markets not having the purchasing power to "outbid" us as it were.
In the worst case scenario, we would be dependent on the willingness of investors to take risks for lower rewards to expand business enough to meet
American demand as well, otherwise we would necessarily be limited to the wares of companies that couldn't gain enough of a foothold in other
markets. This creates a supply-side price increase on whatever of the best stuff does make it to America and the days when a working stiff could
aspire to put in enough overtime or earn enough promotions to afford a corvette or other such thing will be over. In other words it force the average
American into subsistence very much the way socialism would, allowing him a decent home and the necessities but robbing him of grander aspirations and
thereby reducing the incentive to work harder, pursue higher education, etc. This in turn disadvantages American industry of course by ensuring that
the incentive to build oneself to the best and brightest is greater overseas. The spreadsheets will look great because we'll be producing but we
won't be the innovators, or the hard workers and we won't be setting the pace anymore.
In short, the "fair tax" combines the worst aspects of communism and capitalism- it creates a widely egalitarian society where the bottom 90% of
wage earners live essentially the same regardless of income and get the things they really need, if little else, while the wealthy get richer than
ever and are free to take that money overseas for business or pleasure, where they need not be concerned with the wretchedness of the common man.
So, as I said, your "fair tax" proposal implicitly reduces our infrastructure and the motivation of our labor force, with the goal of fighting with
poorer nations for production jobs whose output simply isn't valuable enough to be worthwhile to us. What we need to do is streamline the existing
income tax system, make it truly progressive, and put our money into the infrastructure of innovation and higher technology to create the jobs worthy
of American labor.
Incidentally, although I have been through your links, it doesn't pay to throw links around without an argument in your own words. It begs the
question, did you
read the friggin thing?
The mere mention of Hamilton, the rat of whom Patrick Henry spoke when declining to attend the constitutional convention, in the beyond the basics
section should be a dead giveaway if you know your nation's history.
The man was an elitist thug who apparently saw democracy as an expedient front for plutocracy, and I am highly suspicious of any economic policy for
which his words can be invoked.
Pleasure meeting you ape, see you around.
signed, Aaron Burr.